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TMI Blog2015 (10) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... n making disallowance of Rs. 26,72,955/- paid to C&F Agent on account of Lorry Freight, under the provision of section 40(a)(ia) of the Income tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(a), Shilong ought to have deleted the arbitrary addition of Rs. 26,72,955/- under the provision of Section 40(a)(ia) of the Act, when no amount was payable as on 31.3.2006." 3. Briefly stated, the facts of the case are that the assessee is a Private Limited Company, engaged in the business of export of agricultural products through its proprietary unit namely, M/s. India Trading Company. The Assessing Officer passed the assessment order under section 143(3) of the Income-tax Act, 1961 (in short 'the Act&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases to the seaport of Mumbai. It is stated that M/s. NFPL was assigned for the job of clearing and forwarding the export consignments to various destinations from Mumbai seaport. The agent M/s. NFPL used to make payment on account of lorry hire to the transporters who used to brings the materials from various sites after deducting the TDS for and on behalf of the assessee company. It is also stated that the assessee company after having purchased the materials from various sites directly dispatched to the Mumbai seaport through the suppliers of agricultural produces. M/s. NFPL used to unload the materials at the seaport and make payment to the transporters, after deducting tax at source for and on behalf of the assessee company and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges was complied with by the agent on different dates for and on behalf of the assessee and, therefore, no disallowance u/s.40(a)(ia) is called for. In the case of CIT v. Gujarat Narmada Valley Fertilisers Co. Ltd. [2014] 361 ITR 192, the Hon'ble Gujarat High Court held that no disallowance can be made under section 40(a)(ia) of the Act on amounts reimbursed, where the obligation to deduct TDS from the payment was complied with by the agent. The relevant observations made by the Hon'ble High Court at (page 194 & 195) are as under: "...It is required to be noted that while confirming the order passed by the Commissioner of Income tax (Appeals) and deleting the disallowance, it has been specifically observed by the Tribunal that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. It is observed that the Special Leave Petition preferred by the Revenue in the case of Gujarat Narmada Valley Fertilizers Co. Ltd. (supra) has been dismissed by the Hon'ble Supreme Court CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. [T.A. No. 315 of 2013, dated 17-1-2014] observing that no disallowance can be made u/s.40(a)(ia) on account of reimbursement of expenses incurred by the agent on behalf of the assessee for transportation and other charges, when the obligation to deduct tax at source was complied with by the agent, who had made payment on its behalf. 7. In view of above, we allow the appeal of the assessee holding that the addition of Rs. 26,72,955/- made under the provisions of section 40(a)(ia) of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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