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2015 (7) TMI 319 - ITAT HYDERABAD

2015 (7) TMI 319 - ITAT HYDERABAD - TMI - Disallowance u/s 40(a)(ia) - Non deduction of TDS - In so far as air liting is concerned, the goods are transported through GBR Freight Forwarders Private Ltd and in so far as shipments are concerned, they are through Balaji Shipping Services - Held that:- As far as GBR Freight Forwarders (P) Ltd is concerned, assessee has made a short deduction. Neverthless, the decision in the case of CIT vs. S.K. Tekriwal (2012 (12) TMI 873 - CALCUTTA HIGH COURT) is a .....

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tion 194C of the Act. We also rely on the decision of the Coordinate Bench in the case of Ushodaya Enterprises [2015 (1) TMI 510 - ITAT HYDERABAD ] Decided in favour of assessee. - ITA No. 1537/Hyd/2014 - Dated:- 17-6-2015 - Shri B.Ramakotaiah & Smt.Asha Vijayaraghavan, JJ. For the Petitioner : Shri S. Rama Rao For the Respondent: Smt. Anjala Sahu ORDER Per Smt. Asha Vijayaraghavan, J.M. This appeal is preferred by the assessee against the order of the CIT (A)-IV, Hyderabad, dated 18.07.2014 .....

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n a sum of ₹ 20,250 in the case of GBR Freight Forwarders Private Ltd and no TDS was deducted in the case of Balaji Shipping Srvices. Assessee submitted that the two parties were merely shipping agents who did not undertake the freight work themselves but got the work done on behalf of the assessee. The assessee submitted that in case of GBR, the payment consisted of firstly, reimbursement of expenses incurred on the assessee s behalf and secondly, service charges and TDS had been deducted .....

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requires that tax is to be deducted on 'any sum' paid for carrying out 'any work' and held that the tax should have been deducted on the gross amount paid by the appellant. The Assessing Officer also noted that it was neither possible nor permissible for an assessee to determine what part of the payment by it constituted the income of the contractor. 5. The Assessing Officer also observed that merely because BSS had not specified the service charge component in its bills, it did .....

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ew that on express language of the section, it is impossible to hold that the deduction of tax has to be confined to the income component of the contractor, that there is nothing in the language of the section which permits exclusion of an amount paid to the contractor and that the words 'on income comprised therein' used at the concluding part of the section 194C( 1) cannot be construed to mean that deduction should be from the income of the contractor as Parliament cannot be attributed .....

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d that reimbursement meant expenses incurred on behalf of another person were recovered. The AR further submitted and relied on the following decisions for the view that reimbursable expense were separate from fees, that what constitutes fee shall be the consideration for the services rendered by the recipients but not the amount of reimbursement and that expenses incurred by the recipients on behalf of the assessee are to be reimbursed to that person: i. CIT vs. Industrial Engineering Projects .....

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ion from the transporters, that the entire amount paid to BSS was for reimbursement of shipment charges and that therefore, no tax was deducted at source. 9. The ld CIT (A) observed as follows: 11. I have considered the facts on record and the submissions of the AR. The bills raised by GBR show a slew of services rendered by it, including freight charges. The bills submitted by BSS refer only to freight charges. It is the appellant s claim that the freight charges, referred to in these bills was .....

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ade out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses? Answer: Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source . 11. The CIT (A) concluded that a plain reading of the sec.194C, along with the clarification as per the CBDT Circular, shows that the appellant was obliged to deduct tax on the entire payment made to the two shipping age .....

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payment was made only for freight charges and there was not component of service charges in the bill raised by BSS. I find this highly improbable. There would be no need for BSS to raise a bill at all if all that it was charging the appellant was the amount claimed for reimbursement. Further, there is nothing in the bills themselves to suggest that the claim was by way of reimbursement. 15. I, therefore, uphold the disallowance of the sum of ₹ 24,76,442 u/s 40(a)(ia). In the result, the ap .....

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hinery hire charges falling under the head "rent" and the provisions of section 194-1 were applicable. On the ground that the assessee had deducted tax at 1 per cent under section 194C(2) as against the actual deduction to be made at 10 per cent under section 194-1 the payments were disallowed proportionately invoking the provisions of section 40(a)(ia). The Tribunal held that where tax was deducted by the assessee, though under a bona fide wrong impression under wrong provisions, the .....

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Tribunal. 15. The ld Counsel submitted that though this argument for short deduction of tax was not raised before the CIT (A), this claim of the assessee may be considered in the present case before the Bench. It was also submitted by the ld Counsel that all amounts were paid before the end of the relevant accounting year and hence section 40(a)(ia) is not applicable and relied on the decision of Ushodaya Enterprises in ITA No.676/Hyd/2009 & 411/Hyd/2010 dated 7.1.2015 wherein it has been h .....

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followed the ratio of the Special Bench decision in the case of M/s. Merilyn Shipping & Transport Ltd (136 ITD 23(SB). 7.3 The assessee further submitted that the Hon'ble Andhra Pradesh High Court in its judgment dated 24.06.2014 in the case of CIT vs. M/s. Janapriya Engineers Syndicate (ITA No.352 of 2014) held until and unless the decision of the Special Bench in the case of M/s Merilyn Shipping & Transport is upset by the Hon'ble jurisdictional Court, it binds smaller and coo .....

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