2013 (3) TMI 716

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....acts in brief are that the assessee is a Private Limited Company, and is engaged in the business of Custom House clearing, forwarding and Shipping Agents. 4. The Assessing Officer, during the course of assessment proceeding, noted that assessee has not deducted TDS on the transportation of shipping charges paid on behalf of the assessee's clients and assessee's clients have also not deducted TDS for making such payment to the assessee on account of such charges. In response to the show-cause notice, the assessee submitted that assessee has made the payment to the shipping company and other parties for shipping charges, port charges and other kinds of charges on behalf of its clients. The details of payment made to the various parties wer....

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....ative but do not find merit in them. The appellant has admittedly made payments for which a consolidated bill was raised. Thus, in view of Circular No. 715 dated 08.08.1995 the appellant was bound to deduct TDS from the gross amount of the bill including reimbursement of expenses. Hence, the non deduction of TDS on the entire bill amount would attract disallowance in terms of the provisions of Section 40(a)(ia) in view of the legal position brought out above. Mere non routing of those expenses (in respect of which reimbursement has been received from the clients) through the profit and loss account would not absolve the appellant from the implications of the mischief of Section 40(a)(ia). Hence, the disallowance made by the Assessing Office....

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....ir behalf has neither been debited nor claimed as expenses in the profit and loss account. Thus, the assessee is acting mere as conduit or intermediary and whatever payments are made to the concerned shipping company and to various other Government Agencies, the same is recovered by the clients. It is neither the case of the Assessing Officer nor of the CIT(A) that assessee has claimed any such expenses in the profit and loss account. These are mainly reimbursement of the expenses. Once any expense has not been claimed as deduction, the provision of Section 40(a)(ia) cannot be invoked. The disallowance cannot be sustained in this case for the reason that, firstly, assessee cannot be held to a person responsible for deduction of tax at sourc....