2011 (12) TMI 679 - AT - Income Tax

Non deduction of TDS u/s 194C against freight charges - addition made u/s. 40(a)(ia) - liability to submit Form 15-I before the IT Authority as per Rule 29D to authenticate the claim - Held that - In the present case before the Assessing Officer assessee had submitted that form 15-I received by him could not be deposited with the Ld. CIT. Assessee s submissions have been reproduced in Para-7(ii) at page-4 of Assessing Officer s order. After considering the assessee s submission Assessing Officer, inter alia, observed that assessee did not submit form 15J by 30.06.2006 because he had not received form 15-I. He was of the view that 15-I was received subsequently when the assessee was confronted with the issue of disallowance under section 40(a)(ia). The availability of form 15-I, however, at the time of assessment proceedings is not doubted. Therefore, in view of decision in the case of Shri Vipin P. Mehta 2011 (5) TMI 503 - ITAT MUMBAI Assessing Officer is directed to delete the disallowance of ₹ 24.74.376/-. In the result, ground Nos. 1 & 2 of the appeal are allowed.

Summary

Issues:
Appeal against deletion of addition under sec. 40(a)(ia) for non-deduction of TDS on freight charges; Interpretation of provisions of sec. 40(a)(ia) and sec. 194C; Validity of submission of Form 15-I by the assessee; Applicability of penal provisions for non-submission of Form 15J.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved the deletion of an addition under sec. 40(a)(ia) of the IT Act for non-deduction of TDS on freight charges. The Assessing Officer observed that the assessee, a transport operator, did not deduct TDS on a specific amount paid to lorry owners out of the total freight charges. The AO also noted discrepancies in the submission of Form 15-I by the assessee to the contractor as required by Rule 29D. The CIT(A) deleted the addition, emphasizing that the assessee received Form 15-I from the vehicle owners, and the absence of PAN details in some cases was not sufficient to warrant the addition under sec. 40(a)(ia).

The CIT(A) held that once the assessee received Form 15-I, the obligation to deduct tax ceased, and any defects in the form should not invalidate its substance. The Tribunal referenced precedents where failure to submit declarations to the tax department did not automatically render the assessee liable for TDS deduction. The Tribunal upheld the CIT(A)'s decision based on similar cases and directed the AO to delete the disallowance under sec. 40(a)(ia) in line with the principles established in those cases.

The Tribunal found no grounds to interfere with the CIT(A)'s order, as the assessee's case aligned with established legal interpretations and precedents. The Tribunal emphasized the importance of adherence to statutory provisions and the relevance of timely submission of required forms. Ultimately, the appeal by the department was dismissed, affirming the decision to delete the addition under sec. 40(a)(ia) for non-deduction of TDS on freight charges.