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2017 (1) TMI 892 - ITAT MUMBAI

2017 (1) TMI 892 - ITAT MUMBAI - TMI - TDS u/s 194C - Non deducting tax on the payments made on account of reimbursement of shipping expenses to M/s Dolphin Maritime Agency Pvt Ltd. - Held that:- CIT(A) has considered Board’s circular No.715 dated 08-08-1995 which is on the issue of deduction of tax at source on the payments made for reimbursement of shipping charges. It is noted that the Ld. CIT(A) has merely sent the issue back to the file of the AO to verify the facts with the direction that .....

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is upheld. - Decide against revenue - I.T.A. No.2839/Mum/2015 - Dated:- 13-1-2017 - SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI ASHWANI 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 l .....

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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 hearing none appeared on behalf of the assessee. Ld. DR relied upon the order of the AO. 3. The solitary issue raised in this appeal by the revenue is that whether the Ld.CIT(A) was justified in deleting the disall .....

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was disallowed by the AO on the ground that assessee failed in deducting tax at source. During the course of appeal before Ld. CIT(A), detailed submissions were made by the assessee, which were considered by Ld.CIT(A) and it was found that tax was not required to be deducted on these payments. Relevant part of the order of the Ld. CIT(A) is reproduced below:- 5.4. I have carefully considered the contents of the above bill and other similar bills and noticed that the C & F agent namely, Dolph .....

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aration dated 1.4.2010, issued by the above shipping company and the same has been considered. The relevant part of the same is reproduced, here as under: We CMA CGM AGENCIES (INDIA) PRIVATE LIMITED are the agent for CMA CGM, 4 Quai D'arenc, Marseilles (France) in India. We hereby confirm that as per the provision of the Income Tax Act, 1961 CMA CGM S.A. FRANCE is non-resident shipping company engaged in the business of operation of ships in International Traffic. The place of effective mana .....

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e 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 .....

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ey are engaged in operation of ships. Please noted that our Principal are the residents of Denmark r and under Article 9 (Shipping) of the Agreement for Avoidance of Double Taxation between India and Denmark, the prof i ts der ived by our Pr incipal from the operat ion of ships in international traffic are taxable only in Denmark. Further we are regularly filing returns of income based On the provisions of section 139/172 of the Act for the freight charges, terminal charges, terminal handling ch .....

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etween India & Denmark, tax applicable, if any, has been or will be paid. In view of the above and clarification given by CBDT, vide its Circular No. 723 dated 191h September, 1995 (copy attached) the provisions of sections 194C and 195 of Income-tax Act, 1961 for deduction to tax at source shall not apply in respect of freight charges, THC charges, IHC charges and any other amount of a similar nature payable to us by you. Accordingly, tax at source is not deductible from the above mentioned .....

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principal is a tax resident of Belgium and is entitled to the benefit of Article 8 of the DTAA between India and Belgium. The applicant has filed the copy of Tax Residency Certificate and other documents in support of its claim. The applications as well as the document, filed in this regard were 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 .....

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ficate. 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 TDS against reimburs .....

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pellant. The relevant part of the decision of the Hon'ble ITAT, Bangalore Bench, in the above referred case, is reproduced, which have direct bearing on the issue, , here as under: "4.6 As regards the amount of ₹ 4,78,499 towards reimbursement of actual expenses, the Assessing Officer relied on the Board's Circular No. 715 dated 8.8.1995. I have considered the said circular and also the various decisions relied on by the appel lant in this regard. There is no dispute about the .....

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payment is not liablefor deduction of tax under section 195 of the Act. Further the Board's circular is applicable only where there is no. indication about the reimbursable amounts in the bills separately. In that cae, the gross amount has to be considered for deduction of tax. In view of this factual and legal position, the amount of ₹ 4,78,499 is not liable for TDS. Hence, it cannot be disallowed under section 40(a)(ia)." 6.4.3 In the case on hand, as pointed out by the learned .....

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ehalf 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 .....

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