9911796707
TMI Blog2023 (1) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... ered u/s 196 of the Act and, therefore, the income of the Kolkata Port Trust was not chargeable to tax. That, therefore, the assessee cannot be deemed to be an assessee in default for non-deduction of TDS out of payments made to Kolkata Port Trust because there was no tax payable on the income of the said payee Kolkata Port Trust. The ld. counsel, in this respect, has relied upon the decision of the Coordinate Bench of the Tribunal in the case of M/s Gourishankar Bihani [ 2014 (12) TMI 1323 - ITAT KOLKATA] . The matter in respect of above contention is also restored to the file of the AO. The Ld. AO shall adjudicate upon the above contention by way of a speaking order. Payment made towards shipping company charges - CIT(A) has not given any detailed or factual finding as to which of the payees were foreign shipping companies or their agents. CIT(A) has simply relied upon the list given by the assessee without discussing as to which of the payees were resident companies and which of the payees were non-resident companies and no basis has been given for his such conclusion. In view of this, we agree with the contention of the ld. DR that this issue is also required to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges (CFS charges), plot rent and Dock charges. 3. The brief facts relating to the issue are that the assessee company is engaged in the business of transporting, arranging clearance of goods and other services meant for export and import for and on behalf of various customers. During the assessment proceedings, the Assessing Officer noted that the assessee company during the year had paid CFS charges to Emee Logistics Pvt. Ltd. amounting to Rs.2407539/-. The Assessing Officer noted that since the job done by the said payee was contractual in nature, therefore, the assessee was supposed to deduct TDS (Tax deduction at source) u/s 194C on the payments made to said concern. On being asked in this respect, the assessee could not furnish satisfactory explanation, therefore, the Assessing Officer disallowed the aforesaid expenditure and added the same to the income of the assessee u/s 40(a)(ia) of the Act. 4. In the first appeal, the ld. CIT(A) deleted the aforesaid addition made by the AO observing that the assessee was service provider and was engaged in the business of transporting, arranging clearance of goods and other Services meant for export and import for and on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as many as 10 factual mistakes in the impugned order of the CIT(A) that have been pointed out and rectified by the ld. CIT(A) vide order dated 31.12.2018. The ld. DR has further invited our attention to the impugned order of the CIT(A) to submit that the same has been passed in haphazard and hurried manner without proper application of mind and, therefore, so many mistakes have crept in the said order for which the rectification order dated 31.12.2018 has to be passed. On merits of the issue, the ld. CIT-DR has submitted that this is not a case of reimbursement of expenses and that the action of the CIT(A) in deleting the impugned additions is not justified. 6. The ld. AR, on the other hand, has relied upon certain case laws to submit that no TDS is liable to be deducted in case of an amount paid on account of reimbursement of expenses. 7. We have considered the rival submissions and gone through the records. Before proceeding further, it would be relevant to refer to the relevant provisions of section 194C at this stage: Payments to contractors. 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum. (7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed. Explanation.-For the purposes of this section,- (i) specified person shall mean,- (a) the Central Government or any State Government; or (b) any local authority; or (c) any corporation established by or under a Central, State or Provincial Act; or (d) any company; or (e) any co-operative society; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of credit of such sum to the account of the contractor. The assessee, being a company, falls within the definition and scope of specified person. In this case, the assessee had obtained the services of M/s Emee Logistics Pvt. Ltd. under a contract and paid the requisite charges of Rs.2407539/- to the said M/s Emee Logistics Pvt. Ltd. The case of the Ld. AR is that the assessee was reimbursed for the said expenditure incurred by the assessee by its client M/s Electrosteel Steels Ltd. who had engaged the assessee for the aforesaid services. The facts of the case suggest that there was a contract between M/s. Electrosteel Steels Ltd. and the assessee for carrying out aforesaid clearing and forwarding services for which the assessee further contracted/sub-contracted with M/s Emee Logistics Pvt. Ltd. The objective of the provisions of section 194C read with section 40(a)(ia) of the Act is that when a contractor is paid any amount, the payer is supposed to deduct TDS on such payment so as to ensure that payee should not go free without paying any taxes on its income. The main object and purpose of the aforesaid TDS provision is that the payee s income should not escape taxation. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying the same theory of reimbursement of expenses. However, in view of the above discussion and since the ld. counsel for the assessee could not bring before us as to how the reimbursement theory of expenses is applicable in respect of income assessable of respective payees, therefore, the order of the CIT(A) is not sustainable in respect of the above issues also. The impugned order of the CIT(A) on these issues is, therefore, set aside. 9. At this stage, the ld. counsel for the assessee, has brought to our attention to a plea taken before the CIT(A) that the assessee may not be treated as an assessee in default as per provisions to section 201 of the Act as the concerned payees i.e. M/s Emee Logistics Pvt. Ltd. and also the concerned recipients of plot rent and dock charges had taken into account the payment received from the assessee for the purpose of computation of their income and the income tax return duly filed by the said payees and due taxes paid thereupon. The ld. counsel for the assessee, in this respect, has submitted that the issue may be restored to the file of the Assessing Officer so that the assessee may produce the relevant evidences in this respect. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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