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2017 (5) TMI 1359 - AT - Income TaxTDS u/s 195 - disallowance u/s 40(a)(i) - overriding effect of section 172 - freight paid to non-resident shipping companies - Held that:- any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act not being income chargeable under the head "Salaries", would have to deduct the tax thereon at the rates in force. - While considering levy and recovery of tax in case of business carried on with aid of any ship belonging to or chartered by a non-resident which carries passengers etc. shipped at a port in India, then, tax must be computed and recovered in relation to such business of non-resident as per section 172 of the Act. - there is no warrant in applying the provisions in chapter XVII for collection and recovery of the tax and its deduction at source vide section 195. Vide Finance Act, 2008, w.e.f. 1.4.2008 sub-Section (6) has been inserted in Section 195 which requires the payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by the Board. This provision is brought into force only from 1.4.2008. It will not apply for the period with which we are concerned in these cases before us We find that on the issue of the expenditure on so called commission and disallowance u/s 40(a)(i) of the Act, the Tribunal considered the decision in G.E. India Technology Centre Pvt. Ltd., CIT vs R.D. Agrawal & Co. (1964 (10) TMI 9 - SUPREME Court), Orient Goa Pvt. Ltd. (2009 (10) TMI 575 - Bombay High Court ), CST vs Indra Industries (2000 (1) TMI 44 - SUPREME Court), etc. and thereafter set-aside the matter to the file of the Assessing Officer for proper factual as well as legal determination. Both the parties before us agreed that on identical lines, the issue may be restored to the file of the ld. Assessing Officer. We may add here that ld. Assessing Officer is directed to consider Circular No.7/2009 (F.No.500/135/2007-FTD-I) dated 22/10/2009, wherein, earlier Circular No.23 dated 23/07/1969, No.163 Dated 29/05/1975 and Circular No.786 dated 07/02/2010 were withdrawn. The assessee be given opportunity to substantiate its claim. Thus, this ground is allowed for statistical purpose.
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