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2019 (4) TMI 1431 - AT - Income TaxDisallowance u/s 40(a)(ia) - Wharfage charges paid to Maharashtra Maritime Board - TDS u/s 194I - whether Wharfage fees is akin to rent as described in section 194-I or is akin to duty or cess - deduction u/s 37(1) - as per revenue, ‘land’ includes water and since Wharfage charges are paid for utilizing water space, the assessee was obliged to deduct TDS - HELD THAT:- We hold that Wharfage charges paid by the assessee which are charged on the basis of weight of the ship and not in a mechanical manner, cannot be equated to be a charge for ‘rent’ for use of water. The Hon'ble Supreme Court in the case of Japan Airlines Co. Ltd. Vs. CIT and CIT Vs. Singapore Airlines Ltd. [2015 (8) TMI 185 - SUPREME COURT] had also referred to the definition of ‘rent’ and whether the assessee airlines which was landing and paying parking charges to the Airport Authority of India for facility at an airport can be held to be to have paid the amount for simple use of land and hence, liable for deduction of tax at source. Payment was for services and facilities in connection with aircraft operations at the airport in accordance with international protocols and the Airport Authority was providing these facilities for landing and takeoff of aircrafts and in the whole process, use of land was incidental. On the contrary, where the protocol prescribe detailed methodology for fixing these charges, the charges were not for use of land perse and therefore, could not be treated as ‘rent’ within meaning of section 194-I. Applying the ratio to the facts of present case, in view of the dictate of the Apex Court (supra), we hold that Wharfage charges paid by assessee are charges which facilitate the loading / unloading of goods at waterfront and for providing facilities, Wharfage charges are charged from the assessee and in such case, we hold that there is no use of land but even if it was held that there is any use of land, then the same was incidental but such payments could not be treated as ‘rent’ and the assessee be liable to deduct tax at source under section 194-I. The Wharfage charges paid by assessee are to be allowed as deduction u/s 37(1) . The ground assessee is allowed. Allowability of foreign travel and salary expenses of employees of sister concern deputed to assessee - HELD THAT:- The assessee claimed that it was not having full-fledged enhanced administration and marketing set up, for which staff of group companies were deputed as and when there was requirement. Since the staff so deputed actually works on the task relating to assessee’s business, remuneration payable to such employees was reimbursed by the assessee and expenditure so incurred was booked and was for the purpose of carrying on the business of assessee company. In this regard, the assessee had also furnished Resolution passed by Chowgule group for deputation of two main persons, who were also taking care of the bank operations of assessee company. The expenditure thus, being incurred for legitimate and genuine business needs of assessee company and for smooth flow of carrying on the business is to be allowed as expenditure in the hands of assessee u/s 37(1) . Accordingly, we hold so and direct the Assessing Officer to allow the said expenditure. Further, certain foreign travel expenses were incurred by the said employees to explore the new business opportunities and also to see port facilities made available for efficient operations. Necessary confirmation in this regard was filed before the authorities below, which has been brushed aside. We find no merit in the disallowance made by authorities below and direct the Assessing Officer to allow foreign travel expenses of Mr. M.P. Patwardhan and Mr. Atul Kulkarni. Disallowance made u/s 40A(3) - HELD THAT:- No merit in the orders of authorities below in this regard. In view of provisions of Rule 6DD(k) r.w.s. 40A(3) in case of expenditure being incurred at remote areas, the same merits to be allowed in the hands of assessee. We are deciding this issue in favour of assessee because of smallness of the quantum involved. The grounds of appeal raised by assessee are thus, partly allowed.
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