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| The Tax Publishers2020 TaxPub(DT) 0066 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
The implicit view taken by AO while framing assessment under section 143(3), that in absence of any obligation cast upon assessee to deduct tax at source in respect of demurrage charges, the said charges could not be disallowed under section 40(a)(i), was found to be in conformity with the judgment of High Court in the case CIT v. V.S. Dempo & Co. Pvt. Ltd. (ITA No. 989/2015 & 991/2016), dated 05-2-2016: 2016 TaxPub(DT) 1042 (Bom-HC), which was available at the time of framing of the said assessment. Accordingly, there was no infirmity in the view taken by the AO and hence, the order passed by CIT under section 263 was set aside.
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Revision under section 263 - Non-deduction of tax at source in respect of demurrage charges - Validity - AO took implicit view
CIT observed that assessee-company paid demurrage charges to its foreign supplier on delayed discharge of material without deduction of tax at source. Observing, that AO erred in not disallowing the demurrage expenses under section 40(a)(i), the CIT was of the view that the order passed by AO under section 143(3) was erroneous insofar it was prejudicial to the interest of Revenue. Held: The implicit view taken by AO while framing assessment under section 143(3), that in absence of any obligation cast upon assessee to deduct tax at source in respect of demurrage charges, the said charges could not be disallowed under section 40(a)(i), was found to be in conformity with the judgment of High Court in the case CIT v. V.S. Dempo & Co. Pvt. Ltd. (ITA No. 989/2015 & 991/2016), dated 05-2-2016: 2016 TaxPub(DT) 1042 (Bom-HC), which was available at the time of framing of the said assessment. Accordingly, there was no infirmity in the view taken by the AO and hence, the order passed by CIT under section 263 was set aside.
REFERRED : CIT v. V.S. Dempo Company Ltd. (2016) 387 ITR 354 (SC): 2016 TaxPub(DT) 4318 (SC) CIT v. V.S. Dempo & Co. Pvt. Ltd. (ITA No. 989/2015 & 991/2016), dated 05-2-2016: 2016 TaxPub(DT) 1042 (Bom-HC) and CIT v. Orient (Goa) P. Ltd. (2010) 325 ITR 554 (Bom): 2010 TaxPub(DT) 0887 (Bom-HC)
FAVOUR : In assessee's favour
A.Y. :
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