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
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" Bench, Mumbai
Before Shri H.L. Karwa, President, and
Shri N.K. Billaiya, Accountant Member
ITA No. 1704/Mum/2012
Ramu S. Deora Dy. Commissioner of Income tax
Sambhav Chambers, 4th Floor Range 12(3)
Sir, P.M. Road, Fort Mumbai.
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
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.
(H.L. KARWA) (N.K. BILLAIYA)
PRESIDENT ACCOUNTANT MEMBER
Mumbai, Dated: 17/04/2014.
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Copy to: The Appellant
The CIT, Concerned, Mumbai
The CIT(A) Concerned, Mumbai
The DR " " Bench
Dy/Asstt. Registrar, ITAT, Mumbai.