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TMI Blog2019 (1) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... ate limited company. It is engaged in the business of shipping agency, clearing and forwarding, stevedoring and other allied services. The assessee, in the course of its business, had taken certain ships on hire and had paid charter hire charges. For the AY 2007-08 the assessee had made total payment of Rs. 12,61,18,420/- as charter hire charges. Similarly for the AY 2008-09, the total payment was to the tune of Rs. 2,30,34,169/- as charter hire charges. The Assistant Commissioner of Income Tax (TDS) was of the view that when charter hire charges are paid, the payments attracted the provisions of sec.194-I of the act and assessee having failed to deduct tax at source was liable u/s 201(1) and 201(1A) of the Act. The ACIT(TDS) was of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec 194C of the Act or 'hire' simplicteor coming within the provisions of sec. 194-I of the Act. Further, the question is whether payment for hire of ship simplicitor could come within the ambit of extended definition of 'rent' u/s 194-I of the Act. In order to examine whether it is a case of contract of carrier coming within the provisions of sec. 194C or hire simplictor of ships coming within the provisions of sec. 194-I, reading of contract/agreement entered between the assessee and the owner of the ships is must. The contract entered between the assessee and the ship owners are not placed on record though there is a reference to some of the clauses of contract in the order passed u/s 201 (1) and 201(1A) of the Act. We find the issue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA numbers 302, 400 & 401/Coch/2014 [Exihibit-II] setting aside the order u/s 201[1] passed by the ACIT(TDS) with a direction to examine the agreement entered into between shipping company/owners from whom the vessels were taken on hire by the assessee and on its basis to determine as to whether it is a case of contract of carrier coming within the .ambit of Sec.194C or rent falling under the provisions of 1941 of Income Tax Act 1961. 4. The Assessee had hired ships on time-charter basis and made payment of Rs. 12,61,18,420/- to various companies without deduction of tax, thereby committing a default of TDS provisions. The ACIT[TDS] passed an order u/s 201[1] on 30-03-2012 [Exhibit-III] wherein the entire payments were treated as paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has submitted the break up of expenditure. 7. Since the assessee has submitted that Rs. 5,10,12,348/- has been paid to non-residents (out of total payments of Rs. 12,61,18,420/-), provisions of section 195 is clearly attracted. 8. The Honorable Madras High court in the Poompuhar Shipping Corporation Ltd. judgment dated 09.10.2013 in TC(A)nos.2206 to 2208 of 2006, & TC(A)Nos.598 to 601 of 2013 held that the payment by way of charter/time charter of ships falls within the ambit of Royalty and therefore, the provisions of Sec.194J/195 are attracted. In view of the fresh materials now adduced and the pronouncement in the Poompuhar Shipping Corporation Ltd., the time-charter hire charges paid to foreign companies has to be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.45 & 46/coch/2014. ii. Respectfully prayed that there after the ITAT may set aside the order u/s 201(1) dated 30.03.2012. iii. Respectfully prayed that the ITAT may direct the Assistant Commissioner of 1 Income tax (TDS) Kochi, to deal with the TDS aspect of the payment to residents. iv. Respectfully prayed that the ITAT may direct the Assistant Commissioner of Income Tax, (International Taxation), Kochi to deal with the payments made to Non-Residents". 6. We have heard the rival submission and perused the material. The only issue raised by the department before the Tribunal in the Income-tax appeal was that section 194-I of the I.T.Act has application to the facts of the instant case and not section 194C of the I.T.Act, as contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment's acknowledgment in the local delivery book is placed on record in the paper book filed by the assessee. When the payment details are furnished by the assessee vide letter dated 06.07.2012, the Department ought to have taken up the issue of applicability of section 194J and 195 of the I.T.Act before the first appellate authority or before the Tribunal. However, on perusal of the grounds of appeal, the Department's only plea is provisions of section 194-I has application instead of section 194C of the I.T.Act, as claimed by the assessee. The Revenue does not have the case before the CIT(A) nor before the ITAT that provisions of section 194J and 195 of the I.T.Act has application. The Tribunal is expected only adjudicate the issue that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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