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TMI Blog2023 (3) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no error in the reasons given by the AO and the CIT(A) to make addition towards disallowance of C F charges u/s. 40(a)(ia) of the Act. As decided in case of Prahari Agency Private Limited [ 2021 (11) TMI 82 - ITAT CHENNAI] where it has been held that TDS is applicable u/s. 194C of the Act, for C F charges and for non-deduction of TDS, expenses can be disallowed u/s. 40(a)(ia). Alternate plea of the assessee for disallowance of 30% in light of amendment to section 40(a)(ia) of the Act, by the Finance Act, 2014 w.e.f. 01.04.2015 - We find that said amendment is considered to be prospective in nature from assessment year 2015-16 onwards and thus, it is not applicable for the impugned assessment year as held in the case of Shri. Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] where it has been clearly held that amendment to section 40(a)(ia) of the Act, is prospective in nature which cannot be applied for retrospective purpose. Therefore, we are of the considered view that there is no merit in the alternate plea taken by the assessee and thus, same is rejected. Appeal filed by the assessee is partly allowed. - ITA No. 413/Chny/2020 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any bills and vouchers. Therefore, the AO has disallowed a sum of Rs. 5,05,756/- towards clearing and forwarding expenses. The assessee has paid an amount of Rs. 6,43,294/- to M/s. Surya Logistics and Rs. 31,56,804/- to M/s. SK Logistics. The assessee did not deduct TDS as per provisions of section 194C of the Income-tax Act, 1961 (hereinafter referred to as the Act ) on payment made to both the parties for clearing and forwarding expenses. Therefore, the AO called upon the assessee to explain as to why expenses cannot be disallowed u/s. 40(a)(ia) of the Act. In response, the assessee submitted that he had paid clearing and forwarding charges to C F agents which includes reimbursement of various expenses incurred by them on our behalf and their service charges. Since, majority of payment is towards reimbursement of expenses, provisions of section 194C cannot be applied. The AO, however was not convinced with explanation furnished by the assessee and according to the AO, provisions of section 194C is applicable when payment is made to clearing and forwarding agent for carrying of goods and such payments are subjected to TDS as per section 194C of the Act. The AO had also taken supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is nothing on record to controvert the findings made by the Assessing Officer. I have considered the assessment order, the grounds taken by the appellant in this appeal. In my considered opinion, in the absence of any documentary evidence to the contrary, the grounds taken in this appeal are not maintainable and are therefore dismissed and the order of the Assessing Officer is confirmed. 5. The Ld. Counsel for the assessee, submitted that the Ld. CIT(A) erred in disallowing a sum of Rs. 5,05,756/- for nonfurnishing of bills and vouchers without appreciating fact that when assessee has produced bills and vouchers for majority of expenses, he ought not to have disallowed part of expenses for non-furnishing of supporting evidences. The ld. Counsel for the assessee, submitted that the ld. CIT(A) erred in upholding the findings of the AO in applying the provisions of section 194C and consequently disallowed expenditure u/s. 40(a)(ia) of the Act, without appreciating fact that what was paid by the assessee to C F agents represents reimbursement of various expenses incurred on behalf of the assessee to various shipping companies and said payment does not come under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing and forwarding services, which in our considered view is definitely a contract in terms of provisions of section 194C of the Act and thus, the assessee ought to have deduct TDS, when payment is made to C F agents because the assessee is a person responsible for making payment for rendering services. Therefore, we are of the considered view that, there is no error in the reasons given by the AO and the CIT(A) to make addition towards disallowance of C F charges u/s. 40(a)(ia) of the Act. 9. Further, an identical issue had been considered by coordinate bench of ITAT in the case of Prahari Agency Private Limited vs ITO in ITA No. 1701/Chny/2018, where it has been held that TDS is applicable u/s. 194C of the Act, for C F charges and for non-deduction of TDS, expenses can be disallowed u/s. 40(a)(ia) of the Act. The relevant findings of the Tribunal are as under: 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The assessee is in the business of clearing agent, has rendered services to their clients and made direct payment to shipping companies/CFS Agents for services rendered to their clients. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g payments the person who makes the payments should deduct TDS on such payments. In this case, since, the assessee has availed services for their clients and also payments have been made by the assessee directly to the shipping companies/CFS Agents. Therefore, in our considered view, the assessee ought to have deducted TDS on such payments. The arguments of the assessee that if at all tax has to be deducted, it shall be deducted by its client but not the assessee is also not correct, because, service provider does not have had an occasion to deduct TDS. In fact payment made by the assessee to shipping companies is reimbursement in the hands of the clients and thus, there may be no occasion for the recipient of services to withhold tax on such payments. The concept of reimbursement of expenses will come into operation only when someone made payments on behalf of the assessee and assessee reimburse such expenditure. In this case, it is not so. In fact, the assessee has made payments on behalf of their clients and thus it is reimbursement for their client. In our view, the assessee being a payer directly to the shipping companies/CFS Agents ought to have deducted TDS while making the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt, the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. assessment year 2013-2014 held to be retrospective effect from the date of insertion of provisions of section 40(a)(ia) of the Act. But, to apply such provisions, the assessee shall comply with certain conditions as per which it has to obtain a certificate from an Accountant in prescribed Form No. 26A stating that the recipient of such sum have filed return of income u/s. 139 of the Act and also has taken in to account such sums for computing income in such return of income. In this case, the assessee has failed to obtain Form No. 26A and file before the AO and CIT(A) to give the benefit of proviso to section 40(a)(ia) of the Act, and said lapse is continued even before us. Before us, the assessee could not file any Form no 26A obtained from its clients nor filed their ITR copies to prove that the recipients have included sum paid by the assessee in their income tax returns. Therefore, we are of the considered view that there is no merit in alternate ground taken by the assessee and hence, the same is rejected. 10. In this view of the matter and by considering facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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