TDS u/s 194C do not apply on payments made to agents of foreign shipping companies
This appeal by the Revenue is preferred against the order of the ld. CIT(A) – 30, New Delhi dated 12.12.2019 pertaining to Assessment Year 2012-13.
Briefly stated, the facts of the case are that the assessee company is engaged in supply chain management, logistics and freight forwarding, which is related to movement of goods and cargo within India or outside by road, rail, air or ship. The activities of the assessee involves packing, loading/unloading, trucking, containerization, custom clearance and other handling functions at both ends, besides moving the goods by air or sea, where goods cross the international borders. The assessee is an Indian arm of a multinational company Expeditors International.
During the course of assessment proceedings u/s 201/201(1A) of the Income-tax Act, 1961 [hereinafter referred to as ‘The Act’], the Assessing Officer came to know that the assessee is making payments to Indian subsidiaries of foreign shipping companies and on such payments, no TDS u/s 194C of the Act has been deducted.
The assessee was asked to explain as to why the assessee should not be deemed to be an assessee in default u/s 201/201(1A) of the Act.
The contention of the assessee did not find any favour with the Assessing Officer who, taking a leaf out of the proceedings of F.Y. 2009-10 and 2010-11, treated the assessee to be an assessee in default.
The assessee strongly agitated the matter before the ld. CIT(A) and reiterated its contention that it has made payments to agents of foreign shipping companies, therefore, these payments are covered u/s 172 of the Act, and are fully exempt from TDS deduction.
ITAT Concluded that the CBDT Circular No. 723 dated 19.09.1995 clearly states that provisions of section 172 apply to payments made to agents of foreign shipping companies and therefore, provisions of section 194C of the Act do not apply. Since the aforementioned Circular has been followed by the Assessee, we do not find any reason to interfere with the findings of the ld. CIT(A).
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