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2011 (11) TMI 703 - AT - Income TaxTDS u/s 194C - disallowance of freight charges u/s. 40(a)(ia) - non-deduction of TDS where the freight charges includes Octroi tax paid to Maharastra Government by the transporters and reimbursed by the assessee - Held that - The issue of reimbursement of customs duty charges and other charges which are incurred by agents on behalf of assessee cannot be subject matter of TDS. See Assistant Commissioner of Income-tax Versus Grandprix Fab. (P.) Ltd. 2009 (10) TMI 659 - ITAT DELHI Disallowance of business promotion expenses Coolie 12, 327/- i.e. sustained the disallowance of 6, 000/- sustained the disallowance of 8, 388/- out of coolie and cartage expenses and sustained the disallowance as made by Assessing Officer in respect of general expenses i.e. 2, 918/-. Since lower authorities have made the disallowances in absence of proper evidence we find no need to interfere with the same and the same is hereby upheld. These grounds of assessee s appeal are dismissed.
Issues involved:
1. Disallowance of freight and clearing charges under section 40(a)(ia) for non-deduction of TDS. 2. Disallowance of business promotion expenses, coolie & cartage expenses, and general expenses. Analysis: Issue 1: Disallowance of freight and clearing charges under section 40(a)(ia) for non-deduction of TDS The appeal by the assessee challenges the order of the CIT(A) confirming the disallowance of freight and clearing charges due to non-deduction of TDS under section 40(a)(ia) of the Income Tax Act. The Assessing Officer found that TDS was not deducted on the freight and clearing charges paid by the assessee to the respective parties. The assessee argued that certain charges like octroi tax, custom duty, port charges, etc., were reimbursed by the agent and not liable for TDS. The counsel relied on various case laws to support the contention that reimbursement expenses are not subject to TDS. The Tribunal, after considering the arguments and case laws, allowed the claim of the assessee stating that expenses incurred by agents on behalf of the assessee, such as customs duty charges, are not subject to TDS. The disallowance of freight and clearing charges was overturned based on the cited case laws. Issue 2: Disallowance of business promotion expenses, coolie & cartage expenses, and general expenses The appeal also contested the disallowance of business promotion expenses, coolie & cartage expenses, and general expenses by the lower authorities. The Assessing Officer made estimated disallowances due to lack of proper evidence. The CIT(A) provided partial relief on business promotion expenses but upheld the disallowances on coolie & cartage expenses and general expenses. The Tribunal noted that the disallowances were made without sufficient evidence and hence upheld the decisions of the lower authorities. The grounds of appeal related to these expenses were dismissed based on the lack of proper evidence supporting the expenses claimed. In conclusion, the Tribunal partly allowed the appeal of the assessee based on the disallowance of freight and clearing charges being overturned, while upholding the disallowances related to business promotion expenses, coolie & cartage expenses, and general expenses due to insufficient evidence. This summary provides a detailed analysis of the legal judgment, covering the issues involved and the Tribunal's decision on each issue.
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