TMI Blog2011 (11) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... e. - ITA No. 1864/Del/2011 - - - Dated:- 4-11-2011 - SHRI C.L. SETHI, JUDICIAL MEMBER SHRI K.G. BANSAL, ACCOUNTANT MEMBER For the Appellant: Sh. Ved Jain, Ms. Rano Jain, Sh. Venketesh Chomania, CA s For the Respondent: Sh. Mohanish Verma, CIT(DR) ORDER PER C.L. SETHI, J.M. The Assessee is in appeal against the order dated 25.03.2011 passed by the ld. CIT(A) for the A.Y. 2008-09. 2. Ground no. 1 2 regarding not providing opportunity of being heard by ld. CIT(A) has not been pressed before us. Hence, the same stands rejected. 3. Ground no. 4, 5 6 revolve around the issue regarding disallowance of ₹ 2,04,72,855/- u/s 40(a)(ia) of the Act. 4. The assessee firm is a partnership firm, which is engaged in the business of logistics i.e. clearing and forwarding agent. The assessee filed its return of income on 28.09.2008 declaring total income at ₹ 8,88,140/-. The return was selected for scrutiny and notices u/s 143(2)/142(1) were issued and served upon the assessee. 5. During the course of assessment proceedings, it was noticed by the AO that the assessee had declared gross receipts of ₹ 3,33,44,575/- against which the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 0 16. APL Logistics, Mum. 2,25,483/- 0 17. ATZ Shipping Trade 96,782/- 0 18. Kuenhe Nagel 73,704/- 0 19. Ascent Air Pvt. Ltd. 54,969/- 0 20. NYK Logistics 1,83,524/- 0 21. Best Shipping 1,85,927/- 0 22. SSE 60,000/- 0 Total 2,04,72,855/- 0 6. Since, in the view of the Assessing Officer, no tax required to be deducted u/s 194C of the Act was deducted, the Assessing Officer had drawn the assessee s attention to the provisions contained in sec. 40(a)(ia) of the Act vide ordersheet entry dated 25.10.2010 and asked the assessee to show cause as to why the amount paid should not be disallowed as deduction fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educt the tax from the payments made to the above parties after deduction of tax including the amount of reimbursement but the assessee has fails to so. Therefore, the expenses claimed by the assessee in the P L account to the extent of the amount as mentioned above is not allowable as deduction in view of the provision of sec. 40(1)(ia) of the I.T. Act and the same is disallowed and added to the income of the assessee. 7. Being aggrieved, the assessee preferred an appeal before the ld. CIT(A). 8. After considering the AO s order and the facts of the case, the ld. CIT(A) decided the issue against the assessee by observing and holding as under: - 4. I have carefully considered the facts of the case and the AO s findings. As per first para of the page 03 of the impugned order, it is evident that 22 persons as detailed on page 02 of the impugned order have not raised any bill to the appellant though it has made payments of ₹ 2,04,72,855/- to these persons in accordance with the terms and conditions of the agreements entered between its clients (the persons exporting the goods through the appellant) and these 22 persons (supra). The appellant has further submitted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forwarding, the assessee made payments to shipping companies for and on behalf of its clients, which were reimbursed later by assessee s client on actual basis. It was thus, contended by the ld. Counsel for the assessee that there was no expenses incurred by the assessee on account of payment made to various shipping companies/freight forwards and thus, there was no question of disallowance u/s 40(a)(ia) of the Act. He further submitted that the payment made to shipping companies on behalf of assessee s client consisted mainly of following items: - (i) Document Charges these charges relate to preparation of bills of lading which is a basic document for export/import in India. (ii) THC (Terminal Handling Charges) these are the charges levied by shipping companies for handling cargo in the custom bounded terminal. These include CFS (Container Filling Station) Charges for handling the cargo in yard. The maximum charges as payable to shipping lines in this regard are fixed by port authorities. The shipping companies cannot charge more than the rates as given by port authorities. 11. The ld. Counsel for the assessee further submitted that there was no contract between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The goods of assessee s client, who are exporter or importer, were exported or imported by the shipping companies. The shipping companies raised bill for various charges against the ultimate exporter or importer, who are the client of the assessee. The amount mentioned in the bill raised by shipping companies on ultimate consumer were initially paid by the assessee, and thereafter the assessee got reimbursed the said amount from its client including the charges of the assessee for services rendered. We have perused the various bills raised by various shipping companies and find that the shipping companies raised their bills on the ultimate customer, who is the exporter or importer of the goods. The assessee used to raise bills upon exporter or importer i.e. assessee s client, including the charges payable to shipping lines, and as well the charges of the assessee on account of various services rendered by it. It has not been disputed by the AO that the bills issued by shipping companies were raised in the name of clients, whose goods were exported or imported, and the assessee thereafter raised the bill to its client separately indicating charges of the assessee as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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