TaxTMI 
TaxTMI 
2016 (11) TMI 660
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....king and Storing" and the payments made include storing charges, peeling charges repacking charges, labour charges etc. d. The name of work undertaken by the processor and the nature of payments made to them itself show that the assessee had to necessarily deduct tax at source u/s. 194C of the Act. e. The Ld. CIT(A) has erred in deleting the addition u/s. 40(a)(ia) of Rs. 20,02,535 for non deduction of tax at source from clearing and forwarding charges. f. The Ld. CIT(A) ought to have noted that the payments made under the head "Clearing and Forwarding" are usually also inclusive of commission/service charges paid to the agency. Circular No. 5/2002 of the CBDT clarifies that clearing and forwarding agents acts as independent contractors and any payment made to them would, hence, be liable for deduction of tax at source. g. The interest on vehicle loan paid by the assessee to M/s. Sundaram Finance and other private companies was separately debited in the profit and loss account and hence, tax was deductable at source on the interest paid. 2. The brief facts of the case are that by order dated 28/02/2014, the Additional Commissioner of Income Ta....
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....tract within the meaning of Sec. 194C of the I.T. Act liable to tax deduction at source. 6. Ground No. 2(e) and (f) relate to deletion of addition of Rs. 20,02,535/- under the head clearing and forwarding for non deduction of tax u/s. 40(a)(ia). According to the Ld. DR, the Ld. CIT(A) has not appreciated the fact that the payment made under the head clearing and forwarding are normally inclusive of commission, service charges paid to the agency. In this regard Circular No. 05/2002 of CBDT was relied upon which clarify that clearing and forwarding agents act as independent contractors and any payment made to them would be liable for deduction of tax at source. 7. Ground No. 2(g) relates to interest on vehicle loan paid by the assessee to M/s. Sundaram Finance and others which are separately debited in the profit and loss account and hence liable for deduction of tax on interest paid. 8. The Ld. Counsel for the assessee, Shri R. Sreenivasan, FCA reiterated the arguments made before the Ld. CIT(A). As for non deduction of tax at source on the reimbursement of expenses paid to M/s. Geo Acquatic, it was submitted to the Assessing Officer that the ratio of the case of the Hon'bl....
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....enditure incurred under particular heads and in such cases there is no liability to deduct tax. The assessee has placed reliance on the decision of the ITAT Delhi Bench D in the case of ITO vs. Dr. Willmar Schwab (I) Pvt. Ltd., a copy of which has been filed. It has been held in the said decision that reimbursement of expenses does not attract the provisions of TDS. 12. Now the issue to be decided here is whether the payment made under the head plant repair represents reimbursement of expenses. In our view the split up given by the assessee has to be read in conjunction with clause 3(b) to (h) of the agreement. It would be clear that payments are in nature of reimbursement of expenses. Respectfully following the decision of ITAT Delhi Bench D, and the decision of Hon'ble Kerala High Court (supra), we hold that the payment made to M/s. Geo Acquatic, debited under the head plant repairs does not attract TDS liability. 13. Further the Ld. AR filed a second paper book showing copy of bills raised by M/s. Geo Acquatic Pvt. Ltd., Chandiroor. He stated that page 1 to 32 of the paper book relates to bills raised for processing charges on which TDS has been deducted. Page 33 to 116 re....
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....uction. The assessment order is also not clear or the Assessing Officer has not quantified what are the exact charges paid to Al Mustafa Agencies towards these services. In these circumstances and in the absence of material on record he has held that the disallowance of clearing and forwarding charges as he has done is not warranted. He has also considered the decision of Hon'ble Delhi High Court. 15. Yet another point in revenue's appeal is on the deletion of addition made out of vehicle loan hire charges of Rs. 3,61,136/- without deduction of tax. This is mainly paid to M/s. Sundaram Finance. Here also this is paid as EMI along with principal payment. Therefore the provisions of TDS are not applicable. The Ld. CIT(A) held that hire purchase payment would not come within the meaning of sec. 194C for the purpose of tax deduction. Further payments are made under the Equated Monthly Instalment Scheme. It is not covered by the TDS provisions. Accordingly, the addition made on this score has been deleted. 16. We have considered the rival submissions and perused the facts of the case. The first issue is regarding deletion of addition made under section 40(a)(ia) on reimbursement o....