TaxTMI 
TaxTMI 
2015 (1) TMI 919
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.... work on which TDS was not deducted." In ITA Nos. 122/PNJ/2014 and 309/PNJ/2014 also the grounds are common except for change in the figure. In place of Rs. 73,21,304/- in ITA No. 121/PNJ/2014, amount of Rs. 3,00,14,341/- and Rs. 72,97,022/- be respectively read in ITA Nos. 122/PNJ/2014 and 309/PNJ/2014. 3. Arguments were advanced by both the parties on the basis of the facts in ITA No. 121/PNJ/2014. We, therefore, decided to dispose off all the appeals on the basis of facts in ITA No. 121/PNJ/2014. 4. The only issue involved in all these appeals relate to whether CIT(A) was correct in law in deleting the disallowance made by the AO by applying the provisions of Sec. 40(a)(ia). The facts for the A.Y 2009-10 in the case of M/s. Zephyr Biomedicals relating to this issue are that the AO during the course of the assessment noted that the Assessee has not deducted TDS on freight amount paid to the Forwarding & Clearing agent (C&F agent). When called for, the Assessee explained that the amount paid are in the nature of reimbursement of the expenses as the agent only collects the amount which are paid by them to the airlines. The AO relied on CBDT Circular no. 715 dt. 8.8.1995 wherein ....
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.... wherein it has been held that TDS provisions are not applicable on pure reimbursements. I am in agreement with the contention of the appellant, in view of the various judicial pronouncements quoted and relied upon by the appellant and the A.O. is directed to delete the disallowance made u/s 40 (a)(ia) amounting to Rs. 73,21,304/-." 5. We heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below as well as the evidences and the case laws relied on before us. The ld. AR before us relied on pgs. 68 to 73 of the paper book and on that basis the ld. AR claimed that the Assessee has reimbursed to C&F agent the actual air freight paid by them to the airlines and it is not payment made to the C&F agent. We noted that there are bills of Jet Airways from pg. 69 to 73 of the paper book, summary of which is made at pg. 68. Page 68 consists of invoice dt. 12.5.2008 raised by Jet Air Freighters to the Assessee. The Assessee has issued cheque bearing no. 46101 dt. 16.5.2008 for total amount of Rs. 2,05,660/- which according to the Assessee includes the sum of Rs. 1,25,272/- relating to the air freight cartage. We noted that from the covering ....
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....ted tax at source while making payment to the carrier so as to prove that the amount which was paid by the Assessee to the C&F agent represents reimbursement of the freight paid by the C&F agent on behalf of the Assessee to the airlines. It is not the intention of the legislature that neither the C&F agent deducts the tax when it makes the payment to the carrier nor the Assessee deducts the tax at source when it makes payment to C&F agent. If the Assessee claims that the amount paid to the C&F agent by the Assessee represents reimbursement, the onus is on the Assessee to prove that it represents the reimbursement of the claim. In our opinion, provisions of Sec. 194C are clearly applicable in the case of the Assessee. 7. We have also gone through the various decisions as relied on by the ld. AR. In the case of DCIT vs. Dhaanya Seeds (P.) Ltd., 42 taxmann.com 277, the Bangalore Bench of the Tribunal under para 6.4.3 clearly held that reimbursement of the expenses by C&F agents cannot be held to be contract/service on which the provisions of Sec. 194C would come into play. It is a case where the Assessee has proved that he reimbursed the actual expenses incurred by the C&F agent. Thu....
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....le taking the view in favour of the Assessee, the Tribunal observed that the decision of the Tribunal was based upon the decision of the Hon'ble Supreme Court in the case of Vector Shipping Services (P) Ltd. We do not agree with these observations of the Bombay Bench of this Tribunal. We noted that the Hon'ble Supreme Court dismissed the SLP against judgement of Hon'ble Allahabad High Court in Vector Shipping Services (P) Ltd., 357 ITR 642 at the admission stage. The Hon'ble Supreme Court has not gone into the merits of the issue and has not laid down any law. The dismissal of the SLP at the admission stage cannot be treated as declaration of law under Article 141 of the Constitution of India. The Hon'ble Supreme Court in the case of Smt. Tej Kumari & Ors. vs. CIT, 247 ITR 210 at pg. 213 has held as under : "It is, therefore, noticed that it is not a case where a special leave petition was summarily dismissed by the Supreme Court rather the civil appeal was heard on the merits and thereafter it was dismissed holding that the appeal has no merit. It is a well settled principle of law that when a special leave petition is summarily dismissed under article 136 of ....
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.... already have quoted extensively both the majority and the minority views expressed in the aforesaid case. The main thrust of the majority view is based on the fact "that the Legislature has replaced the expression "amounts credited or paid" with the expression "payable‟ in the final enactment. Comparison between the pre-amendment and post amendment law is permissible for the purpose of ascertaining the mischief sought to be remedied or the object sought to be achieved by an amendment. This is precisely what was done by the Apex Court in the case of CIT Vs. Kelvinator reported in 2010(2) SCC 723. But the same comparison between the draft and the enacted law is not permissible. Nor can the draft or the bill be used for the purpose of regulating the meaning and purport of the enacted law. It is the finally enacted law which is the will of the legislature. The Learned Tribunal fell into an error in not realizing this aspect of the matter. The Learned Tribunal held "that where language is clear the intention of the legislature is to be gathered from the language used". Having held so, it was not open to seek to interpret the section on the basis of any comparison between the d....
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....art IV on 13-06-1969, the aforementioned words were omitted. Therefore, this would be a clear pointer to the legislative intent that the legislature being conscious of the fact and being armed with all the Committee reports and also being armed with the factual data, deliberately avoided those words. What the appellants are asking was to read in that definition, these precise words, which were consciously and deliberately omitted from the definition. That would amount to supplying the casus omissus and we do not think that it is possible, particularly, in this case. The law of supplying the casus omissus by the courts is extremely clear and settled that though this Court may supply the casus omissus, it would be in the rarest of the rate case and thus supplying of this casus omissus would be extremely necessary due to the inadvertent omission on the part of the legislature. But, that is certainly not the case here. We shall now endeavour to show that no other interpretation is possible. The key words used in Section 40(a)(ia), according to us, are "on which tax is deductible at source under Chapter XVII-B". If the question is "which expenses are sought to be disallowed?" The answ....
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....d by learned advocates have already been dealt with and rejected." 13. We have also gone through the decision of Hon'ble Allahabad High Court in Vector Shipping Services (P) Ltd., 357 ITR 642 (supra). We noted that in this case the following substantial question was admitted : "(a) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal has rightly confirmed the order of the Commissioner of Income-tax (Appeals) and thereby deleting the disallowance of Rs. 1,17,68,621 made by the Assessing Officer under section 40(a)(ia) of the Income-tax Act, 1961, by ignoring the fact that the company M/s. Mercator Lines Ltd. had performed ship management work on behalf of the assessee M/s. Vector Shipping Services (P.) Ltd. and there was a memorandum of understanding signed between both the companies and as per the definition of memorandum of understanding, it included contract also ?" Upon hearing parties and upon perusing material on record, the Hon'ble jurisdictional High Court was of the considered view that (page 645 of 357 ITR) "We do not find that the Tribunal has committed any error in recording the finding on the facts, which w....
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....s certainly a safe approach. Going by this school of thought, now that their Lordships of the hon'ble jurisdictional High Court have observed, in whatever setting and context, that "this is to be noted, for disallowing expenses from business or profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year", we could proceed on the basis that this proposition has the approval of their Lordships. 37. There could also be a school of thought that since the correctness or otherwise of the case of Merilyn Shipping and Transports v. Addl. CIT [2012] 16 ITR (Trib) 1 (Vishakapatnam) [SB] did not even fall for consideration by the hon'ble jurisdictional High Court, it cannot be said that the hon'ble jurisdictional High Court has approved the view taken by the Special Bench in Merilyn Shipping and Transports. The conceptual support for this proposition could be this. As a reading of the substantial question of law before their Lordship's case would clearly show that the question which fell for adjudication by their lordships was altogether different, i.e., whether carrying out of work by Mercator Lines....