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2019 (1) TMI 1415 - HC - Income TaxTDS u/s 172 OR 194 - freight charges paid to agents of foreign shipping companies, under section 40(a)(ia) - Held that - Payments made to agents of foreign shipping companies to whom Section 172 of the Act applies are subject to tax deduction at source under Section 195 of the Act. In support reliance was placed upon the decision of this Court in case of Commissioner of Income Tax, Panaji, Goa Vs. Orient (Goa) P. Ltd.(2009 (10) TMI 575 - BOMBAY HIGH COURT) wherein it was held that before the provisions of Section 172 of the act can be made applicable, the person making the payment has to be nonresident. A subsequent division bench of this Court in CIT vs. V.S.Dempo & Co. (P.) Ltd (2016 (2) TMI 308 - BOMBAY HIGH COURT) was not able to agree with the view of this Court in Orient (Goa) P. Ltd. Therefore made a reference to the full bench of this Court. Though the full bench of this Court in V.S.Dempo & Co. (P) Ltd. (supra) held that if the receiptant of the income is covered by Section 172 of the Act, then no occasion to deduct tax at source can be foisted upon the Indian company making the Revenue very fairly states that in view of the full bench decision in V.S. Dempo & Co. (P) Ltd. (supra) and the subsequent decision of this Court on an identical issue in Elve Corporation Vs. Assistant Commissioner of Income Tax 12(3), Mumbai and anr. (2018 (11) TMI 648 - BOMBAY HIGH COURT), the issue stands concluded in favour of the assessee and against the respondent-Revenue.
Issues involved:
1. Amendment in the title of the appeal memo 2. Challenge to the order of the Income Tax Appellate Tribunal for Assessment Year 2008-09 3. Disallowance of freight charges under section 40(a)(ia) of the Income Tax Act 4. Interpretation of provisions of section 172 and section 194 of the Income Tax Act 5. Application of full bench decision in Commissioner of Income Tax Vs. V.S. Dempo & Co. (P.) Ltd. 6. Conclusion of the issue in favor of the appellant-assessee Detailed Analysis: 1. The appellant sought liberty to amend the title of the appeal memo to indicate the correct ward number of the Respondent No.1, which was granted without re-verification. 2. The appeal under Section 260A of the Income Tax Act challenged the order of the Income Tax Appellate Tribunal dated 12th February, 2015, pertaining to Assessment Year 2008-09. 3. The Revenue raised questions regarding the disallowance of freight charges paid to agents of foreign shipping companies under section 40(a)(ia) of the Act. 4. The Tribunal's decision was based on the interpretation of sections 172 and 194 of the Act, specifically on whether tax deduction at source was required for payments made to agents of foreign shipping companies. 5. The appeal was admitted on substantial questions of law, and the issue was taken up for final disposal based on the full bench decision in Commissioner of Income Tax Vs. V.S. Dempo & Co. (P.) Ltd., which favored the appellant-assessee. 6. The Tribunal's order held that tax deduction at source was applicable to payments made to agents of foreign shipping companies covered under Section 172 of the Act. However, subsequent decisions and full bench rulings concluded in favor of the appellant-assessee, based on the interpretation of the Act and previous court decisions. 7. The counsel for the respondent conceded that the issue was concluded in favor of the appellant-assessee based on the full bench decision and subsequent court rulings on similar issues. 8. Consequently, all substantial questions of law were answered in favor of the appellant-assessee, leading to the allowance of the appeal.
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