Sum paid by custom house agent to container freight station agent is liable to sec. 194C TDS: ITAT

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Sum paid by custom house agent to container freight station agent is liable to sec. 194C TDS: ITAT

The issue of Section 194C, read with section 40(a)(ia), of the Income-tax Act, 1961 regarding Deduction of tax at source

 

as a Contractors/sub-contractors payments by Custom House Agent was there before ITAT in the following case:

 

Shri Shanmugar Services

[2022] 138 taxmann.com 227 (Chennai – Trib

 

The case was pertaining to the Assessment years 2009-10 and 2010-11.

 

The question before ITAT was Whether section 194C provides that person who makes payment is required to deduct TDS on such payment?

 

Whether said payment is for himself or on behalf of third party?

 

ITAT answered it in affirmative. It held as under;

 

Assessee, a Custom House Agent, had made payment to shipping companies CFS Agents on behalf of its customers and claimed that payment was in nature of reimbursement of expenses and is in the scope of section 194C.

 

Assessing Officer disallowed said payments under section 40(a)(ia) for non-deduction of TDS under section 194C.

 

Whether since payment made by assessee to CFS Agents was covered under section 194C, for non-deduction of TDS on such payments, Assessing Officer had rightly made disallowance under section 40(a)(ia).

 

It is further held that the 30% Disallowance by Finance Act 2010 applied retrospectively to AY 2005-06 and AY 2009-10

 

Conclusion: 

 

Payment made by assessee, Custom House agent, to shipping companies/CFS agents was covered under section 194C and, thus, for non-deduction of TDS on such payment, Assessing Officer had rightly made disallowance under section 40(a)(ia)

 

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