TaxTMI 
TaxTMI 
2019 (6) TMI 1470
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....13 on 30/09/2012 admitting total income of Rs. 73,03,040/-, which was processed u/s 143(1) of the Income-tax Act, 1961 ( in short 'the Act'). Subsequently, notices u/s 143(2) and 142(1) was issued to the assessee. In response to the said notices, the AR of the assessee furnished the required information as called for. 2.1 During the course of hearing, the assessee's AR was asked to furnish TDS reconciliation vide order sheet noting dated 21.1.2015. On examination of the details submitted, the AO noticed that the assessee has incurred an amount of Rs. 32,75,617/- towards Port Handling Charges under the head "Works Cost" during the relevant year and also the assessee has not deducted TDS on the said payment. 2.2 The AO further obser....
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.... 5. Learned CIT (A) has erred in holding that the invoice raised is composite only because reimbursement amounts and other service charges are contained in a single sheet of paper. Memo of expenses / invoice is not a composite bill. 6. Reliance of learned CIT(A) on the Case Law cited by him and Board Circular No. 715 is misplaced. 7. For these and any other grounds that may be raised at/before the date of hearing, it is prayed that the disallowance u/s 40(a)(ia) of reimbursed expenses be deleted." 5. Before us, ld. AR of the assessee filed written submissions, the contents of which are as under: "1. Issue in appeal before the Hon'ble Tribunal is disallowance u/s. 40 (a)(ia) of Rs. 32,75,6171- made by A....
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....axmann.com 16 (Guj). They are not cases where any composite invoices fell for consideration nor of reimbursements. As regards the observations of the supreme court in the case of Associated Cement Co Ltd Vs. CIT [1993] 201 ITR 435 (SC), the passage on which reliance is sought to be placed by Learned CIT(A) is misquoted by him and it is torn out of context. That is basically a case where the contractor is liable to TDS and not a case of reimbursement at all. The contract amount was decided between the contractor and contractee on the basis of certain rates to be paid towards various categories of work. There is a clause 13 in the contract whereby if the rate payable to labour increases that increase must be reimbursed by the contractee Reimb....
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....ara 6.4.2. Hon'ble Bench upheld the order of Learned CIT(A) in that case holding that Board's Circular is applicable where there is no indication about the reimbursable amount in the bills separately. Order of CIT(A) has been upheld in Para 6.4.3. Facts in our case are exactly similar. Ratio of the decision of the Bench applies to our case. 10. On reimbursement to C&F Carriers Like ICMS above there are also other decisions by Bombay High Court and the Benchers of the Tribunal. They are listed herein below and copies enclosed duly highlighting the relevant parts. (P 1 to 10) i. CIT, TDS-2, Mumbai Vs. Zee Entertainment Enterprises Ltd [2018] 92 taxmann.com 30 (Bom.) Paras 2(iv) r.w.4(a). (P 11 to 14) n, ACIT....
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.... activities relating to the customs clearance. The agents will do whole clearance from collecting the shipping agents delivery order to final dispatch of the consignment to the assessee's desired address. At the time of assigning the job itself, the assessee and the agent are aware that majority of the payment made to agent are towards payment to shipping companies, freight charges, container hiring charges, container movement charges etc. All the above charges are supported by the invoices from respective agencies. The assessee is required to make advance payment to the clearing agent and clearing agent will submit the actual expenditure details with the supporting invoices to the assessee by way of "Memo". Therefore, assessee is actually ....
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.... 7.2 Imagine a situation, the agent renders services for the compensation of let us say 5% of the total port handling charges and he pays the above 95% to the shipping company and gets the required invoices. If the assessee deducts TDS on total amount, can the service agent survive. The AO and first appellate authority have to understand the trade practice before coming to a conclusion, which may end up enforcing hardship on the assessee as well as on service provider. 7.3 In the given case, ld. CIT(A) has categorized the expenses in 4 categories, viz., 1) Expenses incurred towards services rendered by third parties to ICMS on behalf of the assessee, which amounted to Rs. 24,50,980/- 2) Expenses incurred towards servic....