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Issues involved: Disallowance u/s. 40(a)(ia) r.w.s. 194C, Levy of penal interests.
Disallowance u/s. 40(a)(ia) r.w.s. 194C: The appellant contested the disallowance of payments to lorriwalas under section 40(a)(ia) r.w.s. 194C, arguing that there was no direct contract with the truck drivers as the appellant acted as an intermediary earning only commission. The appellant asserted that since there was no outstanding amount payable at the end of the year, the provision of section 40(a)(ia) should not apply. Additionally, it was emphasized that the appellant did not have any contractual obligations towards the truck drivers, thus negating the applicability of section 194C. The Tribunal noted discrepancies in the assessment, highlighting the lack of evidence establishing a direct contract between the appellant and the truck owners for transportation services. The Tribunal referred to a decision by the Hon'ble Madras High Court emphasizing the necessity to verify the exact nature of the appellant's business to determine the applicability of section 194C. The Tribunal remitted the matter back to the Assessing Officer for further examination and directed the appellant to provide necessary evidence to support its claims. Levy of penal interests: The appellant denied liability for penal interest, which was considered after condoning a delay in filing the appeal. The appellant cited reliance on an Income Tax Practitioner-cum-Consultant for handling tax matters due to the closure of the partnership firm's business. The delay in filing was attributed to the health issues of the practitioner. The Tribunal, after hearing both parties, condoned the delay and proceeded to address the appeal on its merits. The Tribunal acknowledged the past Tribunal decision on a similar issue for the assessment year 2007-08 and directed the matter to be reconsidered by the Assessing Officer in light of relevant legal provisions and other judicial decisions. The appellant's appeal was allowed for statistical purposes, with the order pronounced on December 30, 2013.
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