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2017 (1) TMI 892

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..... WANI TANEJA (ACCOUNTANT MEMBER) For The Appellant : Shri N.P. Singh CIT(DR) For The Respondent : Shri SB Shethia ORDER Per ASHWANI TANEJA, AM: This appeal has been filed by the Revenue against the order passed by the Commissioner of Income-tax (Appeals)-3, Thane [hereinafter called CIT(A)] dated 27-03-2015 for A.Y. 2011-12 on the following grounds:- 1. Whether in law and facts of the case, the Ind. CIT(A) erred in holding that the assessee was not liable to deduct tax on reimbursement of shipping expenses paid to Dolphin Maritime Agency Pvt. Ltd., who is not shipping agent of non resident ship owner but an independent shipping agent. 2. Whether in law and facts of the case the Ind CIT (A) erred in holding that the reimbursements to Dolphin Maritime Agency Pvt. Ltd. are not liable for tax deduction at source without appreciating the fact that sections 194C and 194] refer to any sums paid and that Circular no. 715 of the C.B.D.T dated 08.08.1995 answers this question in the affirmative at question number 30. 3. Appellant prays that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 2. During the course of .....

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..... rm that the entire amount payable to us towards freight other ancillary charges in our capacity as the agents of CMA CGM S. A. FRANCE during the financial year 1st April, 2010 to 31st March, 2011 shall be include in the Return of Income to be filed by us under Section 172 on behalf of CMA CGM S. A. FRANCE and we shall be entirely responsible for the payment of any applicable tax on such freight other ancillary charges. In view of CBDT Circular No. 723 dated 19.09.1995, the provision of Section 194 C and 195 of the Income Tax Act , 1961, which provides for deduct ion of tax at source on certain types of payments, are not applicable in the present case. We shall indemnify YOU against any liabilities that may devolve on you at a later date under Income Tax Act, 1961due to non-deduction/withholding of tax from payments made to us. 5.5. Likewise, another shipping company Maersk India Pvt. Ltd., has also issued a similar letter, the contents of the same are reproduced here as under: We Maersk India Private Limited are shipping agents for A. P. Moller Maersk - A/s (hereby known as the Principal ). We hereby confirm that as per the provisions of the Indian Income T .....

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..... ere perused. On prima facie examination of the documents and details filed, it appears that the principal is entitled for the benefit of Article 8 of the DTAA between India and Belgium. In view of this, the principal is entitled for 100% DIT Relief on account of income from operation of the vessels as per Annexure attached herewith operating in the international traffic which is either owned or chartered by the principal for transportation of passengers, mail livestock or goods carried on by the principal from the Indian ports. However, any income earned for the transportation of passengers, mail livestock or goods from one place to another place within India is not covered by this DIT Relief Certificate. The certificate is issued and will be relevant only to M/s. Safmarine Container Lines N.V. Belgium and not applicable to any other shipping Lines. This Certificate is valid for F.Y. 2010- 11 unless it is cancelled or modified before the expiry of the said financial year. The fact of the cancellation or modification will be intimated to you. 5.7. The Ld. AR further placed copy of Circular No. 715 dated 8.8.1995, issued by the CBDT, New Delhi, in regard to deduction of T .....

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..... ey are paid service charges on which TDS has been made and not for the purpose of incurring expenses on behalf of the assessee. In this view of the matter, the reimbursement of expenses by C F Agents cannot be held to be contract / service on. which the provision of section 194C of the Act would come into play and apply. In view of the factual position as laid out above and following the decision of the Hon'ble Delhi High Court in the case of Van Oord ACZ India (P.) Ltd. (supra), we hold that- there is no need to deduct TDS on reimbursement of expenses to C F Agents which are separately billed and accordingly uphold the order of the learned CIT (Appeals). Consequently, we dismiss ground No. 2 raised by revenue. 6. I have carefully considered the facts of the case, above submissions of the Ld. AR and noticed that the C F agent has raised bills, reflecting separate amount for shipping of goods. The exact amount, as has been raised by the C F agent, to the appellant, has also been raised by the shipping companies to the C F agents for shipping of goods. Accordingly, it is claimed that there is no case of any income element in the hands of the C F agents. The copy of b .....

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