2015 (12) TMI 755 - AT - Income Tax

TDS u/s 194 - Addition u/s 40(a)(ia) - non deduction of tds on road transportation charges - CIT(A) deleted the addition - Held that - Assessee was not under any obligation to incur transportation charges because they are reimbursed by the APO. It has only accommodated the APO by making the payments to the transporters. In other words, the APO reimbursed the actual expenses incurred on their behalf. Therefore, the assessee has maintained a separate account for this purpose. This aspect has been seen by the CIT(A) in the finding extracted (supra). Assessee was not under obligation to deduct TDS under section 194C because the transporters have not acted on behalf of the assessee. They have transported the goods of APO. Considering these facts we do not find any error in the order of the ld. CIT(A). Hence the appeal of the Revenue is dismissed. - Decided in favour of assessee.

Summary

Issues involved:
1. Appeal against CIT(A) order dated 4th July, 2011 for AY 2008-09.
2. Deletion of addition under section 40(a)(ia) of the I.T. Act, 1961.

Analysis:

1. The appeal was presented by the Revenue against the CIT(A) order dated 4th July, 2011 for AY 2008-09. The Revenue's grievance was centered around the deletion of an addition of Rs. 41,14,375/- made by the Assessing Officer (AO) under section 40(a)(ia) of the Income Tax Act, 1961. The case involved a firm engaged in trading, processing, and acting as a commission agent for pulse and other merchandise. The AO observed that the auditors noted non-deduction of tax at source for freight charges paid during the year, leading to a show cause notice to the assessee. The assessee contended that the payment was made on behalf of the Army Purchases Organization, Ministry of Defense, and no TDS was required. However, the AO insisted on TDS deduction based on the contract terms, resulting in the addition of Rs. 41,14,375/-.

2. The CIT(A) deleted the addition after considering the appellant's arguments. The appellant maintained a separate account for "freight recoverable" where payments to transporters and reimbursements were recorded. The CIT(A) noted that the transporters were not acting on behalf of the assessee, and the transportation charges were reimbursed separately by the APO. The CIT(A) found no error in the assessee's position and concluded that no TDS deduction was necessary under section 194C. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

3. Regarding the Cross Objection (C.O.) filed by the assessee, the Registry pointed out a delay of 1234 days. The assessee sought condonation of delay due to a lost file, but the Tribunal dismissed the C.O. for being time-barred and lacking a plausible explanation. The Tribunal emphasized that the C.O. must be filed within 30 days of receiving notice in an appeal, verified in the prescribed manner, and directed against a specific part of the order. Since the C.O. did not challenge any part of the CIT(A)'s order and supported the findings, it was deemed not maintainable. Consequently, both the appeal and the Cross Objection were dismissed by the Tribunal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition under section 40(a)(ia) of the I.T. Act, 1961, based on the appellant's valid arguments regarding the nature of the transactions and the reimbursement of transportation charges by the Army Purchases Organization. The Tribunal also dismissed the Cross Objection due to a significant delay and lack of merit in challenging the CIT(A)'s order.