TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1419
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....:- "1. That on the facts and circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition made by the AO of Rs. 1,93,07,205/- in respect of payment made to the shipping companies without giving cognizance to the decision of Supreme Court in the case of M/s Transmission corporation of India reported in 239 ITR 587. 2. That on the facts and circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition made by the AO of Rs. 1,93,07,205/- for non deduction of TDS in respect of payments made to the shipping agents as reflected in the asst order who are assessed to tax in India and the payments received by them are taxable in India." 3. Facts in brief are that assessee in the present case is a Limited Company and engaged in manufacturing, processing, trading and export of tea, jute, coffee, black paper (golmarich) and other spices. The assessee, for the year under consideration has filed its return of income declaring total income at Rs.1,20,29,840/-. Thereafter a notice u/s. 143(2)/142(1) of the Act was issued for conducting the scrutiny assessment upon assessee. 3.1 During the year, assessee has made payments for an amount of Rs. 1,93,07....
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.... the order of the ld. CIT(A). 5. We have heard the contentions of the rival parties and perused the materials available on record. At the outset, we find that similar issue has already been covered by this co-ordinate Bench in assessee's own case in ITA No.683/Kol/2012 dated 13.11.2015 relating to AY 2007-08 where the relevant extract is reproduced below:- We also understand that section 172 of the Act is applicable for the purpose of the levy and recovery of tax in case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. The non-resident shipping companies are liable to pay taxes u/s 172 of the Act and such companies have to discharge tax liability on payments for carriage of goods from India or have to make satisfactory arrangements for discharge of tax liability thereof. Accordingly in case shipping company is taxable u/s 172 of the Act and the obligation to pay taxes arises in the hands of the master of the ship or any agent appointed by assessee in India. In this regard, reliance could be placed upon Circular No. 723 issued by CBDT clarifying the scope of Section 172, 194C and 195 of ....
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.... DTAA. Therefore, above expense was disallowed and added back to the total income of assessee. 8. Aggrieved, assessee preferred an appeal before L'd CIT(A) who has deleted the addition made by AO by observing that similar issue was placed before him for AY 2007-08 as the addition made by AO was deleted by his predecessor and in terms of above contention he deleted the same. Being aggrieved by this order of L'd CIT(A) Revenue is in appeal before us. Before us both the parties relied on the orders of Authorities Below as favourable them. 9. We have heard rival contentions and perused the materials available on record. At the outset, we find that similar issue is already covered in favour of assessee in assessee's own case in ITA No.683/Kol/2012 dated 13.11.2015 relates to AY 2007-08. The relevant extract in para-6 reproduced below:- 6. From the aforesaid discussion, we find that the AO has disallowed the expenses due to the violation of TDS provisions of the assessee. However the transaction for making the advertisement payment and commission are out of the purview of the TDS provisions in terms of the provisions of section 195 of the Act which reads as under : "195. [(1) Any p....
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.... and submissions. From the assessment order it appears that the AO has made addition u/s. 14A read with Rule 8D(2)(ii) for Rs. 6,54,807/- and Rule 8D(2)(iii) for Rs. 4,38,670/- together totaling Rs. 10,93,477/-. The appellant has contested application of Rule 8D as it has not incurred any expenditure to earn dividend income of Rs. 25,370/-. The AR has further stated that the appellant has earned only a nominal amount of Rs. 25,370/- and the action of the AO to arbitrarily fixed disallowance of expenditu5re at Rs. 10,93,477/- was unreasonable and bad in law. In support the AR has cited the case of ACIT vs. Punjab state Co-operative and marketing Federation Ltd, 2011 IT No. 548 passed by the Hon'ble ITAT, Chandigarh Bench. I have examined the annual report FY 2007-08 of the appellant and find that the company as on 31.03.2008 had no unsecured loans and the only secured loan was from Karnataka Bank which was to be utilized only towards the working capital of the appellant. Hence, no amount of borrowed fund can be said to have been utilized for the purpose of making investment in shares/mutual funds from which exempt income has been earned. I further notice from the balance sheet a....
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....s which are yielding dividend income in India only. 14. We have heard the rival contentions and perused the materials available on record. From the foregoing discussion, we find that AO has invoked the provision of Sec. 14A has made the disallowance under Rule 8D of the IT Rule without recording any satisfaction. We also find that assessee has sufficient fund in making investment in Indian companies which are placed on page 153 of the assessee's paper book. Therefore we can infer borrowed money has not been utilized in investment in Indian companies. AO has applied the formula given under Rule 8D of the IT Rules even on those investments which were made in foreign companies of the assessee without appreciating that the dividend income from foreign companies is not exempted to tax. Therefore, the disallowance cannot be made for the investment made in foreign companies. Considering the facts and circumstances of the case and in our considered view, we find that L'd CIT(A) has deleted the disallowance as per Rule 8D of IT Rules after taking into account the investment made in the Indian companies and for this reason, we find no reason to interfere in the order of Ld. CIT(A). We also ....