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2017 (1) TMI 892 - AT - Income TaxTDS u/s 194C - Non deducting tax on the payments made on account of reimbursement of shipping expenses to M/s Dolphin Maritime Agency Pvt Ltd. - Held that - CIT(A) has considered Board s circular No.715 dated 08-08-1995 which is on the issue of deduction of tax at source on the payments made for reimbursement of shipping charges. It is noted that the Ld. CIT(A) has merely sent the issue back to the file of the AO to verify the facts with the direction that disallowance shall be deleted only if the amount paid by the assessee represents the amount of reimbursement. During the course of hearing before us, nothing has been pointed out by Ld. DR in the directions and findings of Ld. CIT(A) which is incorrect on facts or on law. Under these circumstances, in absence of anything incorrect or wrong having been pointed out in the findings of Ld.CIT(A), we find that no interference is called for in the order of the Ld.CIT(A) and, therefore, the same is upheld. - Decide against revenue
Issues:
1. Whether the assessee was liable to deduct tax on reimbursement of shipping expenses to an independent shipping agent. 2. Whether the reimbursements made to the shipping agent are liable for tax deduction at source. 3. Whether the order of the CIT(A) should be reversed and that of the Assessing Officer be restored. Issue 1: The main issue in this case was whether the assessee was liable to deduct tax on reimbursement of shipping expenses to an independent shipping agent. The Revenue contended that the CIT(A) erred in holding that tax deduction was not required on these payments. The background revealed that the assessee was engaged in exporting general items to African countries and made payments to Dolphin Maritime Agency Pvt Ltd for shipping expenses. The AO disallowed these payments for failure to deduct tax at source. However, the CIT(A) considered detailed submissions and found that tax deduction was not necessary on these payments. The CIT(A) referred to bills raised by the shipping companies and the declaration confirming tax obligations, which led to the conclusion that tax deduction was not required on the reimbursements. Issue 2: The second issue revolved around whether the reimbursements to Dolphin Maritime Agency Pvt Ltd were liable for tax deduction at source. The Revenue argued that sections 194C and 194I required tax deduction on such payments, citing Circular no. 715 of the C.B.D.T. The CIT(A) considered the circular and various judgments, including those of the ITAT, to support the position that tax deduction was not applicable to the reimbursements. The CIT(A) directed the AO to verify the facts to ensure the amount paid by the assessee represented reimbursement only. During the hearing, the Ld. DR did not identify any errors in the CIT(A)'s findings, leading to the conclusion that no interference was warranted, and the order of the CIT(A) was upheld. Issue 3: The final issue was whether the order of the CIT(A) should be reversed and that of the Assessing Officer be restored. The Revenue's appeal was dismissed, as during the hearing, no discrepancies were found in the CIT(A)'s decision. The Tribunal upheld the CIT(A)'s order, emphasizing that no interference was necessary. Therefore, the appeal filed by the Revenue was dismissed, and the order was pronounced in the open court at the conclusion of the hearing. This judgment highlights the importance of considering specific circumstances and legal provisions when determining tax liability on reimbursements to independent agents, emphasizing the need for thorough verification of facts before making tax deduction decisions.
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