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TMI Blog2011 (2) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically included in Explanation III below section 194C. In this view of the matter, the provisions of section 194C are not applicable to the payments to the C & F agents. - assessee also took up the plea, without prejudice, that each of the payments as agency fees was less than Rs.20,000/- and the aggregate was also less than Rs.50,000/- and therefore even on that ground, the assessee was not required to deduct tax under section 194C The insurance premium paid in respect of the policies was claimed as a deduction as business expenditure and they appear to have been allowed in the preceding assessment years. However, in the year under appeal, the premium was not allowed as a deduction - Held that:- keeping in view the case CIT Vs. B.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the course of the assessment proceedings, the assessee was required to furnish the party-wise details of the expenses and explain whether any tax was deducted at source as required by section 194C of the Act. In response to the same, the assessee submitted that C F agency charges were paid to M/s. Vidhi Enterprises and Jayashree Shipping being their charges as agent of the assessee and that C F expenses are reimbursement of expenses such as customs duty, food stuffing charges, DEPB licence/ miscellaneous expenses, conveyance and other charges paid. It was further submitted that considering the nature of the expenses, no tax was required to be deducted at source. 3. The Assessing Officer did not accept the assessee s explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 194C do not apply. 5. The CIT(A) accepted the contention of the assessee based on the judgement of the Hon ble Bombay High Court and the order of the Visakhapatnam Bench of the Tribunal and directed the Assessing Officer to delete the disallowance of Rs.4,02,252/-. It is against this decision that the revenue has come in appeal. 6. We have carefully considered the facts and the rival contentions. The learned counsel for the assessee has also filed brief written submissions dated 13.11.2009. In the judgement in the case of East India Hotels Ltd. (supra), which is also reported in 320 ITR 526, the Hon ble Bombay High Court has held as under:- (i) From the decision of the Apex Court in the case of Birla Cement Works Vs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Birla Cement Works (supra) the word work in section 1 94C has to be understood in a limited sense and would extend only to the service contracts specifically included in the said section by way of Explanation III. The contract between the assessee and the C F agent is a service contract which has not been specifically included in Explanation III below section 194C. In this view of the matter, the provisions of section 194C are not applicable to the payments to the C F agents. If that is so, there was no obligation on the part of the assessee to deduct tax from the payment made to the C F agents. Even otherwise and assuming that section 194C is applicable to the assessee and to the payments made to the five C F a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the assessee are covered by Explanation III below section 194C has been answered in favour of the assessee by the judgement of the Hon ble Bombay High Court cited above and on this ground alone the decision of the CIT (A) has to be upheld. We do so and dismiss the first ground raised by the department. 8. The second ground is as under:- The learned CIT (A) on the facts and in the circumstances of the case and in law, erred in directing the Assessing Officer to allow the expenditure of Rs.4,00,529/- being premium paid on the life of partner under the Keyman Insurance Policy by misinterpreting the CBDT s Circular No. 762 dated 18.02.1998 and failing to consider the Explanation(2) to section 10 (1 0D) of the I. T.Act, 1961, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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