2011 (11) TMI 703

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.... 2. The first two issues in this appeal of assessee are against the order of CIT(A) confirming disallowance of freight charges and clearing charges by invoking provisions of section 40(a)(ia) of the Act on account of non-deduction of TDS. For this, assessee has raised following ground nos. 1 and 2: "2. For that the Ld. C.I.T(A) was not justified in not deleting the disallowance of freight charges of Rs. 62,285/- u/s. 40(a)(ia) on account of non-deduction of TDS where the freight charges includes Octroi tax paid to Maharastra Government by the transporters and reimbursed by the assessee and the balance amount paid to M/s. Inland Road Transport (P) Ltd. as freight charges on which TDS was not deductible. 2. For that the Ld....

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.... 2,705.00 137 5 1,538.00 - 5,363.00 20-08-2004 388 806 41 5 2,030.00 - 3,270.00 20-08-2004 1,285.00 3,300.00 165 5 30 - 4,785.00 01-10-2004 812 2,640.00 133 5 2,823.00 - 6,413.00 10-11-2004 523 1,518.00 74 5 30 - 2,150.00 02-12-2004 1,078.00 2,200.00 112 5 30 - 3,425.00 25-12-2004 1,111.00 2,846.00 143 5 3,030.00 - 7,135.00 02-02-2005 843 2,200.00 112 5 30 25 3,215.00 15-02-2005 599 1,595.00 83 5 30 18 2,330.00 24-02-2005 1,111.00 2,035.00 102 5 30 31.8 3,314.80 31-03-2005 - - 1,254.00 60 2,315.0....

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....aid by the agent for/on behalf of the assessee. These reimbursement expenses were not made towards any services rendered by the agent, but have been made to set off of the expenses incurred by the agent while clearing the imported goods from the customs for/on behalf of the assessee. Since no element of income is embedded in reimbursement of expenses incurred by agency for/on behalf of the assessee, the assessee was not obliged to deduct tax at source, and, therefore, the CIT(A) has rightly deleted the addition." He also relied on in the case of ITAT, Kolkata "B" Bench in ITA No.1580/K/2008, DCIT Vs. M/s. M. B. Ispat Corporation Ltd. Assessment Year 2005-06 dated 03.04.2009, wherein it has been held as under: "We have carefully ....

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....as held as under: "5) We have considered the rival contentions and perused the record. The jurisdictional High Court in the case of CIT Vs. Seimens Aktiongesellschaft (supra) has held that reimbursement of expenses cannot be regarded as revenue in the hands of the payee. While deciding the issue, the Hon'ble High Court has followed the decision of Hon'ble Delhi High Court in the case of CIT Vs. Industrial Engg. Projects P. Ltd. (202 ITR 1014). It is a settled proposition of law from the various decisions of High Courts and particularly the decision of Hon'ble jurisdictional High Court (supra) that when there is no element of income and the payment is only as a reimbursement of expenses incurred by the payee, then no disallowance ca....