TDS not deductible on Shipment Charges Paid as Reimbursement U/S 194C

Brief Facts: Assessee was in the business of exports, which were done through both air and sea. Regarding air liting the goods were transported through GBR Freight Forwards Private Limited to whom reimbursement and service charges were paid and the TDS was deducted by Assessee on the basis of involvement of Service Charges. Whereas, for Balaji Shipping services through which shipments were concerned, no TDS was deducted as no service charge component was present.

Question of Law

Whether the Revenue was right in relying under section 194C, on the basis that that tax is to be deducted on ‘any sum’ paid for carrying out ‘any work’ and held that the tax should have been deducted on the gross amount paid by the appellant?

Contention of the Assessee

Assessee while addressing before the learned CIT(A) argued that reimbursable expenses were separate from fees, that what constitutes fee shall be the consideration for the services rendered by the recipients but not the amount of reimbursement. Also, it was mentioned that GBR had included service charges and the tax have been deducted on it and amount paid to BSS was only the reimbursement of shipment charges and no service charges was paid. Before the Hon’ble Tribunal it was submitted that all amounts were paid before the end of the relevant accounting year and hence section 40(a)(ia) would not be applicable.

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