TMI Blog2017 (8) TMI 1613X X X X Extracts X X X X X X X X Extracts X X X X ..... -8-2017 - Shri V. Durga Rao, Hon'ble Judicial Member ORDER This appeal by the revenue and the cross objection by the assessee are directed against the order of Commissioner of Income Tax (Appeals), Vijayawada, dated 30/10/2015 for the Assessment Year 2008-09. 2. Facts are in brief that the assessee-firm is engaged in the business of C F agency, filed its return of income by declaring total income of ₹ 1,65,070/-. Return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and thereafter a notice under section 148 was issued and the assessment was completed under section 143(3) read with section 147 of the Act. During the course of assessment proceedings, on verification of the books of account, the Assessing Officer has found that the assessee has made the following contract payments without deducting tax at source:- 1 Chennupati Transport ₹ 1,22,440 2 Decent Lorry Services ₹ 6,38,664 3 Kranti Transport ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant together with commission after effecting TDS in appellant s hands. Appellant passed on the transportation charges to the respective transporters. The Principal has made TDS from commission paid to the appellant and transport charges paid to the transporters. But, the total bill amounts i.e. including the TDS deducted have been passed on by the appellant to the transporters. As per the agreement with principal, the appellant has to transport the products through the transporters assigned by the principal. Thus factually the transport charges are the expenditure of the principal and therefore, he has made TDS from transport charges payments. Since the entire bill amounts are paid to the transporters the credit of TDS certificates of transport charges payments on appellant s name was claimed by the appellant in his return of income. As there was no contract between appellant and transporters and as no expenditure was incurred under this head no TDS was made by appellant But AO held that even though transport charges were not claimed as expenses, section 40(a)(ia) was applicable for not making TDS and added the transport charges of ₹ 41,63,417/- to the income. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord and also the orders of the revenue authorities. We find that there is no contract between the assessee and the transporter and the section 194C is applicable to work contract. The learned CIT(A) has found that in the instant case the clearing and forwarding contractor appoints for transportation of goods, and hence the only responsibility of the assessee was to make payment on receipts of goods. Admittedly, the assessee is engaged in purchase of yarn and trading thereon, and receive the goods from transporters, through clearing and forwarding agents. The AO has made the impugned addition on the assumption that the assessee was having agreement with the transporter for transportation of its goods, was not based on any evidence on record. Therefore, in the absence of any documentary proof to establish that there is an agreement between the assessee and the transporter for carriage of goods, we are not inclined to interfere with the order of the CIT(A) on this issue, which is confirmed and this ground no. 1 of the Revenue is dismissed. 5. Appellant also submits that AO. never doubted genuineness of payment of transport charges. In such situation, he ought not have invoked se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porters from principal and (2) it did not enter into any contract directly with any transporters and (3) the principal reimburses appellant for such payments are borne out by supporting evidence. 5.2 As per the agreement, the appellant being C F agent renders following sservices to the principal company viz., M/s Marico Industries limited. a. Unloading and storing in the godowns of C F agent the goods received from the principal company. b. Executing the sale orders received from the field staff of the principal company. c. Dispatching the goods to the dealers through local transporters which were duly approved by the principal company. d. Providing infrastructure facilities like telephone to their field staff, courier facility, Xerox facility, fax facility and purchasing the miscellaneous items as per principal company s need. e. Loading the goods into trucks local deliveries. f. The C F agents shall be entitled to monthly reimbursements at actual of the local cartage, etc. /loading / unloading charges. (i) As per terms of the agreement, the appellant (C F Agent) has to incur expenses for these services on principal behalf for which respective service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the agreement but it is entitled for reimbursement. Thus, assessee provides facilities to the principal company and in fact they are the business expenses of the principal company. The assessee follows accounting system for getting these expenses reimbursed. The necessary entries are made in its books of account. The assessee furnishes a monthly expenditure statement to the principal company enclosing therewith original bills raised in favour for incurring expenses on its behalf. The principal company reimbursed such amounts and are accounted for in its books The TDS deducted on reimbursed amounts is also accounted for. The TDS deducted on reimbursed amounts is also accounted for. The assessee, therefore, has disclosed all these transactions in its books of account. If reimbursed amount is taken as receipt, then obviously the expenses incurred on behalf of Principal company are to be given same treatment. The next result of such receipts and payments is nil. Thus, there is no taxable income out of such transactions. 5.3 Hon ble Delhi High Court in the case of CIT Vs DLF Commercial Project Corporation held that the obligation to deduct TDS is only with reference to inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and orders of the authorities below. 8. The only issue involved in this appeal is whether assessee is under obligation to deduct TDS or not. The case of the assessee is that he is acting on behalf of the principals, once transporters send the bills to the assessee, in turn, the assessee forwarded the same to the principals and the principals deducted TDS and commission payment is paid to the assessee. The ld. CIT(A) after calling all the details and after examining the same, he accepted the submissions made by the assessee and deleted the addition. The Departmental Representative is not able to point out any mistake or error committed by the ld. CIT(A). I have also gone through the order passed by the ld. CIT(A). The ld. CIT(A) after examining each and every detail, passed a detailed order. I find no infirmity in the order passed by the revenue. Thus, this appeal filed by the revenue is dismissed. C.O.No. 56/VIZ/2016 9. The cross objection filed by the assessee is in support of the order passed by the ld. CIT(A). Hence, cross objection filed by the assessee is dismissed. 10. In the result, appeal filed by the revenue and the cross objection filed by the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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