Assessee wins partial relief on prior period expenses and TDS provisions under section 194I for foreign shipping payments

ITAT Visakhapatnam allowed assessee's appeal partially. Prior period expenses were permitted following consistent precedent where AO accepted prior period income but disallowed expenses, ruling such selective treatment improper. TDS provisions under section 194I were held inapplicable to foreign shipping company payments per Board Circular. TDS credit issue was remanded to AO for verification with original Form-16A despite absence in Form-26AS, following CBDT Circular 5/2013. Interest under section 234C was upheld as no statutory provision exists for waiver despite financial restructuring package.

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Issues Involved:
1. Deletion of addition made towards prior period expenses.
2. Disallowance of demurrage charges under section 40(a)(ia) of the Income Tax Act, 1961.
3. Non-granting of credit for TDS.
4. Charging of interest under section 234C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Towards Prior Period Expenses:
The Revenue filed appeals for multiple assessment years (AY 2009-10, 2011-12, 2012-13, 2013-14, and 2014-15) against the orders of the Ld. CIT(A)-NFAC, which deleted the additions made by the Assessing Officer (AO) towards prior period expenses. The Ld. CIT(A)-NFAC allowed the prior period expenses based on precedents set in the assessee's own cases for earlier years, where the ITAT Visakhapatnam Bench consistently held in favor of the assessee. The Tribunal upheld the Ld. CIT(A)-NFAC's decision, emphasizing the principle of consistency and dismissed the Revenue's grounds of appeal on this issue for all the relevant assessment years.

2. Disallowance of Demurrage Charges Under Section 40(a)(ia):
For AY 2011-12 and 2012-13, the AO disallowed demurrage charges under section 40(a)(ia) on the grounds that the assessee did not deduct tax at source as required under section 194I. The Ld. CIT(A)-NFAC deleted these disallowances, relying on the fact that the demurrage charges were paid to foreign shipping companies in foreign currency, and as per CBDT Circular No. 723, dated 19/9/1995, the provisions of section 194C and 195 would not apply. The Tribunal concurred with the Ld. CIT(A)-NFAC, stating that invoking section 194I was not valid in law, and dismissed the Revenue's grounds on this issue.

3. Non-granting of Credit for TDS:
In the cross-appeal for AY 2011-12, the assessee contested the non-granting of credit for TDS amounting to Rs. 9,08,06,937/-. The Ld. CIT(A)-NFAC denied the credit as it was not reflecting in Form-26AS. The Tribunal referred to CBDT Circular No. 5/2013, which allows TDS credit based on original Form-16A even if not reflected in Form-26AS. The Tribunal remitted the matter back to the AO to verify the genuineness of the TDS credit based on the original Form-16A and directed the AO to grant the credit if found correct.

4. Charging of Interest Under Section 234C:
The assessee also appealed against the charging of interest under section 234C for AY 2011-12, arguing that the advance tax liability arose due to a restructuring package granted after the due date for advance tax payments. The Tribunal noted that there is no provision in the Income Tax Act to waive interest under section 234C and upheld the Ld. CIT(A)-NFAC's decision to deny the waiver, dismissing the assessee's ground on this issue.

Conclusion:
The Tribunal dismissed the Revenue's appeals for all the assessment years concerning the deletion of prior period expenses and disallowance of demurrage charges. The assessee's cross-appeals were partly allowed for statistical purposes regarding the TDS credit issue, while the appeal concerning the waiver of interest under section 234C was dismissed. The cross-objections raised by the assessee were dismissed as infructuous.

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