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TMI Blog2012 (7) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/- u/s. 40(a)(i) r.w.s. 195 & 200 IT Act, 1961 as the assessee has failed to deduct tax on the payment made to overseas entities and the assessee company itself conceded that the overseas entities have rendered services to the assessee. ii) Whether on the facts and in the circumstance of the case and in the law, the Ld. CIT(A) has erred in deleting the addition of Rs.6,232/- made on account of interest paid on late payment of TDS and service tax for calculating book profit u/s. 115JB of the IT Act, 1961, as the assessee has failed to add Rs.6,232/- while calculating book profit u/s. 115JB of IT Act, 1961." 3. Apropos issue of disallowance of Rs.76,79,601/- u/s. 40(a)(i). In this case assessee company is engaged in the business of freigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to various overseas companies u/s. 40(a)(i) read with section 195 of the IT Act. 4. Upon assessee's appeal Ld. CIT(A) considered the issue. Before the ld. CIT(A) assessee contended that the remittances made by it are not an income but the same were the reimbursement of expenses incurred on behalf of the assessee by the overseas companies in overseas destination. It was submitted that in this case no service has been rendered by the overseas companies in India and no part of the income was received or deemed to be received in India during the year by or on behalf of such overseas companies. Further no part of income accrues or arises or is deemed to accrue or arise to them in India during the year. Assessee also filed certificate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be read in conformity with the charging un provision of section 4, 5, & 9. This reasoning flows from the words "sum chargeable under the provisions of the Act" in section 195(1) of the IT Act. Since the expenditure to the foreign companies of Rs.76,79,601/- was reimbursed to overseas companies for the expenses incurred on behalf of the assessee company and their margins for the services rendered outside India, therefore, such payments does not fall under the purview of "sum chargeable under the provisions of the Act" as provided in section 195 of the IT Act. Hence, these payments were not liable to TDS u/s. 195(1) of the IT Act and consequently the expenditure alongwith the margin reimbursed to the overseas companies for service rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in India, hence, all are non-resident in India. He further submitted that section 195(1) of the IT Act, 1961 states that the income will be subject to deduction of tax at source if it is chargeable under the provisions of the Income Tax Act, 1961. The income earned by the overseas logistics company is not received or deemed to be received in India nor accrues or arises or is deemed to accrue or arise in India as all activity is carried out overseas and culminates when the goods are handed over to the transporter overseas. Hence, these payments are not chargeable in India and no tax needs to be deducted at source. Furthermore, ld. Counsel of assessee relied upon the following case laws:- - Sun Microsystems India Pvt Ltd. vs. ITO (125 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt, the whole or part of which is liable to tax in India. If tax is not so assessable, there is no question of tax being deducted. Thus, we agree with the finding of the Ld. CIT(A) that since the expenditure to foreign companies of Rs.76,79,601/- was reimbursed to overseas companies for the expenses incurred on behalf of the assessee company and their margin for the services rendered outside India, therefore, such payment does not falls under the purview of "sum chargeable under the provisions of the Act". Hence, these payments are not liable to TDS u/s. 195 of the Act and consequently the expenditure alongwith the margin reimbursed to the overseas companies for service rendered outside India becomes allowable expenditure and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. 11. AO held that as interest on TDS and service tax is to be added to the income of the assessee in terms of section 115JB. 12. Upon assessee's appeal Ld. CIT(A) held that the interest amount on late payment does not include payment of TDS therefore the same cannot be covered under the provisions of section 115JB. Hence, he directed the addition made by the AO be deleted. 13. Against the above order the Revenue is in appeal before us. 14. We have heard the rival contentions in light of the material produced and precedents relied upon. Ld. D.R. relied upon the order of the AO. Ld. Counsel of the assessee on the other hand supported the order of the ld. CIT(A). He further submitted that the assessee has a book loss and was not subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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