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2015 (2) TMI 61

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....tronically filed its return of income for 2007-08 on 26-10-2007 declaring total loss of Rs. 1,37,321/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 10-12-2009 and the total income was determined at Rs. 33,62,860/-. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who vide order dated 23-12-2010 dismissed the appeal of the assessee. Aggrieved by the aforesaid order of Ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds:-           "1. The order passed by the CIT(A) is erroneous in law and on facts and therefore, requires to be suitably modified. It is submitted that it be so do....

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....es. TDS amount was deducted whenever required and only on the reimbursement of expenses incurred by them as the order of Rs. 33,22,048/- [ Rs. 34,16,650 - Rs. 94,602 ], no TDS was deducted.           2.3 Without prejudice to foregoings, it is submitted that if at all entire disallowance is upheld the correct amount comes to Rs. 33,22,048/- and not Rs. 33,29,238/-." 4. Before us, Ld. AR submitted that though assessee has raised various grounds but the only effective ground is with respect to disallowance u/s. 40(a)(ia) of the Act. 5. During the course of assessment proceedings, AO noticed that assessee had debited clearing and forwarding charges of Rs. 34,16,650/-. He also noticed that the afo....

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....tted that for the remaining amount, TDS was not deducted since the same was reimbursement of expenses. Assessing Officer did not agree with the appellant's contention on the ground that the bills raised by clearing and forwarding agents are on account of different expenses and not reimbursement and accordingly these are the receipts of clearing and forwarding agents. Appellant debited the entire charges and credited the same in agent's account. The contract is between appellant and clearing and forwarding agents and not the company who are actually doing the work. Assessing officer also relied upon circular number 715 issued by CBDT. In answer to question number six and seven, it is clearly mentioned that gross amount paid to cleari....

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....of reimbursement is there under section 194C. In the case of clearing and forwarding Agent it is clearly mentioned in answer to question number seven of circular number 715 that clearing and forwarding agents act as independent contractors and any payment made to them would be liable for TDS. They would also be liable to deduct tax at source while making payments to a carrier of goods. In answer to question number 30, it is clearly mentioned that section 194C refers to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of TDS. In the light of clear clarification, there cannot be any exemption from TDS even in case of reimbursements. Since provisions of section 194C read with circular number 715....

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.... the assessee had to pay the service charges rendered and also to reimburse the actual expenditure incurred by them on account of freight and other incidental charges on their furnishing the proof of such expenditure. It was further submitted that the clearing and forwarding charges included the reimbursement of expenses incurred by the clearing and forwarding agent on behalf of assessee. It was further submitted that "M/s. Three Rose" and other agents were reimbursed the cost incurred by them and there was no profit element in the reimbursement. Ld. AR further submitted that before AO, assessee had submitted the summary of clearing and forwarding charges paid to different agents clearly specifying the agency charges but AO did not consider....