TaxTMI 
TaxTMI 
2014 (5) TMI 268
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.... is be held so now and AO be directed to delete the addition. 2. The hon'ble CIT(A) has erred in confirming the disallowance of Rs. 4,61,160/- U/s. 14A of the Income Tax Act, 1961 read with Rule 8D without providing the nexus of Investment and considering the facts submitted during hearing. It is submitted that the disallowance is uncalled for and be directed to be deleted." 3. Ground No. 1 relates to disallowance of payments of Rs. 12,97,893/- u/s. 40(a)(ia) being the reimbursement expenses paid to clearing and forwarding agent without deduction of tax at source. 4. Brief facts of the case are that AO observed during the assessment proceedings that assessee has not deducted tax at source from payments of Rs. 12,97,893/- made to Express Transport Pvt. Ltd rendering services as Custom House Agent for import and export of goods. The assessee's contention was that TDS was not deducted on bills in respect of reimbursement of expenses as per Board's Circular 715 dated 08/08/1995. On perusal of bills issued by the Customs House Agent, AO concluded that the payments were raised directly by Express Transport Pvt. Ltd to the assessee and payments given on account of reimbursement s....
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.... in favour of assessee and against the revenue by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs Gujarat Narmada Valley Fertilizers Co wherein on similar facts hon'ble High Court has held that no part of amount reimbursed was to be disallowed u/s. 40(a)(ia) if tax has not been deducted which is clear from the head notes of judgment which reads as under:- "Section 40(a)(ia) of the Income-tax Act, 1961-Business disallowance-Interest etc., paid to resident without deduction of tax [Reimbursement to expenses]-Expenses were incurred by agent on behalf of assessee-principal for transportation and other charges, which had been spelt out in bill itself-So far as obligation to deduct tax at source form payment of transport charges and other charges was concerned, same was complied with by agent, who had made payment on its behalf -Whether no part of amount reimbursed was to be disallowed-Held, yes [Para 3] [In favour of assessee]" In view of the above, this ground of assessee is allowed. 8. Ground No. 2 relates to disallowance of expenses of Rs. 6,54,164/- u/s. 14A of the Income Tax Act read with Rule 8D in respect of exempt dividend of Rs. 47,41,076/-.....
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....hd/2010 12. Revenue has taken following three grounds:- "1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs. 60,60,960/- u/s. 40(a)(ia) of the Act, in respect of payment made to Akassish Mechatronics Ltd., completely overlooking the fact that as per provisions of section 40(a)(ia), tax is to be deducted at source under chapter XVIIB which prescribes different rate under different sections and in the instant case, the assessee deducted tax at a lower rate than prescribed u/s. 194J of the Act. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs. 8,86,940/- made u/s. 40(a)(ia) of the Act, in respect of payment made to Elecon Information Technology Ltd., completely overlooking the fact that as per provisions of section 40(a)(ia), the tax is to be deducted at source under chapter XVIIB which prescribes different rate under different sections and in the instant case, the assessee deducted tax at a lower rate than prescribed u/s. 194J of the Act. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of Rs. 3,60,2....
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....th of the payment of Rs.14,78,232/-u/s.40(a)(ia). Ld. CIT(A) deleted this disallowance. 16. At the time of hearing learned counsel of the assessee in respect of both these grounds submitted that there was short deduction of tax, therefore no disallowance u/s. 40(a)(ia) of the Act can be made in view of the decisions of Cochin ITAT Bench in the case of Apollo Types Ltd vs. DCIT in ITA No. 31/Coch/2010 dated 29th May, 2013 and New Delhi ITAT Bench in the case of UE Trade Corporation (India) Ltd in ITA No. 2303/Del/2011dated 18th May, 2012. Ld. DR on the other hand relied on the orders of lower authorities. 17. After hearing both the parties and perusing the record, we find that there is no dispute about the fact that in respect of payment made by assessee to M/s. Elecon Information Technology Ltd. (EITL) and M/s. Akaaish Mechatonics Ltd (AML) these was short deduction of tax and therefore the ratio of the Tribunal in the case of Apollo Types Ltd vs. DCIT and UE Trade Corporation(India) Ltd is directly applicable to the facts of this case. In the case of UE Trade Corporation vs. DCIT, the Hon'ble Tribunal in similar facts has held as under:- 6. We have heard both the parties ....