2024 (3) TMI 535 - AT - Income Tax

TDS u/s 195 - non deduction of TDS - demurrage charges paid by the respondent-assessee to the foreign companies - HELD THAT - AO made the disallowance of demurrage charges paid to various shipping companies on the ground that the appellant had failed to deduct tax at source on such payment following the decision of Hon ble Bombay High Court in the case of CIT Vs. Orient Goa Co. Pvt. Ltd. 2009 (10) TMI 575 - BOMBAY HIGH COURT . The said decision has been overruled by the Full Bench of Hon ble Bombay High Court subsequently in the case of CIT Vs. V.S. Dempo Co. Pvt. Ltd. 2016 (2) TMI 308 - BOMBAY HIGH COURT . The order passed by the ld. CIT(A) is in consonance with the law laid down by the Hon ble Jurisdictional High Court supra. Therefore we do not find any reason to interfere with the order passed by the CIT(A). Appeal of the Revenue is dismissed.

Summary

Issues:
The appeal filed by the Revenue against the order of CIT(A)-2, Panaji for the assessment year 2012-13.

Facts of the Case:
The respondent-assessee, a company engaged in processing and trading in Iron-ore, filed a return of income for the A.Y. 2012-13 declaring total income of Rs. 266,47,93,720. The assessment completed by the Assessing Officer resulted in a total income of Rs. 304,37,76,805 after making various disallowances.

Disallowances Made:
The disallowances made by the Assessing Officer included u/s.14A disallowance, addition on account of undisclosed sale receipts, disallowance of consultancy charges, disallowance of demurrage paid without TDS, and addition on account of interest income.

CIT(A) Order:
The CIT(A) directed the AO to delete the addition of Rs. 4,41,62,650 being demurrage charges paid to non-resident parties, citing relevant court decisions.

Appeal by Revenue:
The Revenue appealed against the CIT(A) decision, arguing that the court decision cited by the CIT(A) did not apply to the present case.

Issue for Consideration:
The main issue for consideration was whether the demurrage charges paid by the respondent-assessee to foreign companies could be disallowed for non-deduction of tax at source u/s.195 of the Income-tax Act, 1961.

Decision:
After hearing the arguments, the Tribunal found that the decision of the Hon'ble Bombay High Court overruled the earlier decision cited by the AO. As the CIT(A)'s order was in line with the law laid down by the High Court, the Tribunal dismissed the Revenue's appeal.

Conclusion:
The appeal filed by the Revenue against the CIT(A) order regarding the disallowance of demurrage charges was dismissed by the Tribunal based on the legal precedents and relevant provisions of the Income-tax Act, 1961.