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2014 (8) TMI 1189 - ITAT BANGALORETDS u/s 194C - payment made to a resident for the services rendered - local agent of non-resident company has rendered services to the assessee - HELD THAT:- Agent of the foreign shipping company is only a conduit but the destination of the payment is the foreign shipping company and therefore, it is not liable to TDS provisions. Though the AO has observed that the local agent has rendered services to the assessee, his order is silent as to the nature of services rendered by the local agent of the foreign shipping company. The Board’s circular No.723 dated 19-91995,in force during the relevant assessment year, clearly provides that payments made to the shipping agent of non-resident ship-owners or charterers for carriage of passengers, etc., from the port in India is not liable for TDS u/s 194C and 195 of the Act. The Board’s circulars are binding on the Revenue authorities. Before disallowance u/s 40(a)(ia) of the Act, the AO ought to have examined and brought on record the nature of services rendered by the local agents of the non-resident company which he has failed to do so. Neither has the CIT(A) done this exercise. In view of the same, we deem it fit and proper to remit this issue to the file of the AO to re-consider the same in accordance with law and if it is found that the recipient of payment is only a local agent of the non-resident company and has not rendered any independent services but has received the payment on behalf of the non-resident company for the services rendered by the non-resident company, then no disallowance is required to be made. With these observations, the issue is remitted back to the AO for consideration in the light of our observations above. These grounds are accordingly allowed for statistical purposes. Claim of bad debt - disallowance on the ground that the same has not been written off in the books of account of the assessee - HELD THAT:- We find that there is a finding of the AO which is not disputed by the assessee that the bad debts have not been written off in its books of account for the relevant assessment year. In view of the same, the said claim is not allowable and the AO has rightly disallowed the same and brought to tax. As regards the assessee’s prayer to give a direction that the same may be considered in the next assessment year, we are not inclined to accept this contention, as a direction can be given only for the issues arising in the assessment of income for the relevant assessment year and not to any earlier or subsequent assessment year. It is for the assessee to make a claim and the AO to consider such a claim, if made, during the assessment proceedings of the relevant assessment year. In view of the same, these grounds of appeal are dismissed. Discrepancy in the valuation of closing stock both with regard to the quantum and the value as on 31-3-2005 - HELD THAT:- We find that the CIT(A) has also not verified the contention of the assessee and has merely confirmed the additions made on account of difference in the valuation of closing stock. We find that none of the authorities have, in fact, examined the contentions of the assessee and have not verified the explanation of the assessee with regard to the alleged discrepancies in the valuation of the closing stock. In view of the same, we are inclined to set aside the order of the CIT(A) as well as the order of the AO on this issue and remit the issue to the file of the AO for reconsideration in accordance with law. The AO shall allow the assessee to explain the discrepancies, if any, in the valuation of closing stock by giving a fair opportunity of hearing to the assessee. These grounds are thus allowed for statistical purposes.
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