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2020 (7) TMI 14 - AT - Income TaxTDS u/s 194C OR 195 - Shipping Expenses on account of non deduction of TDS u/s 40(a)(ia) - payment of ocean freight, made to non-resident shipping companies - HELD THAT:- The provisions of section 172 are to apply, notwithstanding anything contained in other ' provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any "resident" (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any "resident". On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply. Addition on difference between the opening balance in the account of M/s Eskay Sales Corporation and in the accounts of the assessee - HELD THAT:- We find that Assessing Officer has made the disallowance simply by holding that the assessee produced ledger account of these expenses which are not open to full verification and hence has disallowed 10% out of various expenses. The Assessing Officer has nowhere pointed out any specific discrepancy in the books of account nor he has rejected the same. In our opinion, the Assessing Officer cannot make ad hoc disallowance. See ASHOK SURANA VERSUS COMMISSIONER OF INCOME-TAX [2016 (6) TMI 696 - CALCUTTA HIGH COURT] - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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