TMI Blog2019 (1) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... al No. CIT(A)-II/Rjt/0096/11-12 dated. 21.01.2014 for the Assessment Year (A.Y.) 2009-10. 2. First we take up assessee s grounds of appeal in ITA No.220/Rjt/2014 for Asst. Year 2009-10: 3) Hon. CIT(A) erred in law as well as on fact in confirming deduction of tax at source u/s. 194-I on demurrage/detention charges paid to non-resident shipping companies which are assessed u/s.172 of the Act. 4) Hon. CIT(A) erred in law as well as on fact in confirming deduction of tax at source u/s. 194-I on demurrage/detention charges, which is not applicable to nonresident companies. 5) Hon. CIT(A) erred in law as well as on fact in remitting matter back to assessing officer. 3. The above grounds of appeal were recalled for fresh adjudication in pursuance to the direction issued by the ITAT in MA No.11/Rjt/2017 vide order dated 3rd August 2018. Therefore, we proceed to adjudicate the aforesaid grounds of appeal. 4. The only issue raised by the assessee is that ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹ 27,00,497/- on account of non-deduction of TDS u/s 194-I of the Act. 5. Briefly stated facts are that the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early related to the use of space for certain time. Such charges are therefore clearly in he nature of rent paid by the appellant company. The AO has relied upon the decision of the Hon ble Bombay High Court in the case of CIT Panaji vs. Orient Goa P. Ltd in Appeal No.7/2005 dt. 16/10/2009. The Hon ble High Court has upheld the AO s order that non deduction of tax on demurrage charges made to foreign/ non resident companies was liable for disallowance u/s 40(a)(ia) thereby implying that tax should. have been deducted u/s 194-I. It is also categorically mentioned that tax should. have been deducted u/s 194-I. It is also categorically mentioned that the provisions of s.194C are not applicable. The appellant has raised an alternative plea that Mundra Port Kandla SEZ have offered the said income in their income tax returns and tax has been paid on the same. Hence, the demand u/s 201(1) should. not be enforced. For this purpose, the appellant has relied on the decision of the Hon ble Supreme Court in case of Hindustan Coca Cola Beverage Ltd. vs. CIT 211 CTR 545. The AO is directed to verify the contention of the appellant. It will be the responsibility of the appellant to provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals was placed before a Division Bench of this Court and it came to be admitted on the following substantial questions of law : ( I) Whether in facts and circumstances of the case, the ITAT has erred in applying the provision of Section 172 in holding that section 40(a)(i) is not applicable, particularly when section 173 concerned with levy and recovery of tax in a case of any ship, as against section 195 r/w 40(a)(i) of the IT Act, refers to non-resident assessee as in the present case? ******** 7. Out of the above substantial questions, we are concerned with Question No. I. 8. After admission, the present appeal and the other appeals came to be placed for final hearing before a Division Bench of this Court and the Division Bench noted the stand of the assessee in paragraph 4 of its order. In paragraph 5, the Division Bench noted the reference by the Tribunal to its decision in Deputy? Commissioner of Income Tax vs. Orient (Goa) and following it, the Tribunal allowed the assessee's appeal. The order passed by the Tribunal holds that section 40(a)(i) of the Income Tax Act, 1961 (for short IT Act ) would. apply only when there is an obligation to ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently section 17S, However, we do not see how there is an obligation to deduct tax at source on the resident assessee/Indian company before us. While computing the income o f the non-resident Indian / foreign company, assistance can be derived by such non-residents from section 44B if they are in shipping business. It would. also be in a position to rely upon section 172 but the responsibility of the person making payment to a non-resident in sub-section (1) of section 195 cannot be avoided in tho manner Get nut in other cases. The scheme as above operates only to cases covered by section 172 of the IT Act and none else. 49. The term non-resident means a person who is not a resident as per section 2(30) of the Income Tax Act and for the purposes of sections 93, 93 and 168, includes a person who is not ordinarily a resident within the meaning of clause (6)of section 6. The term person includes an individual, a HUF, a company, firm and every artificial juridical person not falling within any of the preceding sub-clauses of clause (31) of section 2. By section 2(23A), a foreign company is defined to mean a company which is not a domestic company. Hence, any person resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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