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TMI Blog2014 (8) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year, clearly provides that payments made to the shipping agent of non-resident ship-owners or charterers for carriage of passengers, etc., from the port in India is not liable for TDS u/s 194C and 195 of the Act. The Board s circulars are binding on the Revenue authorities. Before disallowance u/s 40(a)(ia) of the Act, the AO ought to have examined and brought on record the nature of services rendered by the local agents of the non-resident company which he has failed to do so. Neither has the CIT(A) done this exercise. In view of the same, we deem it fit and proper to remit this issue to the file of the AO to re-consider the same in accordance with law and if it is found that the recipient of payment is only a local agent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as on 31-3-2005 - HELD THAT:- We find that the CIT(A) has also not verified the contention of the assessee and has merely confirmed the additions made on account of difference in the valuation of closing stock. We find that none of the authorities have, in fact, examined the contentions of the assessee and have not verified the explanation of the assessee with regard to the alleged discrepancies in the valuation of the closing stock. In view of the same, we are inclined to set aside the order of the CIT(A) as well as the order of the AO on this issue and remit the issue to the file of the AO for reconsideration in accordance with law. The AO shall allow the assessee to explain the discrepancies, if any, in the valuation of closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to explain as to whether the assessee has deducted tax at source on these payments. The assessee replied that the provisions of TDS are not applicable to the nature of the transaction due to which no TDS was made. The assessee also filed a letter dated 7-7-2007 claiming that by virtue of Board s circular No.723 dated 19-9-1995, tax was not deductible at source. The assessee also placed reliance upon the decision of the Hon ble High Court of Delhi in the case of CIT vs. Continental Carriers (P) Ltd., reported in (2007) (18) (1) ITCL 322 wherein the Hon ble High Court confirmed the view of the CIT(A) and the Tribunal that payments made to resident agents or sub-agents of the foreign shipping companies do not attract TDS u/s 194C of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment was only the foreign shipping company and in these circumstances the assessee had no obligation to deduct tax at source. Further, the learned counsel for the assessee has also drawn our attention to the Board s circular No.723 dated 19-9-1995 wherein at para 5 thereof it was observed that where payments are made to shipping agents of non-resident ship owners or charterers for carriage of passengers etc., shipped at a port in India, since the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal and accordingly the provisions of sec.172 shall apply and those of sec.194C and 195 will not apply. He has also drawn our attention to the copies of the invoices which are placed at pages 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the Revenue authorities. Before disallowance u/s 40(a)(ia) of the Act, the AO ought to have examined and brought on record the nature of services rendered by the local agents of the non-resident company which he has failed to do so. Neither has the CIT(A) done this exercise. In view of the same, we deem it fit and proper to remit this issue to the file of the AO to re-consider the same in accordance with law and if it is found that the recipient of payment is only a local agent of the non-resident company and has not rendered any independent services but has received the payment on behalf of the non-resident company for the services rendered by the non-resident company, then no disallowance is required to be made. With these observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent assessment year. It is for the assessee to make a claim and the AO to consider such a claim, if made, during the assessment proceedings of the relevant assessment year. In view of the same, these grounds of appeal are dismissed. 9. As regards ground Nos.8 to 11 are concerned, the learned counsel for the assessee submitted that the AO, in the assessment proceedings, has observed that there is discrepancy in the valuation of closing stock both with regard to the quantum and the value as on 31-3-2005, but that the assessee has all the relevant material to reconcile the said discrepancy and submitted that there is no discrepancy at all. He has also drawn our attention to the chart reproduced at page 7 of the assessment order wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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