2015 (7) TMI 319

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....rial to the foreign markets. The transportation is either through air or sea. In so far as air liting is concerned, the goods are transported through GBR Freight Forwarders Private Ltd and in so far as shipments are concerned, they are through Balaji Shipping Services. 3. Assessee had deducted tax at source on a sum of Rs. 20,250 in the case of GBR Freight Forwarders Private Ltd and no TDS was deducted in the case of Balaji Shipping Srvices. Assessee submitted that the two parties were merely shipping agents who did not undertake the freight work themselves but got the work done on behalf of the assessee. The assessee submitted that in case of GBR, the payment consisted of firstly, reimbursement of expenses incurred on the assessee's beh....

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.... Cement Co.Ltd vs. CIT [1993] 201 ITR 441 (SC) for the view that on express language of the section, it is impossible to hold that the deduction of tax has to be confined to the income component of the contractor, that there is nothing in the language of the section which permits exclusion of an amount paid to the contractor and that the words 'on income comprised therein' used at the concluding part of the section 194C( 1) cannot be construed to mean that deduction should be from the income of the contractor as Parliament cannot be attributed with the intention of enacting an impractical and unworkable provision which casts impossible burdens on the payer. 6. The Assessing Officer, therefore, disallowed a sum of Rs. 24,76,442 u/....

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....rved as follows: "11. I have considered the facts on record and the submissions of the AR. The bills raised by GBR show a slew of services rendered by it, including freight charges. The bills submitted by BSS refer only to freight charges. It is the appellant's claim that the freight charges, referred to in these bills was merely reimbursement of expenses incurred by these two parties and therefore, the appellant was not obliged to deduct tax on the payment made towards such reimbursement. There is nothing in these bills to show that the freight charges were merely being reimbursed to the two parties". 10. The CIT (A) further pointed out that CBDT Circular No.715, dated 8.8.1995, (215 ITR (St) 12) states as follows: "Question 30 : ....

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...., therefore, uphold the disallowance of the sum of Rs. 24,76,442 u/s 40(a)(ia). In the result, the appeal is dismissed". 14. Aggrieved, assessee is in appeal before us. Before us the ld Counsel for the assessee reiterated the submissions made before the CIT (A). The ld Counsel for the assessee also placed reliance on the decision in the case of CIT vs. S.K. Tekriwal (361 ITR 432 (Cal.) wherein the facts are as follows: "The assessee deducted tax under section 194C(2) of the Income-tax Act, 1961,from payments made to subcontractors. According to the Revenue, the payments were in the nature of machinery hire charges falling under the head "rent" and the provisions of section 194-1 were applicable. On the ground that the assessee had ded....

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.... Ltd (38 Taxmann.com 77 (357 ITR 641) upheld the finding of the ITAT that for disallowing expenses from business and 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. A copy of the decision of the Hon'ble High Court was also submitted by the assessee and the ITAT followed the ratio of the Special Bench decision in the case of M/s. Merilyn Shipping & Transport Ltd (136 ITD 23(SB). 7.3 The assessee further submitted that the Hon'ble Andhra Pradesh High Court in its judgment dated 24.06.2014 in the case of CIT vs. M/s. Janapriya Engineers Syndicate (ITA No.352 of 2014) held until and unless the decision of the Special Bench in the case of M/s Mer....