TMI Blog2015 (12) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the previous year, without deduction of TDS. In view of the above, we remit this issue to the file of the AO for fresh consideration. At this stage, we refrain from deciding the issue of sec. 194-H of the Act, to these payments. TDS u/s 194A - Disallowance u/s.40(a)(ia) - non-deduction of TDS on discount/factoring charges paid to M/s. Canbank Factors Ltd. - Held that:- Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) and judgment of CIT vs. M/s. Vector Shipping Services (P) Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2013, and 10.11.2014 for the assessment years 2008-09, 2009-10 and 2010-11 respectively. Since, the issues involved in these appeals are common, these are clubbed together, heard together and disposed off by this common order for the sake of convenience. 2. The first common issue in Revenue's appeal is with regard to disallowance of sales promotion expenses for nondeduction of TDS by invoking the provisions of sec.40(a)(ia) of the Act. 3. The assessee company claimed sales promotion expenditure in the profit and loss account. However, it was not subjected to TDS. The assessee took a plea before the Assessing Officer that the provisions of sec.194H are not applicable to these payments and this is only a provision determined on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l payment to dealers/distributors over and above the agreed discount based on the volume of sales done by them and these expenditure are purely sales promotion expenses allowable u/s.37(1), and the provisions of sec.194H cannot be applied and he deleted the addition made by the Assessing Officer u/s.40(a)(ia) of the Act. Against this, the Revenue is in appeal before us. 5. We have heard both the parties and perused the material on record. In our opinion, the issue is to be decided by the Assessing Officer in the light of the Special Bench decision of the Tribunal in the case of Merilyn Shipping and Transports vs. Addl. CIT (2012) 136 ITD 23 (Visakhapatnam) , wherein it was held that provisions of section 40(a)(ia) are applicable only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are similar to the interest charges for the purpose of Income-tax. But in this case, the assessee has not paid factoring charges. The bills receivable by the assessee are discounted with the Canbank Factors Ltd. In the process, the amounts, which are going to be received by the assessee on a later date from its clients, discounted for a price and the proceeds are realized immediately. Thus, the sale proceeds are received at a lesser amount, but at an earlier date than the actual due date. The amount so foregone in the process is the factoring charges or bill discounting charges. The amount so foregone may represent the compensation for receiving the amounts in advance. It is not an amount actually paid by the assessee and it is a loss su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted back to the Assessing Officer for fresh consideration. In view of the above, we remit this issue back to the file of the Assessing Officer for fresh consideration. 8. Coming to the ground in Cross objection with regard to applicability of provisions of sec.40(a)(ia) of the Act, we are of the opinion that this ground does not need adjudication in view of our finding on this issue in Revenue's appeal. 9. The assessee has raised one more ground in CO is with regard to depreciation on aluminium cans and crates at 50%. 10. The assessee claimed depreciation at 50% on aluminium cans and crates. The Assessing Officer observed that as per New Appendix-II applicable for the assessment year 2008-09, only containers made of glass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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