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2018 (7) TMI 132 - AT - Income TaxTDS u/s 195 - Disallowance on account of non-deduction of TDS on airfreight - amount paid (reimbursed) to the nonresident agents was on behalf of non-resident shipping company or non-resident airline company - violation of the provisions of Section 44B r.w.s. 172 as well as 44BBA - Held that:- It is clear that assessee-company made payments on behalf of its clients as Clearing and Forwarding Agent which were reimbursed to the assessee-company. The assessee-company did not make claim of deduction in the P & L A/c. Similar claim of assessee-company has been allowed in earlier and subsequent year, therefore, rule of consistency do apply to the income tax proceedings. There were no justification for the authorities below to take a different view on same set of facts. Even no action have been taken while scrutinizing the issue of TDS against the assessee-company. The assessee-company has not violated the provisions of Section 44B r.w.s. 172 as well as 44BBA. Since, under the domestic Law as well as under DTAA, the income received by non-resident airline/shipping companies or their Agents, are not taxable in India, therefore, assessee is not liable to deduct TDS. In this view of the matter, we set aside the orders of the authorities below and delete the entire addition. Scope of auditor's opinion - The opinion of the Auditor is not conclusive because the issue shall have to be considered and decided as per Law. Further, the assessee-company has filed the revised audit report to clarify the above position. Disallowance u/s 40A(3) - Held that:- There is an amendment in Rule 6DD of I.T. Rules as is noted by the Ld. CIT(A), but in Section 40A(3) itself, an exception is provided on account of nature and extent of banking facilities available, consideration of business expediency and other relevant factors. It is not in dispute that assessee-company was engaged in the business of Clearing and Forwarding Agent and acted on behalf of other companies. The amounts in question have been tabulated in the assessment order. These payments are made to airline companies. The nature of business of assessee-company and the agency carried on by the assessee-company on behalf of others, clearly shows that for business expediency in the line of business of assesseecompany, some times cash payments are made to complete the work on behalf of Principal. The assessee-company, under such compelling reasons, shall have to make payments in cash on account of urgent need. The authorities below have not doubted the identity of the payee and the genuineness of the transaction in the matter. We, accordingly, set aside the orders of the authorities below and delete the addition. Assessee appeal allowed.
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