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2023 (8) TMI 887 - HC - Income TaxPayment of shipping charges - Correctness of the order passed by CIT(A) - Commissioner granted partial relief in favour of the assessee in respect of certain disallowances concerning the non-resident shipping lines - HELD THAT - On a perusal of the order passed by the CIT(A) we find that there is sufficient discussion as to why the CIT(A) was convinced that relief should be granted to the assessee in respect of the Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd. Payment of shipping charges was admittedly paid to Hanjin Shipping Co. Ltd. which is an agent of non resident shipping company and the copy of the order u/s 197 by the DDIT (International Taxation) 3(1) Mumbai certifying that provisions of 195 and 194C of the Act are not applicable in respect of the payments made to Hanjin Shipping Co. Ltd. or their agent Hanjin Shipping India Pvt. Ltd. Thus the finding in our view takes note of the relevant order passed by the DDIT (International Taxation). This finding is duly supported by a note mentioned in the invoice raised by Hanjin Shipping Co. Ltd. wherein it has been clearly stated that there is an order under Section 197 of the Act and a request was made not to deduct any tax on the said invoice. Therefore we find that so far as the payment of shipping charges to Hanjin Shipping India Pvt. Ltd. was rightly construed by the CIT(A) and also that no tax need to be deducted at source. With regard to Maersk Line India Pvt. Ltd. the CIT(A) noted that similar payment for shipping charges found to have been made to the shipping company during the previous year ending 31.03.2012. Thus we are of the view that CIT(A) rightly granted relief to the assessee in respect of the payment of shipping charges to those two companies namely Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd.. Tribunal was right in so far as the payments made by the assessee to MSC Agencies Pvt. Ltd. Samudera Shipping Line Pvt. Ltd. and Overseas Container Line Ltd. There is no specific discussion by the CIT(A) while granting relief to the assessee. Therefore to that extent we agree that the findings rendered by the learned Tribunal that the issue has to be reconsidered by the assessing officer afresh only in respect of those three companies as mentioned above. Appeal is partly allowed.
Issues involved:
1. Liability to deduct tax at source on payments made to foreign shipping companies and/or their agents assessed under section 172 of the Income Tax Act, 1961. 2. Binding nature of Circular No. 723 dated September 19, 1995 on income tax authorities regarding tax deduction at source for foreign shipping companies and/or their agents. 3. Lack of examination by the Commissioner of Income Tax (Appeals) and arbitrary findings by the Income Tax Appellate Tribunal. 4. Validity of the order passed by the Commissioner of Income Tax (Appeals) in granting relief to the assessee in relation to certain disallowances concerning non-resident shipping lines. Issue 1: Liability to deduct tax at source on payments to foreign shipping companies and/or their agents assessed under section 172 of the Income Tax Act, 1961 The appeal questioned the liability to deduct tax at source on payments to foreign shipping companies and/or their agents assessed under section 172 of the Income Tax Act, 1961. The Tribunal remanded the matter to the Assessing Officer to consider the correctness of the order passed by the Commissioner of Income Tax (Appeals) regarding certain disallowances concerning non-resident shipping lines. The Tribunal found that the CIT(A) did not provide detailed or factual findings on the payees, leading to a remand for further examination. Issue 2: Binding nature of Circular No. 723 dated September 19, 1995 on income tax authorities The appeal raised the question of whether Circular No. 723 dated September 19, 1995 is binding on income tax authorities regarding tax deduction at source for foreign shipping companies and/or their agents. The CIT(A) granted relief to the assessee in respect of payments made to Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd. based on specific orders and invoices indicating that no tax deduction was necessary as per the circular. The Tribunal upheld the relief granted by the CIT(A) for these companies. Issue 3: Lack of examination by the Commissioner of Income Tax (Appeals) and arbitrary findings by the Income Tax Appellate Tribunal The issue of lack of examination by the Commissioner of Income Tax (Appeals) and arbitrary findings by the Income Tax Appellate Tribunal was raised. The Tribunal found that the CIT(A) did not provide sufficient discussion while granting relief to the assessee in relation to payments made to MSC Agencies Pvt. Ltd., Samudera Shipping Line Pvt. Ltd., and Overseas Container Line Ltd. Consequently, the matter was remanded to the Assessing Officer for fresh consideration specifically for these three companies. Issue 4: Validity of the order passed by the Commissioner of Income Tax (Appeals) in granting relief The appeal questioned the validity of the order passed by the Commissioner of Income Tax (Appeals) in granting relief to the assessee in relation to certain disallowances concerning non-resident shipping lines. The CIT(A) provided detailed reasoning for granting relief to Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd. based on specific orders and invoices indicating no tax deduction was required. The Tribunal upheld the relief granted for these companies and remanded the matter for further consideration only in relation to payments made to MSC Agencies Pvt. Ltd., Samudera Shipping Line Pvt. Ltd., and Overseas Container Line Ltd.
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