Sham Sunder Gupta Vs ITO (ITAT Chandigarh)
Nigeria Inspection, Hong Kong Business Fair &; a “Source of Source” Chase-All Three Additions Deleted u/ss 40(a)(i), 37 &; 68
Three Disputes, One Successful Appeal
The Assessee, proprietor of M/s Steelman Industries & engaged in export activities, challenged three additions confirmed by the CIT(A)/NFAC.
The first was a disallowance of ₹45,71,250 u/s 40(a)(i) for inspection & certification charges paid to a foreign national without TDS. The second concerned foreign-travel expenses of ₹1,99,316. The third related to additions aggregating to ₹6 lakh u/s 68 out of unsecured loans received from the Assessee’s son & another lender.
The Chandigarh ITAT examined each issue separately & deleted all three additions.
Nigerian Inspection Was Not Indian Technical Service
One of the Assessee’s regular buyers, M/s G.M.O. & Company Ltd., was situated in Nigeria. Under Nigerian import regulations, goods entering that country were required to be independently inspected & valued before being cleared from the customs port.
Nigeria had appointed various agencies, including Bureau Veritas, to undertake inspection & valuation. The overseas buyer appointed Mr. Collins Chikezie Chikelube, a foreign national associated with the inspection arrangement, to inspect the exported goods.
Although the Nigerian buyer was primarily liable to bear the inspection charges, the Assessee paid ₹45,71,250 as reimbursement in accordance with prevailing commercial practice.
