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2011 (11) TMI 682 - AT - Income TaxTDS u/s 194C - Disallowance u/s 40(a)(ia) - non tds on direct expenses include the freight paid - Held that:- As the present assessee, who is carrying on the business of clearing and forwarding agents, is not a person responsible for deducting the tax at source in terms of sec. 194C of the Act in as much as the assessee is only an intermediary between the exporters and the shipping lines and it merely facilitates the contract for carrying the goods. Since the assessee was not a person responsible for deduction of tax at source in terms of sec. 194C of the Act, the question of failure on the part of the assessee to deduct tax at source from the payment made to shipping lines for and on behalf of its client would not arise, and, consequently, provisions of sec. 40(a)(ia) cannot be invoked in respect of the payment made by the assessee to shipping lines for and on behalf of assessee’s client i.e. ultimate exporter or importer. We, therefore, reverse the order of authorities below and delete the disallowance made u/s 40(a)(ia) of the Act by the AO. - Decided in favour of assessee.
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