2015 (9) TMI 808 - HC - Income Tax

Disallowance u/s 40(a)(ia) - assessee has failed to bring any evidence of record that the payments made are covered under Circular No.723 of 1995 and that the non-residents ship owners/charters had filed returns u/s 172 of the Act - ITAT confirmed CIT(A) order deleleting part disallowance - Held that - From the findings recorded by the Commissioner (Appeals), it is evident that he has thoroughly examined the facts of the case and has based his conclusions thereon veryfying all the copies of the bills of lading and as per that except in three cases, all payments were made to the agents of non-resident shipping companies which fact was not disputed by the revenue. The Tribunal on an appreciation of the evidence on record has concurred with the findings of fact recorded by the Commissioner (Appeals). It is not the case of the revenue that the findings recorded by the Tribunal are based on irrelevant material or that any relevant material has been ignored. Under the circumstances, the conclusions arrived at by the Tribunal being based upon concurrent findings of fact recorded by it, in the absence of any perversity therein, do not give rise to any question of law much less, a substantial question of law as proposed or otherwise. The appeal is, therefore, dismissed. - Decided against revenue.

Issues:
1. Interpretation of section 40(a)(ia) of the Income Tax Act, 1961 regarding disallowance of payments.
2. Application of Circular No.723 of 1995 in relation to TDS deductions for payments to non-resident shipping companies.
3. Assessment of TDS requirements for payments made to Indian shipping companies acting as shipping lines or agents of non-resident shipping companies.

Analysis:
1. The appeal under section 260A of the Income Tax Act challenged the order of the Income Tax Appellate Tribunal regarding the disallowance of payments totaling Rs. 1,55,67,666 under section 40(a)(ia) for non-deduction of TDS for the assessment year 2005-2006. The Commissioner (Appeals) partially allowed the appeal reducing the disallowance to Rs. 28,82,501. Both the assessee and the revenue appealed to the Tribunal, which partly allowed the assessee's appeal. The revenue, aggrieved by the dismissal of its appeal, filed the present appeal questioning the Tribunal's decision.

2. The Commissioner (Appeals) considered the CBDT Circular No.723, which exempts certain payments to non-resident shipping companies or their agents from TDS under section 194C or section 195, subject to section 172 of the IT Act. The Commissioner found that most payments were made to agents of non-resident shipping companies, not requiring TDS deduction. However, payments to specific Indian shipping companies acting as shipping lines were found to require TDS deduction under section 194C. The Tribunal upheld the Commissioner's findings based on the evidence presented, concluding that the relief granted to the assessee was justified.

3. The Tribunal's decision was based on the verification of evidence and findings of fact by the Commissioner (Appeals). The Tribunal concurred with the Commissioner's conclusions after examining the bills of lading and payment details. The Tribunal found no perversity in the conclusions and noted that the revenue did not dispute the fact that most payments were made to agents of non-resident shipping companies. As the Tribunal's findings were based on concurrent findings of fact and no substantial question of law arose, the appeal was dismissed.

In summary, the judgment involved the interpretation of section 40(a)(ia) of the Income Tax Act, application of Circular No.723 in relation to TDS deductions for payments to non-resident shipping companies, and assessment of TDS requirements for payments to Indian shipping companies. The decision upheld the relief granted to the assessee based on the evidence presented and the Commissioner's thorough examination of the case, ultimately dismissing the appeal due to the absence of any substantial question of law.

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