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2011 (5) TMI 894 - AT - Income TaxAppeal against the disallowance made by the Assessing Officer Section 040(a)(ia) - HELD THAT - it has been submitted before us by the learned AR that the commission agent has raised separate bills for reimbursement of the expenses. With all these facts when we consider the Board Circular which cannot be made applicable to the present case because there is no composite bill raised by the commission agent and as per the learned AR of the assessee since bills for reimbursement of expenditure have been raised by the commission agent separately TDS was not required to be deducted from such reimbursement of expenses and as a consequence Section 40(a)(ia) is not applicable with regard to such payments. the Tribunal decisions cited by the learned AR of the assessee rendered in the case of Modicon Network P. Ltd. 2007 (2) TMI 354 - ITAT DELHI and Grandprix Fab P. Ltd. 2009 (10) TMI 74 - ITAT DELHI-D also support the case of the assessee and hence by following all the Tribunal decisions we hold that no TDS is required to be deducted for reimbursement of expenses for which separate bills were raised by the commission agent and hence the provisions of Section 40(a)(ia) is not applicable to such payments. Therefore disallowance made by the Assessing Officer is to be deleted. In result assessee s appeal is allowed.
Issues:
Disallowance of custom house agent expenses under section 40(a)(ia) for non-deduction of tax. Analysis: The appeal was against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2007-2008. The Assessing Officer noted that the assessee had debited various charges to the profit and loss account, including C&F charges, freight, and octroi charges. The Assessing Officer questioned why TDS was not deducted on payments made to C&F agent, ocean freight, and other expenses. The assessee claimed that TDS was deducted on charges paid to C&F agents but not on reimbursement payments, citing CBDT Circular No.715. The Assessing Officer disallowed a payment made to a non-resident company under section 40(a)(ia) for not deducting TDS. The assessee appealed to the Commissioner of Income Tax (Appeals) and then to the ITAT. The counsel for the assessee argued that Tribunal decisions supported the assessee's position, citing various cases where TDS was not required on reimbursement payments. They highlighted that separate bills were raised for reimbursement expenses, making TDS unnecessary. The Tribunal analyzed the facts, the Board Circular, and previous decisions. It noted that separate bills for reimbursement were raised, aligning with the Tribunal's previous decision that TDS is not required in such cases. The Tribunal held that the provisions of Section 40(a)(ia) did not apply to payments where separate bills were issued for reimbursement expenses. Therefore, the disallowance made by the Assessing Officer was overturned, and the assessee's appeal was allowed. In conclusion, the ITAT ruled in favor of the assessee, holding that no TDS was required on reimbursement payments where separate bills were raised. The Tribunal's decision was based on previous rulings and the specific circumstances of the case, leading to the deletion of the disallowance under section 40(a)(ia).
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