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TMI Blog2012 (7) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... L NOs. 1686 AND 1687 (KOL.) OF 2011 - - - Dated:- 31-5-2012 - PRAMOD KUMAR, MAHAVIR SINGH, JJ. Indranil Banerjee for the Appellant. A.P. Roy for the Respondent. ORDER Pramod Kumar, Accountant Member These two appeals pertain to the same assessee, involve a common issue arising out of materially similar set of facts and were heard together. As a matter of convenience, therefore, both of these appeals are being disposed of by way of this consolidated order. 2. The short issue that we are required to adjudicate in both these appeals is whether or not the CIT(A) was justified in upholding the disallowance under section 40(a)(ia) of the Income Tax Act, 1961, on the ground that the payments made by the assessee to Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source under section 194C from payments to agents of foreign shipping companies, no taxes under section 194 C are required to be deducted from the same. The Assessing Office, however, rejected this stand of the assessee on the grounds that (a) circular no. 723 specifically applicable only to foreign shipping companies and the benefit of the same cannot, therefore, extend to the foreign airlines; (b) PDP and DHL were resident companies, they may utilize services of any airlines for transportation but they were providing services to the assessee, and, therefore, the assessee was obliged to deduct tax at source under section 194 C; and (c) even if it is assumed that the payments were made to the agents of the foreign companies, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived money for the airfreight have received the same in their capacity as "issuing carrier's agent" i.e. agent of the airline concerned. The airfreight payment is thus made to the foreign airlines, namely SIA, Emirates, British Airways and Lufthansa - though through the agent, i.e. PDP and DHL etc. 7. In view of the above discussions, in our considered view, the payments cannot be said to have been made to a resident company, and, accordingly, the provisions of Section 194 C , which apply only on the resident recipients, donot come into play. 8. As for the stand that the assessee should have moved the application under section 195(2) in case of payments to non residents and assessee's failure to do so is to be visited with conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If one reads the observation of the Supreme Court, the words "such sum" clearly indicate that the observation refers to a case of composite payment where the payer has a doubt regarding the inclusion of an amount in such payment which is exigible to tax in India. In our view, the above observations of this Court in Transmission Corpn. of A.P. Ltd.'s case ( supra ) which is put in italics has been completely, with respect, misunderstood by the Karnataka High Court to mean that it is not open for the payer to contend that if the amount paid by him to the non-resident is not at all "chargeable to tax in India", then no TAS is required to be deducted from such payment. This interpretation of the High Court completely loses sight of the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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