CIT vs. ONS CREATIONS PVT LTD
What did the High Court hold?
The tribunal held that the payments were reimbursements of actual freight charges and not service charges, thus not requiring TDS. For the second addition, the payments were below the threshold for TDS deduction.
What were the facts?
The Assessing Officer made additions under Section 40(a)(ia) for failure to deduct TDS on payments to forwarding and clearing agents. The additions pertained to freight charges paid to airlines and payments below Rs. 50,000 to single parties.
What were the issues?
Whether payments for freight charges reimbursed to clearing agents require TDS deduction, and whether payments below Rs. 50,000 to a single party necessitate TDS.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF DELHI AT NEW DELHI . . . . . ITA 1279/2011 . . . . . CIT ..... Appellant . Through: Ms.Suruchi Agarwal, Sr. Standing . counsel. . . . versus . . . ONS CREATIONS PVT LTD ..... Respondent . Through: Mr.Ved Jain, Adv. . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 14.12.2011 . . . The Assessing Officer had made addition of Rs.30,66,703/- and Rs.8,84,881/- under Section 40(a)(ia) of the Income Tax Act, 1961 (Act for short) on account of failure of the assessee to deduct tax at source (TDS) under Section 194C of the Act. . The CIT (Appeals) and Income Tax Appellate Tribunal have deleted the said addition. With regard to addition of Rs.30,66,703/- the two appellate authorities have concurrently held that this payment was not on account of service charges paid to the forwarding and clearing agents but represents payments of the actual and exact freight charges which were paid to the Airlines for export of the goods. Learned counsel for the appellant has relied upon circular No.715 dated 8th August, 1995 wherein it is observed that when a composite bill with regard to service charges payable to the forwarding and clearing agents and transportation charges is raised, TDS should be deducted. In the present case, the findings recorded by the CIT(Appeals) and Income Tax Appellate Tribunal are that the composite bills were not raised. The payments in question were towards the reimbursement of the exact amount which has been paid to the airlines towards freight charges. There is no finding that these agents deliberately separated/bifurcated the bills and service charges were independently paid or were included in the said bills. . With regard to the second addition of Rs.8,84,881/-, the concurrent findings recorded by the CIT(Appeals) and ITAT are that the said payments were less than Rs.50,000/- to a single party and, therefore, TDS under Section 194C was not required to be deducted. Learned counsel for the appellant has drawn our attention to the grounds of appeal in which it is stated that as per the books of accounts some of the parties were made payment of more than Rs.50,000/- in aggregate. Copy of the account book has not been filed along with the grounds of appeal. The names and details of the said parties are not indicated. It is not stated that this contention was raised before the Tribunal and copy of the account book was filed before the tribunal. . In view of the above, we do not find any merit in the appeal and the same is dismissed. No costs. . . . . . . . SANJIV KHANNA,J . . . . . R.V.EASWAR, J . DECEMBER 14, 2011 . Vg/Bisht . $ 18 .
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