2018 (2) TMI 1928 - AT - Income Tax

Addition u/s 14A r.w.r. 8D - CIT-A taking note that assessee had not claimed any exempt income, deleted such disallowance - HELD THAT - We find that the view taken by the Commissioner of Income Tax (Appeals) is in sync with the judgment of Redington India Ltd vs. Addl. CIT 2017 (1) TMI 318 - MADRAS HIGH COURT . Accordingly, we are not inclined to interfere with the order of the ld. Commissioner of Income Tax (Appeals) on this issue. - Decided against revenue TDS u/s 194C - payments were made to transport contractors - assessee not filed form No.26Q within the date prescribed under Rule 31A of the Rules - HELD THAT - One of the submission of the assessee is that it had filed form No.26Q as prescribed under Rule 31A, though belatedly. It is true that quarterly returns specified in Rule 31A have to be filed on or before 15th of the first month of the succeeding the quarter. However, in our opinion, this time limit cannot be construed so strictly to mean belated filing will automatically result in a disallowance u/s 40(a)(ia). Sub Section (6) of Section 194C of the Act clearly say that there is no need to deduct tax on sums credited or paid to a contractor engaged in plying, hiring or lease charges, if the payer, who is the assessee here, gets a declaration that former was owning ten or less goods carriages and also gave their PAN numbers. Considering the facts and circumstances of the case, the issue requires a fresh look by AO. AO has to verify whether assessee had complied with Sub Section (6) of Section 194C. He also needs to verify whether the assessee had filed form No.26Q, though belatedly. If assessee has complied with these there can be no disallowance u/s.40(a)(ia) - Appeal of the Revenue is partly allowed for statistical purpose.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Disallowance under section 14A of the Income Tax Act.
3. Disallowance under section 40(a)(ia) of the Act.

Analysis:
1. The Revenue appealed against an order of the Commissioner of Income Tax (Appeals)-1, Madurai, with a delay of seven days, which was condoned as justified. The appeal was admitted.

2. The Revenue contended that the Commissioner deleted a disallowance made under section 14A of the Act, as the assessee had not earned any dividend income. The Commissioner's decision was based on a Tribunal case and a High Court judgment, which the ITAT found in sync with. Thus, the ITAT dismissed the Revenue's appeal on this ground.

3. The Revenue challenged the deletion of a disallowance under section 40(a)(ia) of the Act. The disallowance was made by the Assessing Officer due to non-compliance with tax deduction rules on freight charges. The Commissioner held that the assessee's compliance with one section was sufficient, and the delay in filing returns did not warrant disallowance. The ITAT found that a fresh verification was required by the Assessing Officer on compliance with the Act's provisions. The ITAT partly allowed the Revenue's appeal for statistical purposes.