Sec. 194C of Income Tax Act, 1961— TDS —Provisions of section 172 applicable in case of assessee as the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal, thus, disallowance made under section 40(a)(ia) was to be deleted.

Facts: This appeal relate to the disallowance of Rs. 6,42,437/- for non deduction of tax at source u/s 40(a)(ia) on payment of ocean freight made to non-resident shipping companies.

Held, that section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. It is clear from the section that the area of operation of TDS is confined to payments made to any "resident". On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply. - SHRI SURESH KHATRI V/s ITO - [2020] 26 ITCD Online 115 (ITAT-LUCKNOW)