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TMI Blog2016 (6) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. That the order of the CIT(A) to the extent upholding the order of the AO passed u/s 201(1)/201(1A) of the Income Tax Act, 1961 is against the law and facts of the case. 2. That the CIT(A) had wrongly upheld the order of the AO, wherein the latter had erred in holding the assessee company to be in contravention of section 194C in respect of 'Shipping Expenses' (including IHC/THC) and had wrongly raised a demand of Rs. 7,189/- and Rs. 4,314/- u/s 201(1) and 201(1A), respectively. 3. That the CIT(A) had wrongly upheld the order of the AO, wherein the latter had erred in holding the assessee company to be in contravention of section 194C in respect of 'Payment to contractors' and had wrongly raised a demand of Rs. 4,682/- and Rs. 3,371/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute freight amount, but represented other charges which had been paid to the clearing and forwarding agents for their services to clear the goods at the custom port; and that by clearing the goods at the custom port, the clearing and forwarding agents cannot be considered to be the agents of the nonresident ship-owners or charters and they will not step into the shoes of the principal as stated in Circular No.723, dated 19.09.1995. As such, the AO held the assessee to be in default in respect of payments of Rs. 3,52,434/-. The tax in default @ 2.04% was worked out to Rs. 7,189/-, whereas the interest u/s 201(1A) from 31.03.2006 was worked out at Rs. 4,314/-. 7. The ld. CIT(A) confirmed the action of the Assessing Officer. 8. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny person on his behalf, whether that amount is paid or payable in or out of India, shall be deemed to be income accruing in India to the owner or charterer on account of such carriage." 13. Section 172(6) is as follows: "A port clearance shall not be granted to the ship until the Collector of Customs or other officer duly authorized to grant the same, is satisfied that the tax assessable under this section has been duly paid or that satisfactory arrangements have been made for the payment thereof." 14. According to section 172(8): "For the purpose of this section, the amount referred to in sub-section (2) shall include the amount paid or payable by way of demurrage charge or handling charge or any other amount of similar nature". 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us also, no decision contrary to 'Freight Systems (India) Pvt. Ltd.' (supra) has been cited on behalf of the Department. Thus, in view of the clear provisions of section 172(8) of the Act, as supplemented by CBDT Circular No.723 dated 19.09.1995, both of which have been duly considered in 'Freight Systems (India ) Pvt. Ltd.' (supra). The grievance of the assessee by way of Ground no. 2 is found to be justified and is accepted as such. Accordingly, the demand of Rs. 7,189/- u/s 201(1) and Rs. 4,314/- u/s 201(1A) of the Act for non-deduction of TDS on payment of shipping expenses of Rs. 3,52,434/- is cancelled. 18. ITA No.363(Asr)/2014 This is Department's cross appeal for the AY 2006-07, contending that the ld. CIT(A) has erred in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds had also been made from the company to the firm in the nature of advance or loan. In the absence of any explanation, the AO held the assessee to be in default under the provisions of section 194 of the Act and therefore, created demands u/s 201(1) and u/s 201(1A) of the Act, for the default of non-deduction of tax at source out of deemed dividend on account of transfer of funds to its sister concerns by the assessee company. 20. The ld. CIT(A) deleted the demand. 21. The ld. DR has contended that the ld. CIT(A) has erred in deleting the demand correctly made by the AO on account of non-deduction of tax out of dividend by transfer of funds by the assessee to its sister concerns by way of loans and advances. The ld. counsel for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain a register wherein details of such concerns, as to which provisions of section 2(22)(e) of the Act apply, may be kept; and that so, that when the payment is made to a non shareholder, it is impossible for the payer company to ascertain whether it will attract the provisions of section 2(22)(e) of the Act or not and it is, therefore, that the law does not expect the payer company to deduct TDS when payment is made to a non-shareholder; that this is the reason why the law expressly provides for TDS requirements only when payment is made to a non-shareholder; that payment to a shareholder would cover both normal dividend as well as deemed dividend; that otherwise also, the deemed dividend will be taxed in the hands of the shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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