TMI Blog2018 (12) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore TDS is not required to be deducted at source Reimbursement expenditure to the tune of ₹ 18,50,249/- is not liable to be disallowed u/s.40(a)(ia) as TDS is not required to be deducted since separate bills are raised by the commission agents. We, therefore, delete the addition made by the authorities below. As a result, the appeal is allowed in favour of assessee. - I.T.A. No.2266/Ahd/2013, I.T.A. No.267/Ahd/2014 - - - Dated:- 27-9-2018 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri T.P.Hemani, AR For the Respondent : Shri Prasoon Kabra, Sr.DR ORDER PER Ms. MADHUMITA ROY - JM: The instant appeals have been filed by the Assessee before us against the separate orders dated 08.08.2013 16.12.2013 passed by the Commissioner of Income Tax(Appeals)-XVI, Ahmedabad [Ld.CIT(A) in short] for Assessment Years (AYs) 2009-10 2010-11 arising out of the orders dated 12.12.2011 30.11.2012 respectively passed by the ACIT/DCIT, Circle-10, Ahmedabad. 2. Since both these appeals pertain to same assessee and the issue involved is identical, the same are being disposed of by a common order fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the instant appeal, the Ld. AR submitted before us that the authorities below have failed to appreciate the business module of the assessee. According to the Ld. AR the payments made to the C F Agents do not fall within the ambit of the provisions of section 194C of the Act for work as defined in the Explanation-III of section 194C as applicable during the year under consideration and therefore no disallowance is called for u/s.40(a)(ia) of the Act. The Ld. AR further submitted that the TDS is also not required on reimbursement to C F Agents. The Ld. Representation of the assessee further made an alternative argument submitting that in the event the C F Agents have declined Agency Charges as income and paid tax thereon disallowance u/s.40(a)(ia) of the Act is not warranted. Reliance has been made on the judgment passed by the Coordinate Bench in the matter of M/s.Om Satya Exim Pvt.Ltd. vs. ITO in ITA No.1335/Ahd/2010 for AY 2007-08 passed on 13.05.2011. 6.1. On the other hand, the Ld. DR relied upon the order passed by the first appellate authority. 8. We have heard the Ld. Representatives appearing for the respective parties and perused the relevant materials availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Apex Court, the Tribunal has decided similar issue in favour of the assessee in the case of Modicon Network P. Ltd.,(supra). It is submitted that in the case of Grandprix Fab Pvt. Ltd. (supra), similar issue was before the Tribunal and it was held by the Tribunal in that case that there was no element of income embedded in reimbursement of expenditure and therefore, impugned payment regarding reimbursement of expenditure would not be disallowed under Section 40(a)(ia). As against this, the learned DR of the Revenue strongly supported the orders of the authorities below and the Board circular no.715 dated 8-81975. Our attention was drawn to question no.30 in the Circular where it was answered that reimbursement cannot be deducted out of the bill amount for the purpose of TDS. 7. We have considered rival submissions and perused the material on record and gone through the orders of the authorities below and the judgment cited by the learned counsel for the assessee. We have also considered Board circular dated 8-8-1975, copy of which has been submitted by the learned DR of the Revenue. In the present case, it has been submitted before us by the learned AR that the commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee the Commissioner (Appeals) allowed such deductions observing that so far as the amount of ₹ 6,93,372/- is concerned as such the agent had already deducted the TDS and deposited in the Government and, therefore, there was no further liability of the assessee to deduct the TDS. With respect to ₹ 76,00,509/-, the CIT(A) observed that the said amount was towards the reimbursement of the expenses to the consignment agent, which was in fact incurred on behalf of the assessee and there was no profit element. The CIT(A) held that the assessee was not required to deduct the TDS on such reimbursement and, therefore, the Assessing Officer was not justified in making the above disallowance and accordingly directed to delete the same. Being aggrieved and dissatisfied with the order passed by the CIT(A) in holding the above, the appellant-revenue preferred appeal before the Income Tax Appellate Tribunal and by the impugned order the Income Tax Appellate Tribunal has confirmed the order passed the CIT(A). It is required to be noted that while confirming the order passed by the CIT(A) and deleting the disallowance, it has been specifically observed by the tribunal that in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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