2015 (3) TMI 636 - AT - Income Tax

Receipts not shown by the assessee - receipt on account of freight alleged to be short accounted - CIT(A) deleted the addition - Held that - Regarding the method of accounting of the assessee, it is observed that he has examined the books of accounts maintained by the assessee and the receipt of freight by the assessee has been credited in respective tanker accounts and in the accounts of the parties who had made payment to the assessee. He has also noted that such freight amount was payable to the tanker owners and the same was paid from time to time. This is the objection of CIT(A) that if such receipt on account of freight alleged to be short accounted for by the assessee is added as income of the assessee then corresponding deduction on account of expenses has to be allowed, which has not been allowed by the Assessing Officer. He has noted that such expenses were in fact not incurred by the assessee but by the tanker owners. No such fact has been brought on record by the Assessing Officer that the assessee was in fact not working as commission agent but as a transport operator. Hence, even if the receipts as per TDS certificate are to be considered as income of the assessee then the payment made by the assessee has to be allowed as expenses and it will not result in addition in the hands of the assessee. - Decided in favour of assessee. Non deduction of TDS on payments made to various parties - CIT(A) deleted the addition - Held that - There is no privity of contract of carriage of goods between assessee and his clients and therefore, the assessee was only facilitator and therefore, not required to deduct TDS u./s 194C of the Act. Respectfully following the judgment of Hardarshan Singh 2013 (1) TMI 314 - DELHI HIGH COURT we hold that the assessee in the present case was not required to deduct TDS and therefore, disallowance made by Assessing Officer in respect of payment of ₹ 22,69,756/- is not proper and the same was rightly deleted by CIT(A) - Decided in favour of assessee.

Summary

Issues:
1. Addition of receipts not shown by the assessee
2. Non-deduction of TDS on payments made to various parties

Analysis:

Issue 1: Addition of receipts not shown by the assessee
The Revenue appealed against the deletion of an addition of Rs. 24,63,336 made by the Assessing Officer due to receipts not shown by the assessee. The CIT(A) held that the appellant's business as a commission agent in transport services had been accepted in previous years. The CIT(A) found that the Assessing Officer's addition was based on TDS certificates issued by parties, but failed to consider expenses incurred by the tanker owners. The CIT(A) concluded that the gross receipts could not be considered as the appellant's income. The Tribunal agreed with the CIT(A) and held that the addition was unjustified, leading to its deletion.

Issue 2: Non-deduction of TDS on payments made to various parties
The second issue involved the deletion of an addition of Rs. 22,69,756 by the Assessing Officer for non-deduction of TDS on payments made to tanker owners. The Assessing Officer contended that the appellant, as a contractor, should have deducted TDS under section 194C. However, the CIT(A) found that there was no contract with the tanker owners, and thus, section 194C did not apply. Citing a judgment of the Delhi High Court, the Tribunal agreed with the CIT(A) that the appellant was not required to deduct TDS. Therefore, the disallowance made by the Assessing Officer was deemed improper and was rightly deleted by the CIT(A). Consequently, the Tribunal dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision on both issues, emphasizing the acceptance of the appellant's business nature and the inapplicability of TDS deduction requirements, as supported by legal precedents.