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2016 (8) TMI 596 - AT - Income TaxRevision u/s 263 - A.O. had failed to invoke section 40(a)(ia) of the Act on freight charges paid by the assessee to 20 vehicles without deducting tax at source - Held that - The assessee has obtained Form 15-I from its transporters and filed the same before the Commissioner of Income tax. Copies of these forms were also produced before the A.O. during the original assessment proceedings. The A.O. has verified these forms and came to the conclusion that the assessee has not violated the provisions of section 194C of the Act. This is a possible view. We do not find any error in the order of the A.O. Thus, the order of the Ld. CIT on this issue is bad in law. There is no error in the order of the A.O. warranting revision under section 263 of the Act. Disallowance of loading and un-loading charges - Held that - CIT has based his conclusions on surmises and conjectures. There is no material before the Ld. CIT to come to the conclusion that the claim of the assessee is not genuine. Such suspicion cannot be a ground for review. Hence, the same is quashed. Unmatched financial charges - Held that - There is no finding of the Ld. CIT that there is an error in the assessment order much less prejudice to the revenue. The method of accounting adopted by the assessee is being followed year after year. There is no fault that could be found in this system of accounting. Under these circumstances, the revision is bad in law. Assessee appeal allowed.
Issues:
1. Condonation of delay in filing the appeal. 2. Failure to invoke section 40(a)(ia) of the Act on freight charges. 3. Disallowance of loading charges debited to the P & L A/c. 4. Treatment of unmatched financial charges. Analysis: Issue 1: Condonation of Delay The appeal filed by the assessee was directed against the order of the CIT, Vijayawada under section 263 of the Act for A.Y. 2009-2010. The delay of 19 days in filing the appeal was condoned after perusing the petition for condonation of delay and hearing rival contentions. Issue 2: Failure to Deduct TDS on Freight Charges The first issue was the failure to invoke section 40(a)(ia) of the Act on freight charges paid by the assessee to 20 vehicles without deducting tax at source. The assessee argued that there was no requirement to deduct tax at source under section 194C due to the absence of a written contract with the truck owners, citing relevant case laws. The Tribunal held that the A.O. had verified Form 15-I obtained from transporters, concluding that no violation of section 194C occurred, thus quashing the revision by the Ld. CIT. Issue 3: Disallowance of Loading Charges The second issue involved disallowance of loading charges debited to the P & L A/c by the Ld. CIT, doubting its nexus with the business of the assessee. The Tribunal ruled that suspicions and conjectures cannot be grounds for review, especially when the expenditure was verified during assessment proceedings, leading to the quashing of the Ld. CIT's conclusions. Issue 4: Treatment of Unmatched Financial Charges Regarding unmatched financial charges, the Ld. Counsel explained the accounting method adopted by the assessee, arguing that it did not cause any prejudice to the revenue. The Tribunal found no error or prejudice in the assessment order, supporting the contention that the revision under section 263 was unjustified and hence quashed the order. In conclusion, the Tribunal quashed the order passed by the Ld. CIT under section 263 of the Act and allowed the appeal of the assessee, emphasizing that there were no errors warranting revision and no prejudice to the revenue from the assessee's actions.
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