TaxTMI 
TaxTMI 
2013 (4) TMI 143
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....nd 2 of this appeal which read as under : 1. On the facts and in the circumstances of the case and in law the Learned CIT(A) has erred in deleting the disallowance of Rs. 50,91,541/- made by the AO u/s 40(a)(ia) on account of non-deduction of TDS on air freight paid to foreign airline companies, ignoring the fact that :- (a) the foreign airline's income is deemed to be table in India at a prescribed rate and unless specifically exempted from the TDS provisions by the AO through an order u/s 195(2) and no such order u/s 195(2) has been produced before the A.O. (b) the CBDT's circular No. 723 dated 19.09.1995, which covers only shipping company and not an Airline Company. (c)....
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....it thereof was not applicable in respect of airlines. He also noted that the assessee had not made any payments on account of freight charges directly to the airlines. The AO, therefore, was of the view that there was failure on the part of the assessee to deduct tax at source from the payment of freight charges and required the assessee to show cause as to why such freight charges should not be disallowed u/s 40(a)(ia) for its failure to deduct tax at source from the payments thereof. In reply, the following submissions were made on behalf of the assessee before the AO : "(2) We have already submitted to your office the details of freight charges paid. In this connection, we have to submit that out of the list only 7 parties are s....
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....eductible by the assessee at source. He noted in this context that the payment of such freight charges was not directly made by the assessee to airlines but the same was made to different parties who acted as freight booking agent. He also noted that the said parties had also not furnished any certificate issued u/s 197 for no deduction of tax at source. Accordingly the freight charges paid to the said parties for air fare/road transport amounting to Rs. 50,91,206/- was disallowed by the AO u/s 40(a)(ia) in the assessment completed u/s 143(3) vide an order dated 23-12-2008. 5. Against the order passed by the AO u/s 143(3), an appeal was filed by the assessee before the learned CIT(Appeals) and after considering the submissions made by th....
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....y Cargo U.A.E. Exempt under Article 8 of DTAA Air Way Bill Swiss World Cargo Switzerland Exempt under Article 8 of DTAA Air Way Bill Gulf Air Company G.S.C. Bahrain Exempt under Article 8 of DTAA 2 City Transport Syndicate Pvt. Ltd. 549,834.00 Shipping Bill City Transport Syndicate Pvt. Ltd. Doha/Qatar Exempt Under Circular Shipping Bill PEE Express Ltd. London UK Exempt Under Circular. 3 Aroscan Cargo Trade Pvt. Ltd. 497,840.00 Air Way Bill Gulf Air Company G.S.C. Bahrain Exempt under Articles 8 of DTAA. &n....
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....rges and even the said air fare was not directly paid to the airlines but the same was paid to the different parties who acted as freight booking agents. As per the details furnished by the assessee for the fist time before the learned CIT(Appeals), the said payment, however, was shown to be made in some cases directly to the airlines and all these payments were held to be exempt by the learned CIT(Appeals) relying on Article 8 of the Double Tax Avoidance Treaty as well as in some cases relying on the CBDT Circular. He, however, has not given any reason or basis to show as to how the said payments were exempt either under the relevant tax treaties or under the Board's circular. No opportunity was also given by him to the AO to examine t....