Prasad Shipping Private Limited Vs CIT (Madras High Court)
Madras High Court held that matter of leviability of 2% TDS on reimbursable expenses in case of Customs House Agent [CHA] is remanded back since assessee failed to produce supporting documentary evidence.
Facts- The petitioner is a Clearing agent/Customs House Agent. The Customs Freight Station raises the Bill in the name of the importer/customer straightaway for its services. The imported goods by customer are cleared by petitioner straightaway for its services. The imported goods by customer are cleared by petitioner by remitting the applicable “customs duty.” The petitioner raises the bill on the importer/customer by bifurcating the taxable and non taxable amount received from the importer/Customer. The Income tax is paid on the income earned and not on the “reimbursable expenses” in which no profit is earned.
Notably, since 2002 there was no issue raised by the respondents and returns were accepted and finalised accepting the income tax returns. However, for the assessment year 2016-2017, the third respondent upon scrutiny of returns disallowed the claim of “reimbursable expenses” of Rs.4,06,10,263/- u/s. 40(i)(1a) of the Income Tax Act, 1961 and passed assessment order treating the “reimbursable expenses” paid on behalf of the importer/customs as income and levied income tax at 30% of Rs.4,06,10,262/- vide order dated 21/12/2018. Further, the second respondent initiated proceedings u/s. 201/201A of the Act and passed an order dated 31.03.2023 raising the demand of TDS @ 2% on Rs.4,06,10,263/- along with interest.
