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2017 (5) TMI 351 - AT - Income TaxTDS u/s 194C - disallowance made u/s.40(a)(ia) - non deduction of TDS on freight expenses - Held that - CIT(A) has held that the assessee was not liable to deduct TDS from the freight payments as the assessee did not own any truck, which was necessary for transportation business. Thus, it remains undisputed fact that the assessee was deriving income only on commission basis as he does not own any trucks. Further, the CIT(A) observed that there was no liability of the assessee to deduct TDS from the payments made for transportation charges as Forms 15-I collected from the truck owners were filed with the office of the CIT, Raipur. No positive material was brought on record by the ld D.R. to controvert the above findings of the CIT(A). Hence, we do not find any good and justifiable reason to interfere with the order of the CIT(A) - Decided in favour of assessee.
Issues Involved:
1. Disallowance under Section 40(a)(ia) of the Income Tax Act due to non-deduction of TDS on freight expenses. 2. The liability of the assessee to deduct TDS under Section 194C. 3. Admission and relevance of additional evidence (Form No. 15J). 4. Bona fide belief of the assessee regarding non-liability to deduct TDS. Issue-wise Detailed Analysis: 1. Disallowance under Section 40(a)(ia) of the Income Tax Act: The primary issue in this appeal is the disallowance of ?2,02,31,972/- under Section 40(a)(ia) due to non-deduction of TDS on freight expenses. The Assessing Officer (AO) observed that the assessee, a transport contractor, did not deduct TDS from freight expenses amounting to ?4,04,63,944/-. Since TDS on transport contracts was applicable only for half the period (before 1.10.2009), the AO disallowed half of the freight payment made by the assessee. 2. Liability to Deduct TDS under Section 194C: The CIT(A) examined whether the assessee was liable to deduct TDS under Section 194C. It was found that the assessee did not own any trucks and derived income only from commission. The CIT(A) concluded that the assessee was not liable to deduct TDS merely because he collected Form No. 15I from truck owners and submitted Form No. 15J to the CIT, Raipur. The CIT(A) relied on judicial precedents, including the case of ITO vs. Bindra Ban Bansi Lal, which held that agents like the assessee are only required to account for commission income and not the entire freight charges as turnover. 3. Admission and Relevance of Additional Evidence (Form No. 15J): The assessee submitted additional evidence in the form of Form No. 15J, which was admitted by the CIT(A) under Rule 46A. The CIT(A) found that the appellant was prevented by reasonable cause from submitting Form No. 15J during the assessment proceedings. The CIT(A) verified the books of accounts and Form No. 15I and found them consistent with the appellant's claim. The CIT(A) concluded that the appellant did submit Form No. 15J on 07.05.2010, and thus, there was no liability to deduct TDS. 4. Bona Fide Belief Regarding Non-Liability to Deduct TDS: The CIT(A) also considered whether the disallowance could be sustained based on the appellant's bona fide belief of non-liability to deduct TDS. The appellant's case was under scrutiny in the previous assessment year (2008-09), and no disallowance was made under Section 40(a)(ia). The appellant's books were audited under Section 44AB, and no disallowable amount was mentioned in the tax audit report. The CIT(A) concluded that the appellant had a bona fide belief that he was not liable to deduct TDS, supported by the decision of the Hon'ble Bombay High Court in 340 ITR 333. Conclusion: The Tribunal upheld the CIT(A)'s order, confirming that the assessee was not liable to deduct TDS from the freight payments as he derived income only from commission and did not own any trucks. The additional evidence (Form No. 15J) was rightfully admitted, and the appellant had a bona fide belief of non-liability to deduct TDS. The appeal filed by the revenue was dismissed, and the CIT(A)'s order was confirmed.
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