2015 (8) TMI 1458 - AT - Income Tax

TDS u/ 194C - tds liability on reimbursement expenses - addition u/s. 40(a)(ia) being the reimbursement of expenses paid to clearing and & forwarding Agents reimbursed towards stamp charges documents charges for custom loading & Unloading charges and other miscellaneous expenses - Held that - The assessee s stand throughout has been that such shipping payments do not require TDS deduction as per the Boards Circular No. 723 dated 01-09-1995 excluding operation of the relevant TDS provisions. Both the lower authorities fail to rebut this contention on facts and law. We accordingly hold that the CIT(A) erred in directing the Assessing Officer to consider assessee s shipping line bills for the purpose of TDS deduction. The case file reveals that a coordinate bench of the tribunal in assessee s own case for preceding assessment year 2014 (5) TMI 268 - ITAT AHMEDABAD holds similar reimbursements made to be very payee as not covered by TDS provisions. The Revenue fails to point out any distinction on facts. We observe in these circumstances that the Commissioner of Income Tax(A) s action in part is not liable to be upheld on both counts i.e. merits as well as judicial consistency. - Decided in favour of assessee.

Summary

Issues involved:
1. Whether TDS deduction is required on reimbursements made to clearing and forwarding agents.
2. Whether TDS deduction is required on shipping line bills.
3. Judicial consistency in TDS deduction on reimbursements.

Detailed analysis:
1. The appeal pertains to the assessment year 2008-09, where the assessee challenged the CIT(A)'s decision confirming the disallowance of Rs. 11,33,134 under section 40(a)(ia) of the Income Tax Act, 1961, for not deducting TDS on reimbursements made to clearing and forwarding agents. The Assessing Officer contended that TDS should have been deducted even on reimbursements. The CIT(A) partly accepted the assessee's grounds, citing a similar issue decided in favor of the department for the preceding assessment year. However, the CIT(A) disagreed with the previous decision and held that TDS is not required on reimbursements where no income element is embedded, citing a judgment of the Delhi ITAT. The tribunal found the CIT(A)'s direction to consider shipping line bills for TDS deduction incorrect, as the assessee's contention, supported by a tribunal judgment from the previous year, was not rebutted by the lower authorities. The tribunal held that the CIT(A) erred in directing TDS deduction on shipping line bills and upheld the assessee's appeal.

2. The main issue in the case was whether TDS deduction was necessary on reimbursements made to clearing and forwarding agents. The tribunal noted that the CIT(A) had taken a different stance from the previous assessment year, where a similar issue was decided in favor of the department. The tribunal agreed with the assessee's argument that reimbursements without an income element embedded do not require TDS deduction. The tribunal also emphasized the importance of judicial consistency in such matters. The tribunal found that the CIT(A) erred in directing TDS deduction on shipping line bills, as the assessee's position was supported by a tribunal judgment from the previous year. The tribunal concluded that the CIT(A)'s decision was not consistent with judicial precedents and upheld the assessee's appeal.

3. The tribunal's decision highlighted the importance of consistency in judicial rulings regarding TDS deduction on reimbursements. The tribunal noted that the CIT(A) had taken a different view in the present assessment year compared to the previous year's decision in a similar matter. The tribunal emphasized that the CIT(A) failed to provide a valid distinction in the facts of the case that warranted a different decision. The tribunal upheld the assessee's appeal, emphasizing the need for judicial consistency in interpreting TDS provisions related to reimbursements made to clearing and forwarding agents.