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2016 (11) TMI 660 - ITAT COCHIN

2016 (11) TMI 660 - ITAT COCHIN - TMI - TDS u/s 194C - amount paid as plant repairs - non deduction of tds - whether the payment made under the head plant repair represents reimbursement of expenses? - Held that:- In our view this agreement is based on the parties having regard to the actual expenses incurred. The processing charges paid is separately billed on which TDS has been deducted. Having regard to the fact that separate bills have been given and based on various Judicial Pronouncements .....

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insurance, rent and other port dues - Held that:- Nevertheless all the above payment relates to payment to statutory authorities, labourers and others, on behalf of the assessee and none of them accrued to the agent. In our view the above payment will also not be liable to TDS. The Assessing Officer has neither quantified nor clear of the exact charges paid to M/s. Al Mustafa Agencies. In the absence of any material on record, we uphold the view of the Ld. CIT(A) in this regard. - Vehicle l .....

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04/2013, for obtaining certificate from the receiver to the effect that they have included such receipts as part of their income. The verdict of Ld. CIT(A) on this score has also to be upheld. - Revenue appeal dismissed. - ITA No. 509/Coch/2015 - Dated:- 26-9-2016 - Shri B. P. Jain, AM And George George K., JM Revenue By : Shri Shantam Bose, CIT(DR) Assessee By : Shri R. Sreenivasan, FCA ORDER Per B. P. Jain, AM This appeal of the Revenue arises from the order of the Ld. CIT(A), Kottayam da .....

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d into by the assessee with M/s. Geo Acquatic (the processor) clearly states the works to be undertaken by the processor/contractor as Washing, Cleaning, Processing, Freezing, Packing and Storing and the payments made include storing charges, peeling charges repacking charges, labour charges etc. d. The name of work undertaken by the processor and the nature of payments made to them itself show that the assessee had to necessarily deduct tax at source u/s. 194C of the Act. e. The Ld. CIT(A) has .....

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at source. g. The interest on vehicle loan paid by the assessee to M/s. Sundaram Finance and other private companies was separately debited in the profit and loss account and hence, tax was deductable at source on the interest paid. 2. The brief facts of the case are that by order dated 28/02/2014, the Additional Commissioner of Income Tax has completed the assessment of the assessee firm determining a total income of ₹ 4,16,47,383/- as against returned income of ₹ 35,20,460/-. Vari .....

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st enclosed. M/s. Geo Acquatic is processing marine product for the assessee by virtue of an agreement. According to the Assessing Officer the assesses is having the contract for processing, freezing and storing the marine products for export by the firm, which are mentioned in the agreement. According to the Assessing Officer, one each of the bill raised by M/s. Geo Acquatic, item wise charges under various heads are mentioned. The Assessing Officer concluded that this is the nature of work and .....

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t repairs to M/s. Geo Acquatic (P) Ltd. represent the reimbursement of expenses and hence no tax was deductable at source. According to the revenue the agreement entered into by the assessee with M/s. Geo Acquatic (P) Ltd. (the principal) clearly states that work to be undertaken by the processor/contractor was freezing, processing, packing and storing and the payment includes peeling charges, repacking charges, labour charges etc. According to them the nature of work undertaken by the processor .....

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cording to the Ld. DR, the Ld. CIT(A) has not appreciated the fact that the payment made under the head clearing and forwarding are normally inclusive of commission, service charges paid to the agency. In this regard Circular No. 05/2002 of CBDT was relied upon which clarify that clearing and forwarding agents act as independent contractors and any payment made to them would be liable for deduction of tax at source. 7. Ground No. 2(g) relates to interest on vehicle loan paid by the assessee to M .....

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s. CIT squarely applies to the facts since the recipient firm is also assessed to tax and have included all the receipts in their income. According to the Assessing Officer, the case of the Hon ble Supreme Court (supra) cannot be applied in a case where addition is made u/s. 40(a)(ia) of the Act. 9. It was also submitted that sec. 40(a)(ia) of the Act has been amended from 01.04.2013 by which no addition should be made unless the assessee was deemed to be in default and the recipient having file .....

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s of sec. 40(a)(ia) are not applicable. Copy of the decision of the Hon ble Supreme Court and Hon ble Allahabad High Court of the same enterprise were filed. Copy of the decision of the Chennai Bench of ITAT in the case of Thekkathir Press Madras was also referred to. As the case law stands today by verdict of the Hon ble Supreme Court the disallowance is not warranted. Reliance was also placed on the Jurisdictional High Court in the case of Muthoot Fincorp Ltd. and Hon ble Delhi High Court in t .....

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st of the payments are in the nature of reimbursement. M/s. Geo Acquatic have also raised the bill, separately showing the processing charges and various expenses incurred by them. According to the authorized representative, reimbursement of expenses is not taxable in the hands of the recipient. This will only go to reduce their expenditure incurred under particular heads and in such cases there is no liability to deduct tax. The assessee has placed reliance on the decision of the ITAT Delhi Ben .....

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f reimbursement of expenses. Respectfully following the decision of ITAT Delhi Bench D, and the decision of Hon ble Kerala High Court (supra), we hold that the payment made to M/s. Geo Acquatic, debited under the head plant repairs does not attract TDS liability. 13. Further the Ld. AR filed a second paper book showing copy of bills raised by M/s. Geo Acquatic Pvt. Ltd., Chandiroor. He stated that page 1 to 32 of the paper book relates to bills raised for processing charges on which TDS has been .....

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s of TDS. He also referred to the decision of ITAT Delhi Bench D in the case of DLF Commercial Projects to this effect. Reference was also placed on the decision of the Hon ble Kerala High Court in the case of Muthoot Fincorp Ltd., Trivandrum, wherein the Hon. Jurisdictional High Court have given a direction to Assessing Officer to verify the nature of reimbursement of expenses in that case where separate bills have been raised. The ACIT, Cir(1) TVM by her order dated 11/08/2014 have given effec .....

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Mustafa agencies without deduction of tax. According to the Ld. Counsel for the assessee M/s. Al Mustafa Agencies are engaged for filing of documents at customs, inspection by customs, labour charges, payment for trailer and other port payments. None of these expenditure are within the purview of TDS provisions. The Ld. CIT(A) held that it is a fact that Al Mustafa Agencies were carrying out various services to the assessee for the effective export and shipping of goods like filing documents wit .....

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not quantified what are the exact charges paid to Al Mustafa Agencies towards these services. In these circumstances and in the absence of material on record he has held that the disallowance of clearing and forwarding charges as he has done is not warranted. He has also considered the decision of Hon ble Delhi High Court. 15. Yet another point in revenue s appeal is on the deletion of addition made out of vehicle loan hire charges of ₹ 3,61,136/- without deduction of tax. This is mainly .....

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ed the facts of the case. The first issue is regarding deletion of addition made under section 40(a)(ia) on reimbursement of expenses paid to M/s. Geo Acquatic (P) Ltd. In this case as pointed out by the Ld. AR separate bills have been raised for processing charges and reimbursement of expenses and the assessee has deducted on the portion of processing charges and not deducted tax on reimbursement of expenses. Reimbursement of expenses comprises of various items like storing charges, peeling cha .....

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s Judicial Pronouncements cited by the Ld. AR and having regard to the fact that the revenue has accepted this fact of separate bill is another case as directed by the Jurisdictional High Court. We are of the considered opinion that the assessee is not liable to deduct tax on reimbursement of expenses to the tune of ₹ 11407877 and accordingly, we uphold the decision of the Ld. CIT(A) in this regard. 17. With regard to the addition of cleaning and forwarding charges to Al Mustafa Agencies, .....

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