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TMI Blog2018 (8) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled for deduction and no TDS is required to be made on the ocean freight since the ocean freight and the reimbursement of actual expenses does not include the profit element. - In addition the expenses claimed over and above the ocean freight must be established by the assessee that the same represent the reimbursement of expenses with relevant evidences. Therefore, in all fairness, we are of the view that the issue should be remitted back to the file of the AO to make detailed verification of the nature of expenses with relevant bills and supporting evidences and to decide the deductibility of TDS and consequent disallowance u/s 40(a)(ia). Accordingly, we direct the AO to examine the issues and redo the same after giving opportunity to the assessee. In the result appeal of the revenue is allowed for statistical purpose. Decided in favor of revenue for for statistical purpose. - I.T.A.No.238/Viz/2017 And CO.No.59/Viz/2017 - - - Dated:- 8-8-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Revenue : Shri V.Appala Raju, DR For The Assessee : Shri G.V.N.Hari, AR ORDER PER D.S. SUNDER SINGH, Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agent on behalf of the assessee company. During the appeal hearing, the Ld.CIT(A) verified the bills submitted by the assessee and found that the payments were made towards ocean freights, documentation charges, container freight station(CFS) charges, transportation charges and other incidental charges. The assessee argued before the Ld.CIT(A) that the relationship between the assessee and the Shipping Agent is that of Principal and Agent but not contractor and the contractee. The Ld.CIT(A) did not accept the contention of the assessee that the relationship between the assessee and the payee is the principal and agent and held that the relationship is that of the contractor and contractee, hence held that the assessee is bound to deduct the TDS u/s 194 C of the Act on such payments. However, the Ld.CIT(A) observed from the bills that the payment made to agents was towards the local transportation charges paid on behalf of the assessee is outside the scope of provisions of section 194C(6) of the Act, since any payment made to the contractor during the course of business of plying, hiring or leasing of goods shall not be subjected to TDS. Accordingly out of the total expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S is applicable. 5. On the other hand, the Ld.AR supported the orders of the Ld.CIT(A) and argued that ocean freight and local transportation charges does not attract the TDS, hence, there is no requirement for the disallowance u/s 40(a)(ia) of the Act. The Ld.AR argued that no interference is called for in the order of the Ld.CIT(A). 6. We have heard both the parties, perused the material placed on record. It is understood from the Ld.CIT(A) s order that the assessee has made the payments to the Shipping Agencies and the bills were produced by the assessee before the Ld.CIT(A) who has verified the same and found that the payments were made towards ocean freight, documentation charges, container freight station charges and transportation charges and other incidental charges. The Ld.CIT(A) also observed that the relationship between the assessee and the Shipping Agent is that of the contractor and contractee but not the Principal and Agent, thus the assessee is bound to deduct the tax at source and there is no dispute that the assessee required to deduct the tax at source on the payments made to the shipping agents. 6.1. The Ld.CIT(A) found that a sum of ₹ 33,76,446/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractor and PAN No. of the contractor. Therefore, section 194C(6) has no application in the assessee s case. However the Ld.CIT(A) held that the payment was towards reimbursement of expenses but no finding was given by the AO in this regard and the Ld.CIT(A) did not afford any opportunity to the AO to verify the nature of expenses with the agreement and supporting bills of transportation or the tickets of Railway, Road Carriers etc., Hence in all fairness we consider it is just and fair to remit the matter back to the file of the AO to verify the nature of payment with the C F agreement, relevant bills of authenticated transport operators and decide the issue afresh on merits after giving opportunity to the assessee. 6.3. The second issue in this case is the payment made to the Shipping Agents to the extent of ₹ 1,23,43,259/- deleted by the Ld.CIT(A) stating that the payments are covered by Section 172 of the I.T.Act. Section 172 deals with the application of TDS in case of shipping business of non residents. In the case of the assessee, the payments were made to local Shipping Agents, hence section 172 has no application in the case of the assessee. Though the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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