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TMI Blog2015 (7) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shipping Services, the amounts paid are only towards reimbursement of shipment charges and therefore, no tax was deducted at source. Assessee did not attract the provisions of section 40(a)(ia) of the Act as reimbursement of expenses do not consist the income of the recipient and the payments are not governed by the provisions of section 194C of the Act. We also rely on the decision of the Coordinate Bench in the case of Ushodaya Enterprises [2015 (1) TMI 510 - ITAT HYDERABAD ] Decided in favour of assessee. - ITA No. 1537/Hyd/2014 - - - Dated:- 17-6-2015 - Shri B.Ramakotaiah Smt.Asha Vijayaraghavan, JJ. For the Petitioner : Shri S. Rama Rao For the Respondent: Smt. Anjala Sahu ORDER Per Smt. Asha Vijayaraghava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertook the work themselves or got it done through other appropriate means. The Assessing Officer relied on sec.194C(1) which requires that tax is to be deducted on 'any sum' paid for carrying out 'any work' and held that the tax should have been deducted on the gross amount paid by the appellant. The Assessing Officer also noted that it was neither possible nor permissible for an assessee to determine what part of the payment by it constituted the income of the contractor. 5. The Assessing Officer also observed that merely because BSS had not specified the service charge component in its bills, it did not mean that they had not taken any profit portion of the amount charged to the appellant. The Assessing Officer also hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relied on the following decisions for the view that reimbursable expense were separate from fees, that what constitutes fee shall be the consideration for the services rendered by the recipients but not the amount of reimbursement and that expenses incurred by the recipients on behalf of the assessee are to be reimbursed to that person: i. CIT vs. Industrial Engineering Projects Pvt Ltd [1993] 202 ITR 1014 (Del) ii. CIT vs. Sandersons Morgans [1970] 75 ITR 433 (Cal) iii. CIT vs. Tanubai D. Desai [1972] 84 ITR 713 (Bom) iv. DDIT(International Taxation)-I vs. Louis Berger International Inc (ITA No. 242/Hyd/10 and 243/Hyd/10) 8. The AR pointed out that GBR included service charges and that tax had been deducted on the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sec.194C, along with the clarification as per the CBDT Circular, shows that the appellant was obliged to deduct tax on the entire payment made to the two shipping agents and relied on the following decisions: i. Arthur Andersen Co 94 TTJ 736 (Mum) ii. Cochin Refineries Ltd v CIT [1996] 222 ITR 354 (Kar) iii. HNS India VSAT Inc v DDlT [2005] 95 ITD 157 (Del) iv. Hindalco Industries Ltd. v ACIT [2005] 278 ITR(AT)125 (AT). 12. The CIT (A) further stated that these decisions no doubt relate to sec.195. However, the ratio of their decision apply to all reimbursements. 13. The CIT (A) held as under: 14. In the case of BSS, the appellant has claimed that the payment was made only for freight charges and there was not com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be an assessee in default under section 201 but no disallowance could be made invoking the provisions of section 40(a)(ia). On appeal: Held, dismissing the appeal, that no substantial question of law arose from the order of the Tribunal. 15. The ld Counsel submitted that though this argument for short deduction of tax was not raised before the CIT (A), this claim of the assessee may be considered in the present case before the Bench. It was also submitted by the ld Counsel that all amounts were paid before the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents before the end of the relevant accounting year, out of the amounts disallowed which have been upheld by the CIT (A). 8. We have heard both the parties. We direct that the AO may follow the decision of the Special Bench in the case of Merilyn Shipping Transports v. ACIT in ITA No.477/Viz/2008 dated 29.03.2012 and the disallowance u/s 40(a)(ia) may not be made by the AO for the amounts/payments which have already been paid before the end of the relevant accounting year, out of the amounts disallowed which have been upheld by the CIT (A). This ground is partly allowed for statistical purposes . 16. We heard both parties. We are of the opinion that as far as GBR Freight Forwarders (P) Ltd is concerned, assessee has made a shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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