Section 40, 194C, 200 of Income Tax Act, 1961—TDS on freight charges u/s 194C— In the instant case, appeal is preferred by assessee against the order of CIT wherein CIT confirmed the disallowance made by AO in respect of payment relating to freight charges by invoking provision of section 40(a)(ia)

Held that— We note that assessee had paid freight charges to Jet Airways to the tune of 1,66,367/- and Air India to the tune of 7,73,864/- totaling to 9,40,231/- without deducting TDS. So, AO invoked sec. 40(a)(ia) of the Act and disallowed the expenditure claimed by the assessee. The only limited prayer of the assessee before us is that after the amendment in sec. 200/201 of the Act, when the recipient of the amounts have shown in their return of income, the amount in question and has been assessed to tax, then disallowance is not warranted. We find force in the contention of the assessee and direct the AO to adjudicate the issue afresh. And direct that if the payees have reflected this payment in question towards them in their respective Return of Income and have taken into account this sum of amount in their Return of Income and has paid tax due on the income declared in the Return of Income, and fulfils the conditions stipulated u/s. 200 of the Act, then no disallowance u/s. 40(a)(ia) of the Act is warranted. Needless to say, the AO may call for the aforesaid details from the payees in case it is found necessary. So, we set aside the order of Ld. CIT(A) and remand the matter back to AO for fresh adjudication as directed above.

Next ground of assesse's appeal is against the action of Ld. CIT(A) in confirming 89,930/- made by AO applying section 2(22)(3) of the Act.

Held that— We note that assessee firm is not a shareholder of M/s. Modern Solaurum Pvt. Ltd. So, sec. 2(22)(e) of the Act is not attracted against the assessee firm and so the impugned addition invoking sec. 2(22)(e) of the Act cannot be sustained as held by the Hon’ble Delhi High Court in Ankitech pvt ltd wherein this principal/ratio has been held. So since the Firm being not a shareholder of the Pvt. Ltd. company which lent the money cannot be taxed by applying sec. 2(22)(e) of the Act. So, the addition is deleted. This ground of appeal of assessee is allowed.[MODERN IMPEX VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CITRCLE-32, KOLKATA.][2019] 11 ITCD Online (23) [ITAT KOLKATA]