RAJEEV DAGA ,KOLKATA vs. ITO, WARD - 30(3), , KOLKATA

The sole grievance of the assessee is against the action of Ld. CIT(A) in confirming the disallowance of Rs.2,49,007/- u/s. 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

At the outset itself, the Ld. AR of the assessee brought to our notice that the total disallowance made by the AO is Rs.2,49,007/- on the basis that the assessee failed to deduct TDS on the following amounts which assessee paid to the C&F Agent: i) Port charges - Rs.92,285/-, ii) Service tax and cess- Rs. 6,305/- iii) CMC with service tax - Rs. 1,763/- iv) Loading & Unloading Rs.49,305/- According to assessee, the aforesaid amounts were paid by the assessee to the C&F Agent was the reimbursement of expenditure incurred by C&F Agent on behalf of the assessee

Having heard the rival submissions and gone through the facts and circumstances of the case, the facts stated above are not repeated for the sake of brevity. It is noted that the assessee is an individual who made certain payments to its C&F Agent namely, port charges, service tax and cess, CMC with service tax etc. as aforesaid which are nothing but reimbursement of the statutory charges made by the C&F Agent on behalf of the assessee. Therefore, there is no requirement of TDS being deducted by the assessee when reimbursing the statutory charges/expenses made by the C&F Agent on behalf of the assessee, since there is no income embedded in the hands of C&F Agent on this payment, so no TDS need

Coming to the other expenses namely, transport charges of Rs.47,500/- is concerned, Having gone through the break-up of the expenses which is reflected at pages 98 and 99 of the paper book it is taken note that the payment on a single day does not exceed Rs.20,000/- and the aggregate payment in the FY did not exceed Rs.50,000/-. Therefore, no tax needs to be deducted by the assessee while incurring the expenditure as per the law which stood on that date and, therefore, no disallowance is warranted and it is ordered to be deleted.

Coming to the payment of service charges of Rs.51,850/- is concerned, it was brought to our notice that the payee has already reflected this amount in its return of income and has paid the tax on it. The certificate as stipulated by the statute i.e. Form 26A of the Chartered Accountant is also produced before us. In the light of the same, no disallowance is warranted. However, it was pointed out by the Ld. DR that the AO did not get any occasion to verify the veracity of certificate of the Chartered Accountant and so the order of Ld. CIT(A) is set aside on this issue and this issue is remanded back to AO to verify as to whether the payee has included the amount in its return of income and paid the tax on it. If so, no disallowance is warranted. With the aforesaid direction this limited issue is remitted back to the file of the AO.

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