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TMI Blog2019 (11) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... with different purposes and objects and certainly not to displace the merchandize to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J TDS not deductible from payments made to custom house agents on account of reimbursement of clearing and forwarding - CIT (Appeals) giving relief to the assessee by holding that TDS is not deductible on supply of Cameras manufactured by Hical Magnetic Private Limited by treating the same as contract for sale - HELD THAT:- As decided in own case [ 2013 (5) TMI 154 - ITAT MUMBAI] the procurement of the raw material is also arranged by the assessee as per the tripartite agreement Thus, it is nothing but a job work contract under these two agreements. Further the assessee is paying the entire cost in advance being working capital and compensation with the margin on cost of raw material and labor at the rate of ₹ 8.04 per Camera to Hical which is nothing hut the job work charges. The price arrangement as agreed between the parties clearly shows that it is a job work of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon order. 3. One common issue raised in assessee s appeals relate to the order of the authorities below that the payment made to Matrix India on behalf of Ms. R.K. Kaif required withholding under section 194J. 4. Upon hearing both the counsel and perusing the records, it transpires that this issue stands covered in favour of the assessee by the decision of this Tribunal in assessee s own case for Assessment Year 2009 10, ITA No. 9080/M/2010 vide order dated 20/2/2013. The Tribunal by an elaborate order has concluded that the TDS officer was incorrect in holding that tax was required to be deducted at 11.33%. The Tribunal concluded that the impugned payments made by the assessee to Matrix India on behalf of Ms. Katarina Kaif do not attract the provisions of section 19 4J. Accordingly the ground raised was allowed. We may refer to the concluding portion in the said order as under:- 18. In the light of the above legal scope we need to examine, if the services, the modeling, rendered by Ms. Katrina Kaif in this case constitutes professional service and the fee paid to her for modeling with the purpose of marketing of the camera pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case, the payments are payable for the 'services of modeling .and it is unconnected .with the production of cinematographic film. While 'modeling' is aimed at display of merchandise, the 'acting' is defined as to act in play or film www.freedictionaty.com) i.e. to portray a role authored by a story-writer with different purposes and objects and certainly not to displace the merchandize to boost the sales of a manufacturer or a trader of the product or services. Therefore, the impugned payments made by the assessee to Matrix India on behalf of Ms Katrina Kaif do not attract the provisions of section 194J of the Act. Accordingly, the grounds raised are allowed. Respectfully following the aforesaid decision, we decide this issue in favour of the assessee. 5. One common issue raised in Revenue s appeal is that learned CIT(A) erred in giving relief to the assessee by holding that TDS is not deductible from payments made to custom house agents on account of reimbursement of clearing and forwarding. 6. Brief facts of the case are that during the previous years relevant to assessment years under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 The AO has also raised demand of tax and interest in respect of clearing charges paid by the appellant on account of short deduction in AY 2007-08. Such demand has been raised by the AO, by applying the provisions of section 194C of the Act. The appellant has submitted a chart as above clarifying the figures of tax deduction at source in this regard and has claimed that the AO has not taken the correct figures. However, it is seen that there are four parties who have worked as CHAs of the appellant and in AY 2008-09, the appellant has deducted tax at source at a uniform rate of 5.66% under the provisions of section 194H. However, in AY 2007-08, the tax has been deducted in respect of the first two parties under section 194H, whereas the Lax has been deducted under section 194C of the Act in respect of the later two parties This aspect has not been explained by the appellant as to why in respect of the later two parties i.e. DHL Express (I) Pvt. Ltd and International Clearing Shipping, two different sections and two different rates have been applied for tax deduction at source in AY 2007-08 and AY 2008^09. Therefore no further relief can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee or by the agent. Failure to deduct tax for such payment at any stage either by die agent or by the assessee would attract the provisions of section 201(l) and 201(1A). If this modus operandi is allowed then in each and every payment which otherwise attracts the TDS can be given a colour of reimbursement of making the payment through intermediatory and consequently circumvent the provisions of TDS. The real fact is that the payment is made for and on behalf of the assessee by the agent and, therefore, the same would he considered as payment made by the assessee to the third party for the purpose of TDS provisions under chapter XVII of the Act. The decision relied upon by the Ld. Authorised Representative in case of CIT v/s Siemens Aktiongesellschaft (supra) as well as S.s. Co. Octroi Contractors Vs. State of Punjab Ors. (supra) do not apply to the facts of the present case when it is not a real reimbursement of the expenses to the agent but is a payment to the third party through the agent. Accordingly in view of the above discussion and facts and circumstances of the case, we set aside the order of CIT(A) and restore the order of Assessing Officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer was restored. We may refer to the said order as under:- 18. The recital of the tripartite agreement reads as under:- a) Kodak has supplied certain tools moulds more particularly described in annexure A hereto (hereinafter quipments ) to the Supplier for carrying out job work for camera as per the requirements of the Kodak. b) Kodak and Hical have entered into an Agreement whereby Hical will supply to Kodak KB-10 Cameras as per the specifications of Kodak. c) Hical has undertaken to supply to Kodak KB10 Cameras as per requirements of Kodak. d) Supplier has agreed to use the tools and moulds owned by Kodak for the purpose of supply of camera parts to Hical. 19. Thus, as per the arrangement between the parties, the assessee supplied tool/moulds to the supplier for carrying out job work for camera parts as per requirements of the assessee. These Camera Paris were supplied to the Hical Magnetic Pvt. Ltd. for assembling of Camera. It is clear that the job work for camera parts used as a raw material for assembling of the camera by Hical Magnetic Pvt. Ltd. is arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angement as agreed between the parties clearly shows that it is a job work of assembling of cameras by Hical Magnetic Pvt. Ltd The Hical Magnetic Pvt. Ltd. in fact, receiving only the Iabor charges and mark up of ₹ 8.04 per camera which is subjected to TDS being job work charges paid by assesses. Therefore, it is not the entire payment to the Hical Magnetic Pvt. Ltd. but only the labor charges of ₹ 20.84 and margin of ₹ 5.04 total amounting to ₹ 20.8H per camera towards the assembling job is subjected to TDS. Accordingly, we set aside the impugned order of CJT[A) on this issue and restore the order of Assessing Officer to the extent of applicability of section 194C only on the payment of ₹ 2Q.88 per camera. The decision relied upon by the CIT(A) in the case of CJT Vs Glenmark Pharmaccuticals (supra) is not relevant on the facts of this issue when the arrangement is found to be work contract. 12. In this regard learned counsel of the assessee has vehemently argued that the said decision of the ITAT was rendered on an erroneous recording of facts and erroneous inferences drawn from such facts. 13. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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