Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (1) TMI 745 - ITAT AHMEDABADTDS u/s 195 OR 172 - remittance to Marshal Island based company towards damage charges for physical damage sustained by vessels and losses caused to the owner of the vessels - as submitted damage to the vessels has happened in India during the business carried out by the ship in India - as per Assessee lump sum consideration paid by the assessee does not fall within income /receipt as defined in Section 172 and is an income in the hands of the remitter falls under Section 5(2) and hence applying u/s 195, particularly, when there is no DTAA between India and Marshal Islands and remitter has not provided TRC, TDS @ 20% was directed as levied Crux of the argument of the assessee is this that as the agent acts on behalf of the non-resident owner or character, he steps into the shoes of the principal and accordingly provision of Section 172 only will be applicable and not the provision of Section 194C or 195 of the Act. HELD THAT:- It is a fact that once the hired Vessel left the Porbandar Port and reached Durban South Africa, the charterer handed back the vessel to the owners who, in turn, raised these damages on the buyer i.e. the assessee before us. Thereafter, only upon arbitration and negotiation, the assessee was required to pay USD 4,50,000/- within 14 days from the date of settlement. It was further found from the settlement deed that the payments were reimbursements in nature and other damages raised are capital in nature CIT(A) declined to consider the same as income to the ship owner within the purview and scope of the provision of Section 5(2) of the Act and the direction passed by the Ld. AO to deduct tax at source on such payments in terms of the provision of Section 195(2) of the Act was found to be wrong, which, in our considered opinion also found to be just and proper for the reason as discussed hereinabove. We, therefore, confirm the order passed by the Ld. CIT(A). Decided against revenue.
|