ITAT upheld deletion as payments were made to non-resident ship-owners
ITAT upheld deletion as payments were made to non-resident ship-owners
AO noted that assessee had not deducted TDS in payments made to contractors etc. AO held assessee to be in default in respect of payments of Rs.3,52,434. The tax in default @2.04% was worked out to Rs.7,189, whereas interest u/s 201(1A) was worked out at Rs.4,314. CIT(A) deleted the demand. ITAT upheld deletion as payments were made to non-resident ship-owners and s 172 applied and not s 194C, and assessee was not in defualt of s 201.-501546
1 AO noted that it was the observation of the auditors of the assessee that the assessee had not deducted TDS in payments made to contractors, custom agents, lease rent charges etc. AO rejected assessee's contention that non deduction of TDS was in pursuance to the provisions of section 172(8), as supplemented by CBDT Circular no.723 dated 19.09.1995, since the amounts paid were found to represent charges paid other than ocean freight and were not paid u/s 172(8) and the Circular of the Board; that the amounts of shipping charges do not constitute freight amount, but represented other charges which had been paid to the clearing and forwarding agents for their services to clear the goods at the custom port; and that by clearing the goods at the custom port, the clearing and forwarding agents cannot be considered to be the agents of the non- resident ship-owners or charters and they will not step into the shoes of the principal. AO held the assessee to be in default in respect of payments of Rs.3,52,434/-. The tax in default @ 2.04% was worked out to Rs.7,189/-, whereas the interest u/s 201(1A) was worked out at Rs.4,314.
2 CIT(A) deleted the demand.
3 On appeal, the ITAT held as under: "16. In this regard, as per CBDT Circular No.723 dated 19.09.1995 (APB 37-38), where payments are made to shipping agents of non- resident ship-owners or charterers for carriage of passengers, etc., shipped at a port in India, since the agent acted on behalf of the non- resident ship-owner or charterer, he steps into the shoes of the principal and, accordingly, the provisions of section 172 shall apply and those of sections 194C and 195 will not apply.…
24. Further, in 'MTAR Technologies (P) Ltd. vs. ACIT', 39 SOT 465 (Hyd.), it has been held that payment by a company to a non- shareholder does not require TDS under section 194 and in such a case, the company/assessee cannot be held to be in default u/s 201 of the Act so as to attract interest u/s 201(1A) thereof.…26. The ld. CIT(A), it is seen, has correctly placed reliance on 'MTAR Technologies Limited vs. ACIT' (supra). No decision contrary to this decision has been cited before us by the department. Accordingly, finding no error therein, the order of the ld. CIT(A) on this aspect is upheld. The grounds raised by the department are found to be shorn of merit and are rejected as such.”
News Reference:IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. A.D. JAIN, JUDICIAL MEMBER
AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No.257(Asr)/2014
Assessment year:2006-07
PAN;AACCP1274G
M/s. PMS International (P) Ltd. vs Income Tax Officer (TDS)
