CHERUKURI RAGHU KIRAN,CHIMAKURTHY vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), GUNTUR

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ITA 445/VIZ/2018Status: DisposedITAT Visakhapatnam07 February 2020AY 2009-104 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) should have admitted the additional evidence regarding payments to shipping agents of non-resident ship owners. The matter was remitted back to the AO to examine the issue in light of CBDT Circular 723.

What were the facts?

The assessee paid ocean freight charges without deducting TDS. The AO disallowed the expenditure under Section 40(a)(ia) as TDS was not deducted. The CIT(A) dismissed the appeal for not furnishing documents during assessment.

What were the issues?

Whether the assessee was obligated to deduct TDS on ocean freight payments to shipping agents of non-resident ship owners, and if additional evidence should be admitted on appeal.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C,Section 195,Section 172

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH

For Appellant: Shri C.Subrahmanyam, AR
Hearing: 04.02.2020Pronounced: 07.02.2020

आदेश /O R D E R

Per Shri D.S.Sunder Singh, Accountant Member :

1.

This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in Appeal No.402/11-12 dated 18.06.2018 for the Assessment Year (A.Y.)2009-10.

2.

All the grounds of appeal are related to the addition made by the Assessing Officer (AO) u/s 40(a)(ia) of the Act in respect of freight charges

Sri Cherukuri Raghu Kiran, Prakasam paid by the assessee. During the assessment proceedings, the Assessing Officer (AO) found that the assessee has not deducted the TDS on a sum of Rs.13,75,677/- incurred towards Ocean Freight. Therefore, the AO disallowed the above expenditure u/s 40(a)(ia) of the Act. The assessee went on appeal before the CIT(A) and contended that the he has paid the Ocean Freight Charges to the agents of nonresident ship owners, therefore, argued that as per Circular 723 of CBDT dated 19.09.1995, the assessee is not obliged to deduct the TDS u/s 194C and 195 of the Act and accordingly filed the copies of invoices of A.S.Shipping Agencies Pvt. Ltd., Gen Shipping Pacific Line PTE Ltd., etc. However, since, the said documents were not furnished before the AO at the time of assessment proceedings, the Ld.CIT(A) rejected the additional evidence filed by the assessee and dismissed the appeal of the assessee.

3.

Against which the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR argued that the Ld.CIT(A) ought to have admitted the additional evidence, since, Circular No.723 dated 19.09.1995 exempt the assessee from deduction of tax at source on payments made to shipping agents of nonresident ship owners and the assessments are to be made under section 172 of the Act. The Ld.AR further submitted that there

Sri Cherukuri Raghu Kiran, Prakasam was no occasion for the assessee to submit the evidence, since, the AO has never asked for the same. Therefore, requested to delete the addition and set aside the order of the Ld.CIT(A).

4.

On the other hand, the Ld.DR strongly supported the orders of the lower authorities.

5.

We have heard both the parties and perused the material placed on record. As per para No.2 of the assessment order, the authorized representative of the assessee appeared before the AO and furnished the information called for. There was no indication from the assessment order that the assessee failed to furnish any of the information called for by the AO. The AO made the addition for non deduction of tax at source without examining the applicability of TDS provisions in the case of Ocean Freight. As per Circular No.723 of CBDT, there is no requirement of deduction of tax at source in case of payments made to shipping agents for carriage of passengers, shipped at a port in India since, the shipping agents steps in to the shoes of nonresident ship owners. Therefore, we remit the matter back to the file of the AO with a direction to admit the additional evidence and examine the issue of deductibility of tax on the payments made to the shipping agents u/s 194C / 195 or otherwise in the light of Circular No.723

Sri Cherukuri Raghu Kiran, Prakasam (supra) and decide the issue afresh after giving opportunity to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purpose.

6.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 7th February, 2020.

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