TMI Blog2015 (12) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent : Sh. K. K. Jaiswal, DR ORDER PER N. K. Saini, AM: This is an appeal by the department against the order dated 06.07.2012 of ld. ld. CIT(A), Meerut. 2. Following grounds have been raised in this appeal: 1. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in facts and law in deleting the addition of ₹ 12,44,115/- made by the AO u/s 40(a)(ia) of the IT Act, 1961 for non-deducting TDS on air freight charges which he was required to deduct as per provisions of section 194C of the IT Act, 1961. Reliance is placed on the following judicial pronouncement and circulars:- (i) Associated Cement Co. Ltd. Vs Cit (1993) 201 ITR 435 (SC) (ii) CBDT circular no. 681 dt. 08.03.1994 (iii) CBDT circular no. 715 dt. 08.0.1995 (Question no. 30) 2. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in facts and law in deleting the addition of ₹ 1,87,912/- made by the AO u/s 40(a)(ia) of the IT Act, 1961 for non making of TDS on sea freight which he was required to deduct as per provisions of section 194C of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding your query the non-deduction of TDS on sea freight paid it is submitted that as the freight paid to shipping agent of non-resident shipping companies, so TDS provision is not applicable. The Movers International is a shipping agent of swift connection which is a non-resident shipping company. Refer DSCIT V Hasmukh J Patel 10 Taxman 229. Copy of case and copy of bills are enclosed herewith. Regarding your query the non-deduction of TDS on Air Freight it is submitted that this expenses is of the nature of Reimbursement of expenses and TDS is not applicable on Reimbursement of expenses. Refer ITA No. 1335/Ahd/2010. Copy of case and copy of bills are enclosed herewith. It was also submitted as under: Regarding non deduction of TDS on Air freight and Ship freight the assessee has explained that as per the provisions of Sec. 197(2) of the Income Tax Act, in case of DTAA with consignee country, they have not deduction TDS and in support two Xerox copies of exemptions certification in identical case are being annexed as per annexure no. 2 along with other details of freights. 5. The AO was not satisfied from the submissions of the assessee and made the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above judgment was duly filed before the learned AO along with letters dated 28.11.2011 16.12.2011 including other judgments placed on record as also considered by him in para 1 at page 2 of assessment order. The learned AO is factually incorrect in making the following observation at page 5 para 1:- Thus, it is clear that where consolidated bills have been raised, TDS was to be deducted. In the case of assessee, cargo agent has nowhere mentioned that bills issued by it include payment in the nature of reimbursement. Assessee has argued that M/s Movers International Pvt. Ltd. has not paid Service Tax on freight amount and charges service Tax only on their service charges which shows that Air freight charged by the agent was in the nature of reimbursement. This plea is not acceptable because charging of Service Tax is entirely a different issue. Merely not charging of Service Tax by agent on freight does not prove that the freight was in the nature of reimbursement because there is no such clear mentioning in freight invoice. Your kind attention is drawn to the following documents filed as under:- a) Bills issued by Movers International Pvt., Canin Express Logi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the other addition of ₹ 1,87,912/-, the ld. CIT(A) observed that the payments made on account of shipping charges (sea freight) were also the reimbursement of expenses and even the service charges were less than ₹ 50,000/-. Therefore, the provisions of Section 194C of the Act were not applicable. Accordingly, the addition of ₹ 1,87,912/- was also deleted. 9. Now the department is in appeal. The ld. DR strongly supported the order of the AO and further submitted that the assessee was required to deduct the TDS u/s 194C of the Act on the payment made for the air freight. As regards to the payment for sea freight, it was stated that the deduction was to be made on the composite payment and not on the individual payment. 10. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the issue under consideration is squarely covered in favour of the assessee by the judgment of the Hon ble Allahabad High Court in the case of CIT Vs Vector Shipping Services Pvt. Ltd. 357 ITR 642. It was also pointed out that the SLP filed by the department against the said order was dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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