Rvwo/24/2023 Ia No: Ga/2/2023 Surendra Commercial And Exim Private Limited v. Income Tax Officer, Ward- 8(4), Kolkata

OD-2 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION ORIGINAL SIDE RVWO/24/2023IA NO: GA/2/2023SURENDRA COMMERCIAL AND EXIM PRIVATE LIMITEDVSINCOME TAX OFFICER, WARD- 8(4), KOLKATA BEFORE : THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 28 August, 2023 Appearance :Mr. Subhas Agarwal, Adv.…for appellantMr. Prithu Dudhoria, Adv.….for respondent The Court : - This review application has been filed to review the judgmentand order in ITA 45 of 2010 dated 13.06.2022. By the said judgment and orderthe appeal filed by the assessee, challenging the order passed by the Income TaxAppellate Tribunal B Bench Kolkata (the Tribunal) in ITA 853 of 2009 for theassessment year 2005-06 was affirmed. Aggrieved by the judgement and order dated 13.6.2022 in ITA 45 of 2010the assessee filed an appeal before the Hon’ble Supreme Court in Special LeavePetition (Civil) Diary No. 29896 of 2022. By the said order the Hon’ble SupremeCourt granted permission to the assessee to withdraw the Special Leave Petitionwith liberty to file review petition before this Court on a solitary issue namely with regard to the invocation of Section 40(a)(ia) of the Income Tax Act, 1961 (theAct) with regard to the payment made to clearing and forwarding agents.Pursuant to such liberty granted to the appellant present review application hasbeen filed. The solitary questions of law canvassed in this review application isas follows :- “Whether in the facts and circumstances of the case this Court ought tohave held that there is no liability to deduct TDS in respect of claim ofreimbursement of expenses relating to port and handling charges claimedby Customs House Agents ?” Mr. Subhas Agarwal, learned Advocate appearing for the applicant/assessee, submitted that there were two issues before the Assessing Officer, oneregarding payments which were made by the assessee to consignment agentsand the other relating to payments made to Customs House agents under twoheads namely, for clearing charges and the other for customs clearing expenseswhich were in the nature of reimbursement relating to Port and Handlingcharges claimed by Customs House agents. The learned Advocate appearing for the applicant/assessee submitted thatthe Assessing Officer while completing assessment by order dated 28.12.2007has elaborately considered the payments made towards Customs House agentsand came to the conclusion that TDS was required to be deducted on suchreimbursements. However, with regard to reimbursements of expenses relatingto Port and Handling charges, the Assessing Officer though noted thesubmissions of the assessee just to follow the findings recorded by him inrespect of payments made to commission agents and no independent finding was given with regard to the claim of reimbursement of expenses relating to Portand Handling charges claimed by the Customs House agents. It is submittedthat the payments made to the Customs House agents relating to expenses forPort and Handling charges was a reimbursement expenditure and that has beenshown separately and it is incorrect to state that the bill was a composite bill.The learned CIT[A] while affirming the order passed by the Assessing Officer tooknote of the facts with regard to the payments made to consignment agents whichwas admittedly a composite bill. However, it was not the case with regard to thepayments made to the Customs House agents for Port and Handling chargeswhich was a reimbursable expenditure. The order passed by the CIT[A] wasaffirmed by this Court in its judgment dated 13.6.2022. Therefore, it is submitted that this issue was required to be consideredand it is undoubtedly a question of law and facts which has to be adjudicated bythe authority and therefore it is prayed that the review application may beallowed and that portion of the order passed by this Court may be reviewed. We have heard Mr. Prithu Dudhoria, learned standing counsel on theabove submission. Therefore, it is submitted that this issue was required to be consideredand it is undoubtedly a question of law and facts which has to be adjudicated bythe authority and therefore it is prayed that the review application may beallowed and that portion of the order passed by this Court may be reviewed. We have heard Mr. Prithu Dudhoria, learned standing counsel on theabove submission. After elaborately hearing the learned Advocates for the parties, we areinclined to accept the submission of Mr. Agarwal that the issue with regard tothe payment made to Customs House agents relating to Port and Handlingcharges claimed by the assessee as reimbursable expenditure was notspecifically considered in the judgment dated 13[th] June, 2022. The error partlyis attributable to the assessee since the substantial question of law on which theappeal was admitted by order dated 15[th] February, 2010, did not specifically mention this issue and it was a composite question of law. Therefore, theendeavour of the applicant/assessee should have been to place relevant factsconcerning the payments made to the consignment agents and those made tothe Customs House agents which were claimed to be reimbursable expenditure.This has ultimately led to the error, which has crept in, in the judgment dated13[th] June, 2022. We find that the same mistake has crept in, in the order passedby the CIT(A) dated 19[th] February, 2009. Before the CIT(A), a specific ground wasraised by the appellant/assessee that the Assessing Officer erred in disallowingpayment of actual Port and Handling charges paid through clearing agent whichare paid on behalf of the assessee to the Port authorities to the tune ofRs.2,77,861.00. The CIT(A) has noted the ground raised by the assessee.However, without discussing the subject issue which was taken up as groundno.1, the CIT(A) has elaborately considered the issue only with regard topayments made to the consignment agent and not with regard to the payment ofPort and Handling charges paid through the clearing agent which are paid onbehalf of the applicant/assessee to the Port authorities. As rightly pointed out by the learned Advocate for the applicant/assessee,the Assessing Officer also did not segregate the two issues and adopted thefindings recorded in paragraph 7.3 of his order dated 28[th] December, 2007 withregard to the payments paid to the Clearing and Forwarding agents as welltowards expenses relating to Port and Handling charges. Thus, we are of the view that the error which crept in during theassessment proceedings has travelled upto this Court which would warrant exercise of our review jurisdiction as we find that the error is apparent on theface of the judgment and order. As we mentioned above, the assessee has to be partly blamed for thepresent situation since the grounds raised by the assessee before this Court inthe appeal were not specific, as has been submitted before us in this reviewapplication. Since we find this issue has not been adjudicated by taking intoconsideration of the facts and the separate bills which were produced by theassessee, we are of the view that the issue should stand remanded to theAssessing Officer for fresh consideration. Accordingly, the review application is allowed and the judgment and orderdated 13[th] June, 2022 is set aside only with regard to the contention of theassessee that there is no liability to deduct TDS in respect of the claim ofreimbursement of expenses relating to the Port and Handling charges claimed bythe Customs House agent. Accordingly, the review application is allowed and the judgment and orderdated 13[th] June, 2022 is set aside only with regard to the contention of theassessee that there is no liability to deduct TDS in respect of the claim ofreimbursement of expenses relating to the Port and Handling charges claimed bythe Customs House agent. Accordingly, the Assessing Officer is directed to afford an opportunity ofpersonal hearing to the assessee, examine the records and bills and take adecision in accordance with law. The Assessing Officer shall take note of thedecisions which were placed by the assessee before us in the case of CIT vs. DLFCommercial Project Corporation, (2017) 88 taxmann.com 422 (Delhi), wherein theCourt referred to its earlier decision in the case of CIT vs. Industrial EngineeringProjects (P) Ltd., (1993) 202 ITR 1014 (Delhi), wherein it was held thatreimbursement of expenses can under no circumstances be regarded as revenuereceipt. To the same effect, the assessee placed reliance on the decision in thecase of CIT vs. Fortis Health Care Ltd., (2019) 181 taxmann.com 257 (Delhi) and the decision in the case of CIT - III vs. Gujrat Narmada Valley Fertilisers Co. Ltd.,(2013) 35 taxmann.com 638 (Gujrat). Learned Advocate appearing for the applicant/assessee submitted that thecircular issued by the CBDT has been wrongly relied on and interpreted by theAssessing Officer and in this regard the Assessing Officer shall also take note ofthe observations made in the judgment in the case of Gujarat Narmada ValleyFertilisers Ltd., more particularly, in paragraph 3 of the said judgment. Consequently, the question of law, which has been raised in this reviewapplication, is left open. (T.S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.) Pkd/GH/SN