TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 257
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....e Tax Act, 1961(hereinafter 'the Act'). 2. The first two interconnected issues are as regards to the order of CIT(A) confirming the action of the AO in disallowing expenses relatable to commission payment made to non-resident agents & outward freight charges paid to foreign shipping company through agents for non-deduction of TDS by invoking the provisions of section 40(a)(i) of the Act. For this assessee has raised the following ground No. 1 and 2: - "1. On the facts and in the circumstances of the case and in Law the Hon'ble CIT(A) erred in upholding the addition made by the Ld AO by invoking provision of section 40(a)(ia) on commission payment made to Non Resident agent of Rs. 6,96,077/- and the reason assigned for doing so are wr....
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....es to whom freight charges are paid are not liable to tax in India. Hence, according to assessee, on this freight charges of Rs. 69,00,486/-, there is no requirement for assessee to deduct TDS. Once there is no requirement to deduct TDS, no disallowance can be made by invoking the provisions of section 40(a)(i) of the Act. Aggrieved, assessee preferred the appeal before CIT(A) on both the issues i.e. disallowance of commission paid to foreign parties as well as outward freight charges paid to foreign shipping companies without deduction of TDS. The CIT(A) also confirmed the action of the AO. Aggrieved assessee is in second appeal before Tribunal 4. We have heard the rival contentions and gone through the facts and circumstances of the case....
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....utward freight charges paid to the agent of non-resident shipping company, Hon'ble Delhi High Court in the case of CIT (TDS) vs. Continental Carriers (P) Ltd. (2007) has considered the issue vide para 4 to 6 as under:- 4. The department's appeal to the ITAT was dismissed. It was noticed that the assessee had submitted a list of shipping lines along with the names of the agents and corresponding bills of lading to the Assessing Officer at the time of the survey itself. It was further held: "In case the goods have been transported by a foreign shipping line, payments have obviously to be made to the foreign shipping lines or agents thereof. Even if payments have been made to sub-agents in some cases, these are passed on to the agents, who f....
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....s therefore, on such payments the assessee was liable to deduct tax at source as all such payees have received the Ocean Freight charges in their own rights and not as the agent of non-resident shipping companies. 16.4 The assessee-company vide its reply dated 21-11-2003, had filed partywise details of Ocean Freight along with certain letters from the shipping companies/agents thereof stating that the said companies are Non- Resident Shipping Company or the agents thereof. 6. We are of the view that the question whether the payees, in the instant case, were agents of the nonresident shipping companies is a question of fact, which has been decided against the revenue concurrently by both the CIT (Appeals) as well as the ITAT. As already ....
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....as against the same the assessee firm is paying interest at the rate of 12% on the capital of the other partners. Therefore, the AO disallowed the sum of Rs. 1,50,370/- claimed out of the capital expenditure, by treating the same as interest chargeable on the debit balance of Shri Madhu Sudhan Daga. Aggrieved, assessee preferred the appeal before CIT(A) who confirmed the action of the AO by observing in Para 5.6 as under: - "5.6 Ground 6: This is against the action of the AO in disallowing Rs. 1,15,370/- being interest on the debit balance of one of the partners capital account (Mr Madhusudhan Daga). The AO noted that the appellant was paying 12% interest to the other partners of the firm and no interest to this particular partner. Howeve....