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TMI Blog2011 (2) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... alling upon the assessee to explain as to why various expenses on which TDS was not deducted should not be disallowed. In reply, the assesee submitted that TDS due on such items will be paid in due course. The AO held that this is an honest promise by the assessee, but, he had filed no explanation, therefore he disallowed a total amount of ₹ 19,32,800/- including air freight charges of ₹ 9,67,998/- u/s 40a(ia). Before the CIT(A), the assessee had stated that the air freight charges to Om freight and Geo Logistic were reimbursement of freight charges for the import of books by foreign vessels having foreign flat. It was argued that they are not subject to tax in India as the ships do not have any permanent establishment in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been made on behalf of the appellant and they have been reimbursed. Only out of this the agency commission involved is payment in pursurance of a contract within the meaning of section 194C. Therefore, the agency commission will be subject to TDS and appellant has not deducted tax on this amount. Rest of the payments are towards air freight and other expenses made on behalf of the appellant. Accordingly disallowance of ₹ 44,025/- out of ₹ 5,57,315 is conf irmed and the balance amount is deleted. Similarly, the appellant has paid ₹ 4,10,683/- to Geo Logistics Pvt. Ltd.out of which ₹ 3,80,534/- is payment towards freight reimbursement to overseas carriers. This payment is made to a non-resident on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not deducted TDS on the payments made to Om Freight and Geo Logistics by applying provisions of section 194C of the Act. The CIT(A) held that the payments made to a non-resident on behalf of the assesee and, therefore, the provisions of section 194C will not be applicable. The contention of the assessee the freight charges paid for the import of books by foreign vessels having foreign flag, therefore, they are not subject to tax in India as the ships do not have any permanent establishment in India. The assessee relied upon the Circular No. 723 of CBDT, as per which in the case of foreign ships a self contained code under section 172 is applicable for recovery of taxes and 194C will not be applicable to the assessee. After consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing expenses paid to laboruers, therefore, the mischief of segtion 40a(ia) covers only an amount of ₹ 77,082/-. We do not find any reason to interfere in the order of the CIT(A), therefore, the same is upheld. 11. The 4th ground is directed against the action of the CIT(A) in allowing clearing charges of ₹ 68,337/- 12. The AO made the addition u/s 40a(ia) on the ground that the assesee without deducting TDS on the payments made on account of clearing charges. On appeal before the CIT(A), the asssesee stated that clearing charges were paid to m/s MD Ruparel & Sons for their incurring freight charges bringing goods from JNPT an also from Sahar Air Port. It was also stated that M/s MD Ruprael & Sons had charges agency for ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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