2011 (2) TMI 1517 - AT - Income Tax

Summary

Issues involved: Disallowance of air freight charges to Om Freight and Geo Logistics, disallowance of binding charges, disallowance of clearing charges.

Disallowance of air freight charges: The AO disallowed a total amount including air freight charges u/s 40a(ia) for non-deduction of TDS. The CIT(A) deleted the disallowance, stating that payments made to non-residents on behalf of the assessee are not subject to TDS u/s 194C. The ITAT upheld the CIT(A)'s decision, noting that the freight charges for import of books by foreign vessels are not taxable in India due to lack of permanent establishment.

Disallowance of binding charges: The assessee claimed binding charges, disallowed by the AO for non-deduction of TDS. The CIT(A) upheld the disallowance only on the payment to Star Trader, stating that TDS was not required on other components. The ITAT affirmed the CIT(A)'s decision, limiting the disallowance to the payment made to Star Trader.

Disallowance of clearing charges: The AO disallowed clearing charges u/s 40a(ia) for non-deduction of TDS. The CIT(A) confirmed the disallowance on agency commission but deleted the rest as reimbursement of expenses made on behalf of the assessee. The ITAT upheld the CIT(A)'s decision, similar to the disallowances in other grounds.

In conclusion, the ITAT dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all grounds related to disallowances of various charges due to non-deduction of TDS.