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TMI Blog2018 (10) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... f any income or profit element embedded therein do not attract TDS liability. It has come on record that the AO had also not followed tribunal’s decision applying CBDT’s circular No.723 instead of Circular No.715 (supra) in violation of settled judicial discipline of binding precedents in absence of any judicial precedent to the contrary. We take into account all these facts and settled legal position in light of voluminous documentary evidence that the AO has erred in treating the instant taxpayer to be an assessee in default u/s 201(1) of the Act. We accordingly accept assessee’s latter substantive ground to reverse the Assessing Officer’s action in entirety. X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction was in the nature of fees for technical services covered u/s. 194J. The pp has not contradicted the above observations and has claimed that the transactions was not a Works Contract. In fact it has only submitted a copy of the order dated 26.12.2011 placed by the Appellant with Eviro Systems and equipment but not the quotation/offer or Invoice of the supplier, therefore the terms and conditions of the Order are not evident. In view of the same, it is seen that the appellant has not been able to contradict the findings of the AO that the payment was towards fees for technical services, here the onus is on the Appellant to establish that it was not liable for TDS, which has not been satisfactorily discharged. Accordingly its submissions cannot be accepted and the demand raised by the AO for non-deduction of TDS is confirmed." 3. We have given our thoughtful consideration to rival contentions. There can hardly be any dispute about the assessee having made the impugned payments in lieu of acquiring its air pollution control system from the payee party. The Revenue case before us is that same attracts u/s 194J of the Act since in the nature of fee for technical service requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹23,61,604/-and ₹7,08,481/-; respectively. The CIT(A) has granted part relief to the assessee as follows:- "4.2 The submissions of the Appellant have been considered. It is seen that the survey u/s. 133A had been conducted on the premises of the appellant on 03.-3-2014, consequent to which the AO has held in his order u/s. 201(1)(201(1A) that the appellant was liable for non-deduction of tax on Ocean Freight payment of ₹ 11,67,49,537/-. IT has been explained in appeal that the app is a manufacturer of various products Aluminium sheets, corrugated sheets galvanized sheets, etc. and in the course of business it incurs expenditure towards Ocean/Sea Freight and it has the modus operandi which has been explained as under:- i. 'The appellant company requests the agents of Non Resident Shipping Companies (NRSCs) for their quotation of Sea Freight for various locations on monthly basis. ii. On receipt of quotations from agent of different NCCs, the Appellant negotiates with those agents and finalizes the freight rates over email. iii. Thereafter, the appellant informs the forwarders to place the container requisitions with the agents of NRSC. iv. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Forwarder on the appellant is for the amount charged by agents of NRSC and there is no element of income in it. Forwarders get commission of 2% from agents of NRSC and nothing from the appellant. Whereas in case of other exporters, forwarder also retains the differential between freight rate finalized by forwarder with agents of NRSC and the freight charged by forwarder to the exporters. Normally other exporters get B/L (Bill of Lading) only after making payment of Sea Freight, whereas the appellant makes payment to forwarder a few days after getting B/L from Forwarder. It is also explained that the Forwarders are making payment to agents of NRSC prior to collecting B/L from the Appellant and that Forwarders collect B/L an make payment of Sea freight to NRSC, after which they raise invoices for reimbursements. Forwarders arrange containers from the agents of NRC as per requirement on the desired day and after collecting pick up letter, they send the same to the appellant for picking up the containers. Thus, Forwarders only act as facilitator or agents of NRSCs being authorized by them to do so. 4.2.1 The AO has not accepted the appellant's explanation that the payments are exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harters, he receives payments primarily on behalf of his principal i.e., non-resident ship owners or ships charters shipped at a port in India. In our opinion, even if these amounts are inclusive of small element of the amounts that ultimately may be going into his own pocket or any of resident account of demurrage or handling charge or any amount of similar nature, it will be covered by sub-section (8) of section 172 inasmuch the circular does not draw any distinction between a dry port and a sea port. Thus, as per provisions of section 172(8) the inland haulage charges are also covered under this provision of law and, hence, no deduction of tax is called under section 194C of the Act. We are further of the opinion that such an interpretation is also fair because the dry ports or ICD's are treated at par with the regular ports. Hence, the contradictory stand taken by the Assessing Officer i.e., when he included certain charges in freight in respect of movement of goods by road at the destination contrary by the shipping line such charges are deemed to be covered under section 172, but when the same shipping line or their agents take charges for transportation from ICD, where g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to take on record. The said documents as part of case file. 6. We now advert to assessee's grievance first of all. It has come on record as per the relevant material in the case file that its impugned payments are in the nature of mere reimbursements not involving income or profit element as per the payees' declarations contained in their respective 26AS statements. Pages 51 to 73 in the paper book indicate that such reimbursements coupled with bills of expenses. We find similar invoices at pages 9 to 22 and 26 to 167 revealing the identical facts. We make it clear that the Assessing Officer had been granted sufficient opportunities to examine these reimbursements component during remand proceedings by the CIT(A). Various judicial precedent CIT vs. Opera Global (P) Ltd. 109 DTR 121 (Del) as well as tribunal's in Income Tax Officer vs. Dr. Willmar Schwabe India (P) Ltd [2005] 95 TTJ 53 (Del); ACIT vs. Dakshin Haryana Bijli Vitran Nigam Ltd. 59 SOT 133 (Del); Nature Bio Foods Ltd. vs. ACIT 35 CCH 384 (Del); ACIT Vs. Galaxy Exports 36 CCH 326 (Jdh) Mamta Machinery Pvt. Ltd. vs. DCIT 37 CCH 376 (Ahd) and Madhu Mehta vs. DCIT 48 ITR (trib) 246 (Mum) showed that mere reimbursement pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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