2013 (5) TMI 684 - HC - Income Tax

Non deduction of TDS on payment of freight - The assessee replied by stating that the owners of the truck actually hired had furnished Forms No.15-I - Held that - Payment accrued to the truck owners whose trucks were actually hired for the purpose of transportation of the goods. It is not in dispute that the trucks indicated in the Form No.15-I submitted by the assessee were in fact used for the purpose of transportation of goods. There was, as such, no authority on the part of the assessee to deduct any tax. Unable to find any question of law involved in the case. Accordingly, the appeal is dismissed.

Summary

Issues:
1. Whether the assessee was obligated to deduct tax at source on payment of freight under Section 40(ia) of the Income Tax Act.
2. Whether the disallowance of expenditure by the assessing officer was justified.
3. Whether the Tribunal's decision to delete the disallowance was legally sound.
4. Whether the submission of Forms No.15-I by the truck owners was necessary for tax deduction.

Analysis:
1. The assessee, engaged in the transport business, paid freight without deducting tax at source, claiming the truck owners who provided Forms No.15-I were responsible for tax deduction. The assessing officer disallowed the expenditure under Section 40(ia). The CIT(A) upheld this decision, leading the assessee to appeal to the Tribunal.

2. The Tribunal ruled that the assessee had no tax withholding obligation for truck hire payments pre-amendment under Section 194 C. Therefore, the basis for disallowance ceased to be valid, and the disallowance was deleted. The Tribunal did not address other legal contentions, and the Revenue challenged this decision.

3. The Revenue contended that Forms No.15-I were not submitted by the payment recipients, arguing they could have been submitted by either the payee or the person to whom the payment accrued. The Court determined that payments accrued to the truck owners who provided the hired trucks for transportation, as confirmed by the use of trucks indicated in the Forms. Consequently, the assessee had no authority to deduct tax, and no legal question was found. The appeal was dismissed.