9911796707
TMI Blog2018 (8) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2011-12. 2. All the grounds of appeal are related to the addition made u/s 40(a)(ia) of Income Tax Act, 1961 (hereinafter called as 'Act'). The Assessing Officer (AO), during the assessment proceedings found that the assessee has debited export charges of Rs. 1,58,38,236/- to the Profit & Loss account but not deducted the TDS. Therefore, the AO disallowed the entire sum of Rs. 1,58,38,236/- u/s 40(a)(ia) of the Act and added back to the income. 3. On appeal before the Ld. CIT(A), the assessee has submitted that the expenditure relating to export charges were incurred for the purpose of clearing and forwarding charges consisting of payments towards customs duties, transport charges, postage expenses, commission to the C&F agent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments made to agents towards transportation charges was outside the scope of TDS as per the provisions of section 194C(6) of the Act. The Ld.DR argued that there is no application of section 194C(6) of the Act in the assessee's case, hence the Ld.CIT(A) erred in deleting the addition. Similarly, in respect of payment made to the Shipping Agents, though the payments said to be paid for reimbursement of expenses, there is no evidence from the bills with regard to the ocean freight except a few bills. The assessee has not furnished the details before the AO. The bills furnished in the paper book also the do not indicate the nature of the payment, the purpose of the payments etc..except in few bills. The Ld.DR invited our attention to pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the tax at source on the payments made to the shipping agents. 6.1. The Ld.CIT(A) found that a sum of Rs. 33,76,446/- out of the payment made to Shipping Agents was incurred towards local transportation charges and the same are excludible from the purview of deduction of tax at source u/s 194C(6) of the Act and a sum of Rs. 1,23,43,259/- was paid towards the ocean freight and TDS is not deducted since the same constitute the reimbursement of expenses. Accordingly deleted the addition of Rs. 1,57,19,705/-. 6.2. As per the observations of the Ld.CIT(A), the assessee has paid to the shipping agencies a sum of Rs. 33,76,446/- towards the local transportation charges and the same does not attract the TDS u/s 194C(6) of the Act. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the transportation charges and the assessee has not taken the goods carriages for using them in the business of plying, hiring or leasing of goods carriages. The Ld.CIT(A) also did not give any finding regarding the number of vehicles owned by 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 fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished the copies of the bills issued by Shipping Agents but not supported the expenditure with relevant vouchers of payment of ocean freight either from Port Authorities or from the ship or from customs authorities. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
