TMI Blog2014 (1) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... for shipping line, concor charges, examination charges, custom sealing charges, unloading, chocking, shifting, labour charges etc. As per Board circular No.723 dated 19.09.1995 - In case of any ship belonging to or chartered by a non resident which carries passenger, livestock, material or goods shipped at a port in India, the provisions of section 172 of the IT Act would apply and no deduction of tax is required as per section 194C of the IT Act. It is also clarified that since the agent acts on behalf of the non- resident ship owners or charterer, he steps into the shoes of the principal and accordingly, provisions of section 194C of the IT Act would not apply in the case of the assessee - Decided against Revenue. - ITA No. 253 & 254/Jodh/2012 - - - Dated:- 12-12-2013 - Shri Hari Om Maratha And Shri N. K. Saini,JJ. For the Petitioner : Shri N. A. Joshi, D.R. For the Respondent : None ORDER Per Bench These two appeals by the department are directed against the orders dated 23.03.2012 and 26.03.2012 of Ld. CIT(A), Udaipur for the assessment years 2005-06 and 2007-08. Since the issue involved in these appeals are common having similar facts and the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the impugned order. For the cost of repetition, the same is not reproduced herein. 6. The Ld. CIT(A) asked the remand report from the Assessing Officer, who submitted vide report dated 11/11/2011 as under:- "In this regard, it is submitted that the additional evidences produced by the assessee may not be accepted because:- i) the A.O. has not refused admit evidence which ought to have been admitted. ii) the assessee was not prevented by sufficient cause from producing the evidence which was called upon to produce by the Assessing Officer. Here it is submitted that as per the order sheet entry the A/R, of the assessee was agreed for the disallowance under section 40(a)(ia). iii) The assessee was not prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal. iv) The A.O. has made the order by giving sufficient opportunity to the assessee. Hence additional evidences produced by the assessee at the appellate stage may not be accepted. 2. In compliance of letter No. 1116 inquiries have been made from M/s. Krishna Clearing Agency, Gandhi Dham, Kuchh, M/s. Ashirwad Clearing Agencies Ahamedabad and M/s. A.KL Biswa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of tax has been made the same are not allowable u/s 40(a)(ia). It means the same was available for verification by the then Id. AO. The appellant-assessee only produced copies of debit notes for expenses, bills of agents, ledger account, export bills, etc. for reverification of the appellate authority that cannot by itself lead to the inference that the same are additional evidences. (iii) In CIT v. Poddar Swadesh Udyog (P) Ltd. (2007) 295 ITR 252 (Gau), it has been held that CIT (A) does not appear to have committed any error in law in relying upon the documents filed subsequently at the appellate stage, which are in continuation of the books of account and other documents filed before the AO. Without prejudice, it is submitted that in any case, the data was emanating from the regular books of account produced before the Id. AO. (iv) It is respectfully submitted that the sub-rule (2) of Rule 46A requires the first appellate authority to allow the AO, a further opportunity to rebut the fresh evidence filed by the assessee and as such, the same has not caused any damage or prejudice to the case of the AO in real terms, when he has been provided such opportunity. Otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second para of the remand report is self-explicit and needs no comment as the Id. AO has not disputed the same. The Id. AO himself has confirmed that he received responses from two C F agents whereas one such party has left. 03. As to the third para, it is submitted that there is no issue of not producing these evidences during the course of assessment proceedings for the reasons already stated in para no. 01, supra. The Id. AO without going into merits of the case, stated that since the assessee debited all the amount under the head 'clearing forwarding expenses', the same are liable to deduction of tax at source. It is reiterated that the C F agent incur certain expenses on behalf of the assessee, which are reimbursed to him upon submission of debit notes to the assessee. The C F agents, on behalf of the assessee, make payment and raise separate debit notes for reimbursement of expenses incurred on behalf of the assessee and also separate invoices for agency charges are raised. Therefore, the provisions of Section 194C are not attracted on such payments made. It is further stated that Section 194C speaks of the payments to 'residents' only and the shipowners are not a 'resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments made to Clearing and Forwarding agents on which tax was supposed to be deducted as per the provisions of section 194C of the I.T. Act and had not been done so. The total amount on which tax was supposed to be deducted was Rs.40, l8,077. The appellant has explained that the appellant has conditionally conceded on point of law that if any tax deductible under section 194C on the payments made to C F Agents and failed to do so, then disallowance of expenses may be made. This involves an issue of law whether payments made by the appellant were liable for deduction of tax under section 194C or not. The right of the appellant has to be determined on true interpretation of law and the assessee can be taxed as per the authority of the law only. The appellant has relied on the decision in the case of Chhat Mull Aggarwal V. CIT 8 CTR (P H) 368 where the assessee had agreed to the addition in the income and it has been held that the provisions of section 246(1)( c ) entitle an assessee to file an appeal against the order of the ITO before the AAC where the assessee denied his liability to be assessed under the Act. It is a different matter, if the AAC comes to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for the services provided by the said C F agents. In the amount reimbursed to the C F. agent no element of income is embedded in such payment and in this regard, the appellant has placed reliance on the decision in the case of ACIT Vs. Grandprix Fab (P)Ltd -128 TTJ (Del) 60, Utility Power Tech. Ltd Vs.ACIT -2010- TIOL 545-ITAT, Mumbai. The appellant has given the details of amount paid as reimbursement of expenses of Rs.39,52,331 in his submission and agency charges of Rs.1,49,547 as mentioned supra on page 10 of this order. In support of the claim, the appellant has also submitted separate bills for agency commission paid to the C F Agents and debit note regarding the reimbursement of expenses incurred by the C F Agents on behalf of the assessee for export of goods. In view of above, it is apparent that the above amount represent reimbursement of expenses to C F. agents and these expenses were incurred for shipping line, concor charges, examination charges, custom sealing charges, unloading, chocking, shifting, labour charges etc. for which the C F agent has issued debit note. In view of above facts, it is apparent that the above mentioned expenses represent reimburseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Circle-l,Uduipur Vs. Pyroech Electronics Pvt. Ltd in ITA No.390/Jodh/2010 for assessment year 2007-08 vide order dated 16.12.2011 where payment of Rs.8,66,365 on account of reimbursement was held allowable without tax deduction at source under section 194C read with section 40(a)(ia) as under:- "After considering the submissions and perusing the material on record, we find that the Id. CIT (A) was justified in allowing the claim of the assessee on account of that these payments were on account of reimbursement of expenditure which do not constitute any income in the hands of payee. Similar view has been expressed by Honourable Delhi High Court in the case of Grandprix Fab Pvt.Ltd, 34 DTK 248. Therefore, we are of the view that Id. CIT (A) was justified in holding that on account of reimbursement of expenses no liability was there under section 194C". In the case of the appellant, the appellant has made payments are as under: Name of C F Agent Reimbursement of expenses (Rs.) Agency charge (Rs.) Payment ' (Rs.) Paid/credited to the account of M/s Ashirwad Clearing Agency 1846622/- 77760/- 1924382/- Paid/credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shifting charges Rs,49,666 Labour charges Rs.43,189 Other Rs.92,851 Rs.39,52,331 Agency charge Rs. 149547 Total Rs. 41,01,878 The main expenses are concor charges and shipping line charges. In support of the claim that these expenses fall in category of expenses mentioned under section 172(8), the appellant has relied on the decision in the case of ITO Vs. Freight Systems (India) (P)Ltd -103 TTJ (Del) 103 where it has been held that payments of ocean freight and inland haulage charges paid by the assessee through the person acting as C F agent cannot be subjected to TDS by virtue of section 172 of the Act and circular No.723 dated 19.09.1995. In the assessee's case also, payments are on account of ocean freight and concor charges through their agent of shipping line for which debit note have been placed on record. Moreover, the jurisdictional ITAT, Jodhpur Bench, Jodhpur has allowed the appeal of the assessee in the case of ACIT, Circle-l,Udaiur VS M/s. Minpro Industries ITA No.394/Jodh/2008 order dated 09.12,2011 allowed ocean freight , REPO charges, CCI charges, Terminal Handling charges, bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been mentioned by the appellant as well as in assessment order that books of account and vouchers and details were produced during the assessment proceedings and it has not been pointed out by the A.O. specifically required the said bills in support of the details of clearing and forwarding expense before making the disallowance stating it said to be on agreed basis. In view of above, the evidence is admitted under Rule 46A(3), Rule 46A(4) and the issue is decided on merit considering the report of the A.O. and submissions made by the appellant thereon. As regarding the merits, the AO has obtained copy of bills, debit notes and copy of ledger account from M/s. Ashirwad Trading Agency and M/s. Krishna Clearing Agency while M/s. A.K. Biswas had left and the AO mentioned that assessee himself is debiting the above amount in clearing forwarding expenses a/c and M/s. Krishna Clearing Agency has also credited the agency commission a/c for the total amount. The appellant has reiterated that copy of bills as well as the debit notes obtained by the AO directly from the above parties show that expenses have been reimbursed for the debit notes are not liable for TDS u/s. 194C. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger, livestock, material or goods shipped at a port in India. It has nothing to do with the activity carried out by the assessee. The Board circular No.723 (supra) clarifies both the provisions of section 172 of the IT Act and section 194C of the I.T Act and it is provided that in such case the provisions of section 172 of the IT Act would apply and no deduction of tax is required as per section 194C of the IT Act. It is also clarified that since the agent acts on behalf of the non- resident ship owners or charterer, he steps into the shoes of the principal and accordingly, provisions of section 194C of the IT Act would not apply in the case of the assessee. The AO has also not made out any case that the assessee has paid any amount to the residents. Therefore, provisions of section 194C of the IT act have been wrongly applied in the case of the assessee. The learned CIT (A) was, therefore not justified in remanding the matter to the file of the AO for verification of the details of expenses and deposit of the tax. The direction given by the learned CIT(A) is contrary to the above provisions of law. In view of the above, discussions, we do not approve the findings of the authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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