No TDS Applicability on Payment for Export Freights to Shipping Agents

No Tax Deducted at Source (TDS) shall be charged from the shipping agents on export freights, says Gujarat High Courts.

The respondent to the case, Summit India Water Treatment filed ITR for Assessment Year 2013-14. On this, the Principal Commissioner of tax issued a challenging order u/s 263 of Income Tax Act 1961, on the basis which the assessees company has paid the export freight to the Inter Ocean Shipping and Logistic Services without deducting TDS. Offended by the order passed by PCIT u/s 263 of the Income Tax Act 1961 Get to know complete guide of TDS provisions under income tax act 1961 at here. Also, we include several topics as TDS returns, TDS due dates, penalty & more. Read more, the assessees showed up to the tribunal seeking clarity.

The tribunal thereon relied on the circular (723 dated 19 September 1995) issued by CBDT, which states that the shipping agent hired by the non-resident shipowner or charter is the Principal party (i.e. the shipping company) as per the norms of Section 172 of Income Tax Act 1961 and all the norms applicable to the non-resident shipowner will be applied to the agent and section 194C Get to know complete guide of TDS provisions under income tax act 1961 at here. Also, we include several topics as TDS returns, TDS due dates, penalty & more. Read more or 185 provides that TDS on such export freight payments shall not be applied.

During the sessions of assessment proceedings, PCIT was unable to bring in the proper materials with respect to the export freight payment and also it did not protest earlier. So based on the indisputable records presented by the respondent-assessees in the assessment proceedings u/s 263 of the Income Tax Act 1961, it was concluded that the assessment order is no way erroneous to the national revenue.

The jury consisting of two main decision makers Justice J .B. Pardiwala and Justice Bhargav D. Karia, rested the case saying that as per the facts drawn from the concerned records and facts none of the accusations are considerable in front of the law from the challenging order, therefore, the appeal fails and is thereon dismissed.