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2015 (12) TMI 1568 - AT - Income TaxDisallowance u/s 40(a)(ia) - as per AO assessee has not filed Form No.15I/15J before the competent authority - Held that - We have considered rival contentions and found from the record that assessee has duly obtained Form No.15-I from the recipient of the freight charges giving due particulars as per the requirement. This Form 15-I was also submitted by the assessee before the AO during scrutiny assessment. Merely because the same could not be filed before the CIT(A), the AO disallowed assessee s claim which is not acceptable. As decided CIT vs. Valibhai Khanbhai Mankad 2012 (12) TMI 413 - GUJARAT HIGH COURT failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfilment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act - Decided in favour of assessee.
Issues Involved:
Disallowance of freight charges under section 40(a)(ia) of the Act. Detailed Analysis: 1. Issue: Disallowance of freight charges under section 40(a)(ia) of the Act. - The appeal was filed by the assessee against the order of CIT(A), Mumbai, for the assessment year 2009-2010, regarding the disallowance of freight charges amounting to Rs. 13,18,545 under section 40(a)(ia) of the Act. - During the scrutiny assessment, the AO disallowed a portion of the claim on the grounds of non-filing of Form No.15I/15J. The CIT(A) upheld the disallowance. - The assessee had obtained Form No.15-I from the recipient of the freight charges and submitted it before the AO during scrutiny assessment. The AO disallowed the claim as the form could not be filed before the CIT(A). - The issue was considered in light of the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Valibhai Khanbhai Mankad, which emphasized the requirements under section 194C(3) for the liability to deduct tax at source to cease. The High Court held that once the conditions of Section 194C(3) were satisfied, the liability of the payee to deduct tax at source would cease, and the application of section 40(a)(ia) would not arise. - The Karnataka High Court in the case of CIT vs. Sri Marikamba Transport Co. further supported this view, stating that once the declaration forms are filed by the subcontractor, the liability of the assessee to deduct tax on the payments made to the subcontractor would not arise. - The Tribunal, following the judicial precedents, found no merit in the disallowance of the claim under section 40(a)(ia) of the Act and allowed the appeal of the assessee. This detailed analysis of the judgment highlights the key issues involved in the disallowance of freight charges under section 40(a)(ia) of the Act, providing a comprehensive understanding of the legal reasoning and precedents considered by the Tribunal in reaching its decision.
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