TaxTMI 
TaxTMI 
2011 (5) TMI 300
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....8,84,881/- made u/s 40(a)(ia) for nondeduction of tax at source on payments of clearing and forwarding charges. "On the facts and circumstances of the case as well as in law, the Ld. Commissioner of Income Tax (Appeals) erred in deleting the disallowance of Rs. 30,66,703/- made u/s 40(a)(ia) for nonITA deduction of tax at source on payments of freight and cartage outward." 3. The assessee in this case is a private limited company and is engaged in the business of manufacture and export of garments. In this case during the course of assessment proceedings it was noticed that the assessee has claimed clearing and forwarding charges of Rs. 8,84,881/- and freight cartage outward at Rs. 30,66,703/-. The assessee was asked to expl....
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.... airlines for export of the goods. It was also argued that there is no liability for deduction of TDS on the above payments u/s 194C. It was argued that provision of section 40a(ia) does not apply to such payments made towards reimbursement of actual freight charges paid to the airlines. As regards, the payment of Rs. 8,84,881/- representing clearing and forwarding charges, it was argued that the above amount was paid to various parties as per bills and none of the payments were above Rs. 50,000/- and hence the said payments are not liable to TDS u/s 194C of the Act. Ld. Commissioner of Income Tax (Appeals) concluded as under:- "On careful examination of the matter, I find that payments made on the basis of separate bills raised for....
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....66,703/- cannot be sustained. Further, the disallowance of Rs. 8,84,881/- also cannot be sustained as no payment has been made to any party/agent in excess of Rs. 50,000/- and hence the said payments are not subject to TDS as per the express provisions of section 194C(5). The impugned addition of Rs. 39,51,884/- is therefore, deleted." 5. Against the above order the Revenue is in appeal before us. 6. We have heard the rival contentions in light of the material produced and precedent relied upon. 6.1 Ld. Departmental Representative relied upon the order of the Assessing Officer. 6.2 Ld. counsel of the Ld. Authorised Representative on the other hand supported the order of the Ld. Commissioner of Income Tax (App....