Tribunal Upholds Decision to Exclude Demurrage Charges from Section 195 Disallowance, Dismissing Revenue's Appeal.

The Tribunal dismissed the Revenue's appeal against the CIT(A)'s order, which had directed the AO to delete the addition of demurrage charges paid to non-resident parties. The Tribunal upheld the CIT(A)'s decision, aligning with the Bombay HC's ruling, confirming that the disallowance under Section 195 was not applicable.

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Issues:
The appeal filed by the Revenue against the order of CIT(A)-2, Panaji for the assessment year 2012-13.

Facts of the Case:
The respondent-assessee, a company engaged in processing and trading in Iron-ore, filed a return of income for the A.Y. 2012-13 declaring total income of Rs. 266,47,93,720. The assessment completed by the Assessing Officer resulted in a total income of Rs. 304,37,76,805 after making various disallowances.

Disallowances Made:
The disallowances made by the Assessing Officer included u/s.14A disallowance, addition on account of undisclosed sale receipts, disallowance of consultancy charges, disallowance of demurrage paid without TDS, and addition on account of interest income.

CIT(A) Order:
The CIT(A) directed the AO to delete the addition of Rs. 4,41,62,650 being demurrage charges paid to non-resident parties, citing relevant court decisions.

Appeal by Revenue:
The Revenue appealed against the CIT(A) decision, arguing that the court decision cited by the CIT(A) did not apply to the present case.

Issue for Consideration:
The main issue for consideration was whether the demurrage charges paid by the respondent-assessee to foreign companies could be disallowed for non-deduction of tax at source u/s.195 of the Income-tax Act, 1961.

Decision:
After hearing the arguments, the Tribunal found that the decision of the Hon'ble Bombay High Court overruled the earlier decision cited by the AO. As the CIT(A)'s order was in line with the law laid down by the High Court, the Tribunal dismissed the Revenue's appeal.

Conclusion:
The appeal filed by the Revenue against the CIT(A) order regarding the disallowance of demurrage charges was dismissed by the Tribunal based on the legal precedents and relevant provisions of the Income-tax Act, 1961.

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