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2021 (11) TMI 82 - AT - Income TaxTDS u/s 194C - Non deduction of TDS on payments to shipping companies and CFS Agents - Addition u/s 40(a)(ia) - assessee claims that payments made to shipping companies and CFS Agents on behalf of its clients is in the nature of reimbursement of expenses without any element of profit and thus, is outside the scope of provisions of TDS - HELD THAT:- If you accept the arguments of the assessee, then the purpose of legislature is defeated and the intend to subject the contract payment to deduction of tax at the point of payment is defeated by D transaction in such a manner that the purpose is defeated. It is also important to note that it is the assessee who has booked the expenditure towards container storage charges on payment to shipping companies/CFS Agents and debited in their books of accounts. Similarly, the assessee has received charges from its clients including amount paid to shipping companies/CFS Agents and the same has been credited to its P&L a/c when it had received payments from its clients - payments made by the assessee to shipping companies/CFS Agents is not a reimbursement of expenses, but first hand payment between principal to principal on the bill raised by the service providers. Since, the assessee has made payment on behalf of their customers; the assessee ought to have deducted TDS on such payments while making payments. Since, the assessee has failed to deduct TDS, on such payments the AO is right in disallowing such payments u/s. 40(a)(ia) of the Act. Hence, we confirm additions made by the AO. Alternative plea of the assessee that it has made payment to reputed shipping companies and all service providers has filed their return of income u/s. 139 of the Act and included payments made by the assessee in the return of income and thus, the assessee cannot be held as an assessee in default in terms of second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. assessment year 2013-2014 - In this case, the assessee has failed to obtain Form No. 26A and file before the AO and CIT(A) to give the benefit of proviso to section 40(a)(ia) of the Act, and said lapse is continued even before us. Before us, the assessee could not file any Form no 26A obtained from its clients nor filed their ITR copies to prove that the recipients have included sum paid by the assessee in their income tax returns. Therefore, we are of the considered view that there is no merit in alternate ground taken by the assessee and hence, the same is rejected. Disallowance u/s. 36(1)(ib) of the Act towards Key man Insurance Premium paid - HELD THAT:- As CIT(A), the assessee did not file any evidence to justify payment of insurance premium on Key man Insurance Policy taken in the name of the directors. Even before us neither any evidence was filed nor justified payment. There is no error in the reasons given by the CIT(A) to sustain additions made by the AO for disallowance of insurance premium paid on Key man Insurance Policy. Hence, we reject the arguments of the assessee and confirm additions made by the AO. Appeal filed by the assessee is dismissed.
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