Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 1299 - AT - Income TaxTDS u/s 192 OR 172 - disallowance u/s. 40(a)(ia) towards freight charges paid to agent of foreign shipping companies - as per assessee as per Circular No.723 of 1995 dated 19/9/1995 the provisions of section 194C and 195 will not apply in the case where recipient is assessed under section 172 - Held that:- As far as the binding nature of Circular issued by CBDT Cir. No.723 dated 19/9/1995 is concerned it is pertinent to note that the Circular and Instructions issued by the Board are binding on the taxing authorities and not on the Courts. Further, if the Hon'ble Supreme Court or Hon'ble High Court declares the law on the question arising for consideration then, it would not be appropriate for the Court or this Tribunal to direct the taxing authority to give effect to the Circular and not the view accepted in the decisions of the Courts. Thus, if under a particular provision, a legal question arises, and has been answered and explained by the Hon'ble High Court or Hon'ble Supreme Court then, the said explanation in the decisions of Hon'ble Supreme Court or Hon'ble High Court will be binding and not the Circular issued by the CBDT as held by the Larger Bench of Hon'ble Supreme Court in the case of Commissioner of Central Excise vs. Rattan Melting & Wire Industry (2008 (10) TMI 5 - SUPREME COURT OF INDIA). As per the 2nd proviso if the assessee failed to deduct the tax in accordance with Chapter XVII-B on any payment but is not deemed to be an assessee in default as per the first proviso to section 201(1) then for the purpose on this subclause it shall be deemed that the assessee has deducted and paid tax on such sum on the date of furnishing of return of income by the resident assessee. The decision of Hon'ble Supreme Court in the case of Hindustan Coca-cola Breweries (P) Ltd. (supra), was in respect of the payment to the resident payee and only on the point of liability under section 201(1) when the payee already paid the tax on such amount. The 2nd proviso to section 40(a)(ia) has made it clear that the benefit of payee having paid tax on such income is available only when the payee is resident. In the case in hand the payee is a non-resident, being a foreign shipping company, therefore, the 2nd proviso to section 40(a)(ia) as well as the first proviso to section 201(1) and 201(1A) are not applicable in such payments. Accordingly we do not agree with the alternative plea of the ld. AR Disallowance of transportation charges under section 40(a)(ia) - CIT(A) deleted the disallowance on the ground that the recipients have paid the tax on the transportation charges collected from the assessee and therefore, no TDS was required to be deducted - Held that:- It is apparent that the respondent assesse did not violate the unamended section 40(a)(ia). We have noted the ambiguity and referred their contention of Revenue and rejected the interpretation placed by them. The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support view taken that the expression “said due date” used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. Disallowance under section 40(a)(ia) in respect of maintenance charges - expenses on account of repair and maintenance not exceeding ₹ 20,000/- of individual bills - Held that:- We note that out of total expenditure of ₹ 92,700/- ₹ 51,000/- relates to the purchase of machinery parts, therefore, provisions of chapter XVII-B are not applicable so far as the expenditure relates to purchase of machinery parts. The remaining expenditure is comprising of several bills and the amount of one individual bills does not exceed ₹ 20,000/-. Accordingly we do not find any error or illegality in the impugned order of CIT(A). This ground of the revenue is disallowed. TDS on clearing and forwarding expenses under section 40(a)(ia) - addition on want of deduction of tax - grievance of the assessee before CIT(A) is only in respect of the amount of ₹ 4,19,505/- claimed to be reimbursement of expenses. The CIT(A) has accepted the said contention and allowed part claim - Held that:- As it is manifest from the record, that no such grievance was raised before CIT(A), and further, the fresh plea raised before this Tribunal required the finding of fact, whether any contract between the parties did exist or not. Even otherwise the payment of service charges to C&F agent is based on agreed rate/charges which constitute an agreement between the parties. Accordingly in the facts and circumstances of the case we do not find any merit or substance in the cross objection of the assessee hence, the same is dismissed.
|