2017 (5) TMI 984 - HC - Income Tax

TDS u/s 194C - expenses under head Payment made of lorry hire charges - applicability of Section 40(a)(ia) - TDS liability - Held that - Tribunal rejecting Revenue s appeal on this ground, has recorded a finding that Section 194-C does not apply and in absence of anything to show otherwise, the said findings of fact are confirmed. Learned counsel for the appellant could not show that A.O. while taking a view against Assessee by reference to Section 194-C recorded its findings based on any evidence whatsoever and we find that it was only on assumption. It is for this reason A.O. s findings have been reversed by C.I.T. (A) and Tribunal. These are concurrent findings of fact and when vouchers otherwise were verifiable, we find no reason to take an otherwise view in the matter. The question formulated above is answered against appellant, i.e. Revenue.

Summary

Issues Involved:
1. Interpretation of Section 40(a)(ia) of the Income Tax Act, 1961 regarding expenses incurred under "Payment made of lorry hire charges"
2. Applicability of Section 194-C of the Income Tax Act, 1961 on the payment made to individual truck owners/drivers without a contract

Analysis:

Issue 1: Interpretation of Section 40(a)(ia) of the Income Tax Act, 1961
The case involved a dispute regarding the expenses incurred by the Assessee amounting to a specific sum under the head "Payment made of lorry hire charges" and whether these expenses are covered under Section 40(a)(ia) of the Income Tax Act, 1961. The Assessing Officer initially made an addition based on the perception that Section 194-C applied, as the Assessee was considered a transporter and not a trader. However, the Commissioner of Income Tax (Appeal) found that Section 194-C was not attracted after examining the documents provided by the Assessee. The Commissioner noted that the Assessee's payments to individual transporters were part of direct costs attributable to the receipts of the Assessee company, which are computable under Section 28 of the Income Tax Act, 1961.

Issue 2: Applicability of Section 194-C of the Income Tax Act, 1961
The Tribunal affirmed the findings that Section 194-C did not apply to the payments made by the Assessee to individual truck owners/drivers without a contract. The Tribunal rejected the Revenue's appeal on this ground, stating that in the absence of evidence to the contrary, the findings that Section 194-C did not apply were confirmed. The Tribunal also noted that the Assessing Officer's findings were based on assumption rather than evidence, which led to the reversal of those findings by the Commissioner of Income Tax (Appeal) and the Tribunal. The Court upheld the concurrent findings of fact by the Commissioner and the Tribunal, concluding that the question at hand was answered against the Revenue, and the appeal lacked merit, leading to its dismissal.

In conclusion, the judgment clarified the interpretation of Section 40(a)(ia) and the applicability of Section 194-C in the context of expenses incurred by the Assessee on lorry hire charges, ultimately dismissing the appeal filed under Section 260-A of the Income Tax Act, 1961.