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Ramu S. Deora Sambhav Chambers, 4th Floor Sir, P.M. Road, Fort Mumbai-400 001. Vs. Dy. Commissioner of Income tax Range 12(3) Mumbai.
April, 23rd 2014
                         "D" Bench, Mumbai

                Before Shri H.L. Karwa, President, and
                Shri N.K. Billaiya, Accountant Member

                         ITA No. 1704/Mum/2012
                         (Assessment year:2008-09)

Ramu S. Deora                              Dy. Commissioner of Income tax
Sambhav Chambers, 4th Floor                ­Range 12(3)
Sir, P.M. Road, Fort                       Mumbai.
Mumbai-400 001.

(Appellant)                                   (Respondent)

     Permanent Account No. : AAMPD 2141 H

                    Assessee by        :   Shri Nishit Gandhi
                    Revenue by         :   Shri Sanjeev Jain

       Date of hearing             :        17/04/2014
       Date of Pronouncement       :        17/04/2014


Per N.K. Billaiya, Accountant Member:

      This appeal by the Assessee is preferred against the order of CIT(A)-
23, Mumbai dated 27/12/2011 pertaining to assessment year 2008-09.
The sole grievance of the Assessee is that the CIT(A) erred in confirming
disallowance of Rs.10,78,418/- u/s. 40(a)(ia) for non- deduction of TDS on
terminal handling charges.

2.    During the course of scrutiny assessment proceedings AO noticed
that the Assessee has paid terminal handling charges amounting to
Rs.12,44,840/- to various parties who handled Assessee's export at the
terminal. The Assessee was asked to explain whether TDS was made on
these payments. It was explained that out of the total terminal handling
charges of Rs.12,44,840/-, Rs.1,66,422/- is covered by a certificate u/s.
                                      2                ITA No.1704/M/12

197(1) of the Act and the balance has been paid without deduction of tax.
AO proceeded to make disallowance u/s. 40(a)(ia) of the Act and disallowed
Rs.10,78,418/-. The Assessee carried the matter before CIT(A) but without
any success.

3.    Before us, the counsel for the Assessee stated that there was no
liability upon the Assessee to deduct tax at source on the alleged payment
because of the Board's Circular No.723 dated 19th September, 1995. Per
contra, the ld. DR relied upon the order of lower authorities.

4.    We have carefully perused the orders of the lower authorities and the
Circular of the Board No.723 dated 19/09/1995. The Circular relates to tax
deduction at source for payment made to foreign shipping companies and
at point No.5 the CBDT has clarified that since the agent acts on behalf of
the non-resident ship-owner or charterer, he steps into the shoes of the
principal. Accordingly, provisions of section 172 shall apply and those of
section 194C and 195 will not apply. A similar addition was deleted by the
Tribunal in ITA No.105/Mum/2013 dated 28/03/2014 wherein the
Tribunal has followed the CBDT Circular No.723 dated 19/09/1995. As the
payment is covered by the CBDT Circular we, therefore, set aside the order
of the CIT(A) and direct AO to delete the addition of 10,78,418/-.

5.    In the result, appeal filed by the Assessee is allowed.

Order pronounced in the open court on 17th April, 2014.

               Sd/-                                Sd/-
         (H.L. KARWA)                        (N.K. BILLAIYA)
          PRESIDENT                       ACCOUNTANT MEMBER

Mumbai, Dated: 17/04/2014.
                                  3               ITA No.1704/M/12

Copy to: The Appellant
        The Respondent
        The CIT, Concerned, Mumbai
        The CIT(A) Concerned, Mumbai
        The DR " " Bench

True Copy
                                       By Order

                       Dy/Asstt. Registrar, ITAT, Mumbai.
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