TMI Blog2013 (2) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. With respect to balance, the Assessing Officer will confirm the disallowance. - partly in favor of assessee. TDS on Agency charges, supervision documentation - held that:- no doubt no written contract is there, but the assessee has made payment on account of commission, service charges for documentation, custom clearance and supervision of loading, operation of vessels to clearing and forwarding agents. This clearly falls under the provisions of section 194C of the Act and liable to TDS u/s. 194C of the Act. - Decided against the assessee. Deemed dividend - shareholder - held that:- clause (e) of section 2(22) of the Act as it existed provided that if the loan is received by the shareholder, it is only then that the loan can be deemed to be dividend in his hands. The assessee firm was not the shareholder of the company and the partners of the firm were the shareholders in the books of the company. Therefore, the loan advanced by the company to the assessee firm could not be deemed to be dividend inasmuch as the loan was not to the shareholder but to the assessee who was not the shareholder in the books of the company. - Decision in ACIT, Circle-33 vs. Bhaumik Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Omega Consultants Testing Certification 93,226/- M/s. Indicative Consultants Testing Certification 46,345/- M/s. Itlab (Goa) Pvt. Ltd. Testing Certification 76,117/- M/s. AM Enterprises Shifting, pushing handling charges 29,67,545/- M/s. East Coast Marine Services Loading unloading charges 11,67,662/- M/s. R. V. Logistics Agency charges, supervision documentation 1,05,550/- M/s. Crystal Shipping Corporation Commission 2,96,000/- Total 1,23,77,060/- The Assessing Officer invoking the provisions of section 40(a)(ia) of the Act and made disallowance of the above expenses. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of Assessing Officer. Aggrieved, now assessee is in appeal before us. 4. Before us Ld. Counsel for the assessee described the nature of payment in respect to Anil Trading Co. amounting to Rs.11,52,614/-, Vijay Chandra Mishra amounting to Rs.2,82,725/-, M A Chhinnamasta Steel Power Ltd. amounting to Rs.1,50,300/- and Akhilesh Kumar Jaiswal amounting to Rs.1,22,164/- assessed as transportation charges but these were actually payments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had taken delivery of goods, paid freight charges directly to the transporters, which in turn raised invoice on the assessee. The Ld. Counsel for the assessee relied on the decision of Hon ble Supreme Court in the case of India Meters Ltd. Vs. State of Tamil Nadu in Civil Appeal No. 1032-33 of 2003 dated 07.09,2010. We have full respect for proposition of law laid by Hon ble Supreme Court in the case of India Metals Ltd. (supra), wherein it had held that if the ownership in the goods gets transferred at the premises of the buyer and the supplier has the obligation of transporting the goods to the premises of the buyer, then notwithstanding the fact that the freight charges were recovered separately from the buyer, the transportation charges shall form part of turnover of the supplier, i.e. cost of purchases for the buyer. But in the present case before us, the facts are not clear whether the assessee s agreement with the suppliers was including transportation charges for delivery of goods to the premises of the assessee or not? In the absence of agreement, we cannot decide this issue at this stage. Hence, for verification to examine the agreement or invoices, if any, we se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee from the Balance Sheet enclosed at pages 12(a) to 12(h) of the assessee s paper book 1 demonstrated before us that a sum of Rs.5,97,500/- was capitalized and the balance amount was on account of payment of labour charges etc. Ld. Counsel for the assessee fairly stated that he is for the capitalized expenses which should be allowed and no deduction of TDS can be made with respect to capitalized expenses of Rs.5,97,500/-. We are in full agreement with the argument of Ld. Counsel for the assessee that the amount capitalized at Rs.5,97,500/- cannot be subject matter of TDS. Hence, the same should not be disallowed by invoking the provisions of section 40(a)(ia) of the Act. With respect to balance, the Assessing Officer will confirm the disallowance. This issue of assessee s appeal is partly allowed. 10. With respect to payment made to R. B. Logistics and Crystal Shipping Corporation, we are of the view that these are service charges for clearing and forwarding agent of export and services rendered are in the nature of documentations, custom clearance and supervision of loading, operation of vessels and commission payments. The argument of Ld. Counsel for the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee firm is not the shareholder of M/s Shilpa Creation Pvt. Ltd. and hence no addition can be made in the hands of the assessee. Reliance in this regard was placed on the decision of a Special Bench of ITAT, Mumbai in the case of ACIT, Circle-33 vs. Bhaumik Colour (P) Ltd. [2009] 118 ITD 1. After considering the submission of the assessee the CIT(A) allowed the assessee s appeal vide paras 12 to 15 as under: 12. The Hon ble Special Bench after considering the provisions of taxing deemed dividend as per Income Tax Act, 1922, Income Tax Act, 1961, decisions of Tribunals, decisions of various High Courts as well as the decisions of Hon ble Supreme Court on the issue, has held that deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. It is also held by the Hon ble Special Bench that the expression shareholder referred to in section 2(22)(e) refers to both a registered shareholder and beneficial shareholder. If a person is a registered shareholder but not the beneficial shareholder then the provisions of section 2(22)(e) will not apply. Similarly, if a person is a benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm because the two partners of M/s. Hotel Hill Top were holding shares by which they had 10% voting power in M/S. Hill Top Palace Hotels (P) Ltd. They were also entitled to 20% of the income of the firm M/s. Hotel Hill Top. Therefore the loan by M/s. Hill Top Palace Hotels (P) Ltd. To the firm M/S. Hotel Hill Top was treated as deemed dividend in the hands of M/s. Hotel Hill To the firm under the Second limb of section 2(22)(e) of the Act. The CIT(A) held that, since the firm was not the shareholder of the company the assessment as deemed dividend in the hands of the firm was not correct. The order of the CIT(A) was confirmed by the Tribunal. On Revenue s appeal before the Hon ble High Court, the following question of law was framed for consideration. Whether on the facts and in the circumstances of the case and in law the learned Tribunal was justified in upholding the order of learned CIT(A) deleting the addition of Rs.10 lacs as deemed dividend under Section 2(22)(e) of the I. T. Act? The Hon ble Court held as follows: The important aspect, being the requirement of section 2(22)(e) is, that the payment may be made to any concern, in which such shareholder is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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