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2017 (4) TMI 569 - AT - Income TaxTDS u/s 194C - disallowance u/s. 40(a)(ia) - CIT-A deleted the addition - as per DR violation of section 194H of the Act is there and not u/s. 194C - Held that - As from the details furnished before the department, it is seen that the payments were of small amount and which were mostly less than ₹ 1300/- on any one occasion and there was no reason to doubt the genuineness of the payments. In the light of the aforesaid factual background, we do not find any infirmity in the order passed by the Ld. CIT(A) in allowing the claim of the assessee since the disallowance could not have been made u/s. 40(a)(ia) of the Act invoking sec. 194C of the Act as has been done by the AO. Assessee during the original assessment which was concluded on 13.05.2008 has made a claim of deduction that the amount of ₹ 45,74,228/- has been given to truck owners about 300 in numbers and details of it were mentioned in more than 110 pages in respect to the amount of freight paid and just because word commission has also been added in the 3CD report along with the hiring charges to the transporters cannot be the ground on which the department can turn around and term that the entire amount has been paid for commission and not for hiring charges when the facts emerging from the assessment leaves no scope for any doubt that claim made by the assessee was for hiring of trucks and disallowance was made by AO invoking section 194C of the Act. Therefore, we do not find any infirmity in the order passed by the Ld. CIT(A) and, therefore, we dismiss the appeal filed by the revenue. - Decided in favour of assessee
Issues Involved:
Appeal against deletion of addition under section 40(a)(ia) of the Income-tax Act, 1961. Analysis: The appeal and cross objection were filed against the order of the Commissioner of Income-tax (Appeal) regarding the deletion of an addition made under section 40(a)(ia) of the Income-tax Act, 1961. The revenue challenged the action of the Ld. CIT(A) in deleting the addition of ?45,74,228 made by the Assessing Officer. The dispute arose from the non-deduction of TDS on payments made to transporters for a transport contract with M/s. Bihar State Food & Civil Supplies Corporation Ltd. The AO disallowed the amount under section 40(a)(ia) due to the lack of TDS deduction. The Ld. CIT(A) deleted the addition, leading to the revenue's appeal. The AO raised concerns about the large number of trucks involved in the transport contract, as details of about 300 trucks were provided without the names and addresses of the transporters. The assessee claimed that no formal contracts were in place with the transporters, who were hired on an ad-hoc basis. The Ld. CIT(A) noted that if there were doubts about the genuineness of the claim, the AO could have obtained information from the RTO office. The Ld. CIT(A) observed that the payments were mostly small amounts, and there was no reason to doubt their genuineness. The Ld. CIT(A) allowed the claim, stating that the disallowance under section 40(a)(ia) invoking section 194C was not justified. The revenue contended a violation of section 194H instead of section 194C, but the assessment order clearly mentioned section 194C in connection with the payment to transporters. The AO's findings indicated that the disallowance was made based on section 194C, not 194H, as claimed by the revenue. Therefore, the Ld. CIT(A)'s decision to allow the claim was upheld, and the revenue's appeal was dismissed. The Cross Objection by the assessee challenged the addition of ?5 lakhs, which was not pressed during the appeal hearing due to the small amount, along with the reopening of the assessment under section 147 of the Act. Since the assessee did not press these grounds, they were dismissed. Consequently, both the revenue's appeal and the assessee's Cross Objection were dismissed, and the order was pronounced on 05.04.2017.
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