We Have Heard Sri.arun Raj S., Learned Counsel For Theappellant And Sri.navneeth N.nath, The Learned Standing Counsel Forthe Department v. Vidyut Metallicsltd. (2007) 8 Scc688, It Was Observed That As A General Rule, Each Years Assessmentis Final Only For That Year And Does Not Govern Later Years B

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS MONDAY, THE 12 DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944 ITA NO. 23 OF 2021 AGAINST THE ORDER IN ITA 340/Coch/2018 OFI.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT/ASSESSEE: ALL KOSHYS ALL SPICESNATTAKOM, KOTTAYAM-686102. BLOCK NO.18/609/6, PAKKIL P.O., BY ADV S.ARUN RAJ RESPONDENT/RESPONDENT/REVENUE: COMMISSIONER OF INCOME TAX PUBLIC LIBRARY BUILDING, LAL BAHADUR SASTRI ROAD, KOTTAYAM-686001.BY ADVS.SRI.NAVNEETH N.NATH SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON12.12.2022, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: ITA No.23/2021 JUDGMENT Dated this the 12[th] day of December, 2022Bechu Kurian Thomas, J. Appellant is a partnership firm engaged in the business ofprocessing and marketing of spices and is an assessee under theIncome Tax Act, 1860 (for short 'the Act'). For the assessment year2010-11, the assessee returned a total income of Rs.8,27,980/- andthe assessment was completed by order dated 14.03.2013disallowing an amount of Rs.18,14,139/- paid to M/s.Seven OceanShipping Company as shipping charges. The reason fordisallowance was stated to be non-deduction of TDS under section194(c) of the Act and hence the said amount was disallowed undersection 40(a)(1a) of the Act. 2. The assessing officer held that the payment made toM/s.Seven Ocean Shipping Company as shipping charges cameunder the purview of section 194C of the Act. In appeal, at thebehest of the assessee, the Commissioner of Income Tax held thatthe payment to M/s.Seven Ocean Shipping Company was in thenature of hire charges covered under section 194I of the Act since, in ITA No.23/2021 respect of an earlier assessment year (2008-09), the Income Tax Appellate Tribunal had held that payment made to the very sameshipping company was in the nature of hire charges. Thus, bytreating the payment as hire charges, covered under section 194I ofthe Act, the appeal of the assessee for the assessment year 2010-11was dismissed. 3. Appellant again challenged the order of the First Appellate Authority before the Income Tax Appellate Tribunal. According to theappellant, despite providing sufficient evidence to show that thepayment made to M/s.Seven Ocean Shipping Company fell neitherunder section 194C nor under section 194I, the Tribunal, by relyingsolely upon its earlier decision in I.T.A No.461/2013, confirmed theorder of CIT Appeals and dismissed the appeal. Thus, the assesseehas preferred this appeal on the following substantial questions oflaw: (1) Whether the Tribunal is correct in law and in the facts of the case in confirming the disallowance of Rs.18,14,139/- under section 40(a)(ia) of the Act holding that the amount paid towards shipping chargesattract TDS under section 194(i) of the Act and that the assessee hasfailed to make TDS on the said payment. (2) Whether the Tribunal is correct in law and in the facts of the case in holding that the amount of Rs.18,14,139/- paid/reimbursed by theassessee to M/s.Seven Ocean Shipping Company towards shippingcharges attract TDS under section 194I of the Act? (3) Whether on the facts and in the circumstances of the case theIncome Tax Appellate Tribunal was correct in holding that theassessee/appellant took the machinery (ship) on lease and paid hirecharges for the same and therefore the provisions of section 194I areattracted? Is not such a finding illegal, erroneous and perverse? 4. We have heard Sri.Arun Raj S., learned counsel for theappellant and Sri.Navneeth N.Nath, the learned Standing Counsel forthe department. (2) Whether the Tribunal is correct in law and in the facts of the case in holding that the amount of Rs.18,14,139/- paid/reimbursed by theassessee to M/s.Seven Ocean Shipping Company towards shippingcharges attract TDS under section 194I of the Act? (3) Whether on the facts and in the circumstances of the case theIncome Tax Appellate Tribunal was correct in holding that theassessee/appellant took the machinery (ship) on lease and paid hirecharges for the same and therefore the provisions of section 194I areattracted? Is not such a finding illegal, erroneous and perverse? 4. We have heard Sri.Arun Raj S., learned counsel for theappellant and Sri.Navneeth N.Nath, the learned Standing Counsel forthe department. 5. It is trite law that an assessment has to be decided on ayear-to-year basis and the findings in respect of an allowance or adisallowance on an earlier assessment year cannot bind theassessee's claim for the subsequent years. In the decision inMunicipal Corpn., Thane v. Vidyut MetallicsLtd. (2007) 8 SCC688, it was observed that as a general rule, each years assessmentis final only for that year and does not govern later years because itdetermines the tax for a particular period”. A decision taken by the ITA No.23/2021 authorities in the previous year would not estop or operate a res judicata for a subsequent year as held in the decision inM/s.Maharana Mills (Private) Ltd. v. Income Tax Officer,Porbander (AIR 1959 SC 881). 6. The First Appellate Authority as well as the Income Tax Appellate Tribunal proceeded solely on the basis of the earlier orderin ITA No.461/2013 dated 24.9.2014 in respect of payments made bythe assessee to M/s.Seven Ocean Shipping Company itself, to cometo the conclusion that the payment made by the petitioner is coveredunder section 194I of the Act and therefore the assessee was liableto deduct the tax on such payment. It is noticed that the assessee'sspecific claim before the First Appellate Authority as well as theTribunal was that the payment made to M/s.Seven Ocean ShippingCompany did not form either a rent under section 194I nor did it fallunder the purview of section 194C, and therefore it was not bound todeduct TDS as per the provisions of the statute. 7. The CIT(Appeals) in Annexure B order proceeded on thebasis of the earlier order of ITAT for assessment year 2008-09 andheld that payments to M/s.Seven Ocean Shipping Company ought tohave been subjected to tax deduction at source. None of the specific contentions raised are seen adhered to or considered. The principle that each year's assessment is peculiar to that year, was not borne inmind by the said authority. 8. The Tribunal also failed to apply its mind independently tothe circumstances of the case and merely proceeded on the basis ofthe finding in the earlier appeal ITA No.461/2013. There was noindependent consideration on whether the payment for services ofclearing and forwarding agents for clearing goods from the exporters'dock would fall within the purview of rent under section 194I or,payment to contractors under section 194C or not falling under eitherof the two clauses mentioned above. 9. We notice that the First Appellate Authority as well as the Tribunal failed to consider the contentions of the petitioner in the rightperspective and merely proceeded on the basis of the earlier order inITA No.461/2013. The procedure adopted by the First AppellateAuthority as well as the Tribunal, according to us, was not proper.The payment made to M/s.Seven Ocean Shipping Company isalleged to be in the nature of payment towards clearing andforwarding of the goods sent up for carriage by sea. The saidpayment, according to the learned counsel for the petitioner, does not ITA No.23/2021 9. We notice that the First Appellate Authority as well as the Tribunal failed to consider the contentions of the petitioner in the rightperspective and merely proceeded on the basis of the earlier order inITA No.461/2013. The procedure adopted by the First AppellateAuthority as well as the Tribunal, according to us, was not proper.The payment made to M/s.Seven Ocean Shipping Company isalleged to be in the nature of payment towards clearing andforwarding of the goods sent up for carriage by sea. The saidpayment, according to the learned counsel for the petitioner, does not ITA No.23/2021 even fall under the purview of section 194C of the Act. Since, asmentioned earlier, there has not been an independent considerationof the contentions raised by the petitioner, we are of the view that thisis a matter which requires to be remanded back to the First AppellateAuthority for fresh consideration in accordance with the law. 10. Accordingly, we set aside the order of the First AppellateAuthority in Annexure B as well as that of the Income Tax AppellateTribunal in Annexure C and remand the same to the First AppellateAuthority for a de novo consideration. This appeal is allowed as above. S.V.BHATTIJUDGE vps BECHU KURIAN THOMAS JUDGE