2017 (6) TMI 1245 - HC - Income Tax

Disallowance u/s 40(a)(ia) - Tax Deducted at Source deposited after the due date - Held that - Tax Deducted at Source was deposited after the due date, before the date of filing of the return. In that view of the matter, according to the Tribunal, disallowance under Section 40 (a) (ia) of the Income Tax Act, 1961 cannot be made. This issue is covered in favour of the assessee by judgment of this Court in the case of J.K.Construction Co. 2013 (2) TMI 54 - GUJARAT HIGH COURT . This question is, therefore, not required to be considered. Enhancement under Section 40 (a) (ia) - charges paid to the truck owners for transportation of the goods - Held that - AO as well as CIT (Appeals) proceeded on the basis of such transportation being in the nature of a contract, required deduction of tax at source. The Tribunal, however, held that there is nothing on record to suggest that there was any relationship of contractor and contractee between the assessee and the truck owners. The assessee had merely hired the trucks for transportation on need basis. That being the position, no question of law arises.

Summary

Issues:
1. Disallowance under Section 40 (a) (ia) of the Income Tax Act, 1961.
2. Enhancement under Section 40 (a) (ia) made by CIT (A) in the first round of appeal.

Analysis:
1. The first issue pertains to the disallowance of a specific amount under Section 40 (a) (ia) of the Income Tax Act, 1961. The Tribunal observed that the Tax Deducted at Source was deposited after the due date but before the filing of the return. Citing a precedent from the case of J.K. Construction Co., the Tribunal held that in such circumstances, disallowance under Section 40 (a) (ia) cannot be justified. The Tribunal's decision was based on the timing of the TDS deposit and was in favor of the assessee, as established by the aforementioned judgment. Consequently, the Court concluded that this issue did not require further examination.

2. The second issue concerns the disallowance made by the revenue authorities under Section 40 (a) (ia) in relation to charges paid to truck owners for goods transportation. The Assessing Officer and CIT (Appeals) treated the transportation as a contractual arrangement, necessitating TDS deduction. However, the Tribunal disagreed, finding no evidence indicating a contractor-contractee relationship between the assessee and the truck owners. The Tribunal determined that the assessee had simply hired trucks on an as-needed basis for transportation, negating the need for TDS deduction. As a result, the Tribunal dismissed the notion of a legal question arising in this context and upheld the assessee's position. Ultimately, the Tax Appeals were dismissed based on the Tribunal's findings and conclusions regarding both issues.