2015 (9) TMI 808

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....posing the following question stated to be a substantial question of law:- "Whether the Appellate Tribunal has substantially erred in law in upholding the decision of the CIT(A) in deleting the disallowance of Rs. 12685501/- out of total disallowance of Rs. 1,55,67,666/- made u/s 40(a)(ia) of the Act, especially when the assessee has failed to bring any evidence of record that the payments made are covered under Circular No.723 of 1995 and that the non-residents ship owners/charters had filed returns u/s 172 of the Act?" 2. The assessment year is 2005-2006. The Assessing Officer made addition of Rs. 1,55,67,666/- under the provisions of section 40(a)(ia) of the Act on account of non-deduction of TDS. The assessee carried the matter in ap....

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.... or section 195 since these are subject to section 172 of IT act. Appellant also relied upon several decisions in which payment to agents of non-resident shipping companies were held to be not subject to TDS provisions. Therefore it is clear that wherever any person makes payment to non-resident shipping companies or to any agent of such shipping company then provisions of section 194C will not be applicable and accordingly non-deduction of TDS will not result in disallowance under section 40(a)(ia) of IT act. With the circular 723 and judicial decisions, following conclusions can be drawn- 1 - if any payment is made to an Indian shipping company which is acting as shipping line and not an agent of non-resident shipping company, requirem....

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.... is no question of disallowance under section 40(a)(ia) of IT act. The details are tabulated in the last submission of the appellant mentioned in para 3.2. However in respect of the following payments, the same were made to Indian Shipping companies as shipping line and not as agent of non-resident shipping company- 1 - ORIENT OVERSEAS CONTAINER LINE LTD. Rs. 26,74,072 2 - P & O NEDLLOYD INDIA PVT. LTD. Rs. 3,08,429 3-THE SHIPPING CORPORATION OF INDIA LTD. Rs. 27,24,994 Appellant made payments to aforesaid Indian shipping companies in capacity as principal shipping lines and not as agent of non-resident shipping company. This is very clear from the bill of lading signed by these companies. Accordingly any payment to these comp....