2013 (1) TMI 791 - AT - Income Tax

Summary

Issues Involved: Whether the assessee was liable to deduct TDS in respect of payment made to Albatross CFS Pvt. Ltd.

Issue 1: Liability to Deduct TDS

The assessee made a payment of &8377; 46,419/- to Albatross CFS Pvt. Ltd., claiming it as reimbursement for rail freight charges. The Assessing Officer (AO) disallowed this amount u/s 40 (a) (ia) for not deducting TDS. The CIT (A) upheld this decision, leading to the present appeal by the assessee.

Details: The first payment of &8377; 35,094/- was for reimbursement of rail freight charges paid by the payee on behalf of the assessee. The second payment of &8377; 11,325/- was below the TDS limit of &8377; 20,000/-. The assessee argued that the reimbursement nature of the payments exempted them from TDS, citing CBDT circulars and relevant case laws.

Decision: The Tribunal found that the payments were indeed reimbursements without any profit element, thus not requiring TDS deduction. Citing precedents, the Tribunal ruled in favor of the assessee, stating that the disallowance under Section 40 (a) (ia) was unjustified.

Conclusion: The Appellate Tribunal ITAT Delhi ruled in favor of the assessee, holding that the payments made to Albatross CFS Pvt. Ltd. were reimbursements and not subject to TDS deduction. The decision was based on the nature of the payments and relevant legal interpretations, leading to the allowance of the appeal.