2017 (6) TMI 480 - AT - Income Tax

TDS u/s 194C - amount of freight charges paid by the assessee were disallowable u/s 40(a)(ia) on non deduction of tds - Held that - None of the parties before us produced copies of Bilty or any other documentary evidence from where it could be conclusively established whether the assessee acted as the main transport operator or merely as a transport agent. Further, with regard to the claim of the assessee that in each case, wherever the amount of payment in aggregate per payee exceeded ₹ 50,000/-, PAN was provided, it was noted by us that though detailed charts were submitted, but from these charts it was not possible to decipher the aggregate amount of payment made to one person. The charts have been prepared truck number-wise and not person-wise. Under these circumstances, in absence of supporting ledger accounts and in absence of proper re-tabulations of these charts, it is not possible to decide how much payment has been made to a particular person. Thus, under these circumstances, we find it appropriate to send the matter back to the file of the AO where the AO shall give adequate opportunity of hearing to the assessee to give complete details to establish whether the assessee is a transport operator or a transport agent and how much amount has been made per payee during the year to each payee. Appeal filed by the Revenue is treated as allowed, for statistical purposes.

Issues Involved:
1. Deletion of additions under Section 40(a)(ia) on account of freight charges paid.
2. Classification of the assessee as a Transport Broker/Agent versus a Transport Contractor.
3. Applicability of Res Judicata in tax assessments for different years.
4. Non-submission of PAN and names of parties to whom freight charges were paid.
5. Compliance with Section 194C(7) of the Income Tax Act.

Detailed Analysis:

1. Deletion of Additions under Section 40(a)(ia):
The primary issue was whether the assessee was liable to deduct TDS under Section 194C, and if not done, whether the freight charges paid were disallowable under Section 40(a)(ia) of the Income Tax Act. The assessee argued that they were not liable to deduct TDS as they were a transport agent, not a transport operator, and provided PAN details for payments exceeding ?50,000. The CIT(A) accepted this argument, noting that the business activities were primarily of an agent and not an operator, and thus Section 40(a)(ia) was not applicable. The Tribunal, however, found that proper verification of facts was necessary and remanded the matter back to the AO for a fresh decision.

2. Classification of the Assessee:
The CIT(A) found that the assessee was a transport agent/broker and not a transport operator, as the assessee did not own trucks and earned commission income. This classification was crucial in determining the applicability of TDS provisions. The Tribunal noted the need for further examination of documents like Bilty to conclusively establish the nature of the assessee’s business and remanded the issue back to the AO.

3. Applicability of Res Judicata:
The CIT(A) had considered the principle of consistency, noting that for AY 2008-09, the same AO had concluded that the assessee was not liable to deduct TDS on freight charges. However, the Tribunal highlighted that each assessment year is a separate proceeding and the principle of Res Judicata does not strictly apply. The Tribunal emphasized the need for fresh examination of facts for the current assessment year.

4. Non-submission of PAN and Names of Parties:
The AO had disallowed the freight charges due to the non-submission of PAN and names of the payees. The CIT(A) found that PAN details were provided wherever payments exceeded ?50,000. However, the Tribunal noted discrepancies in the charts provided, which were truck number-wise and not person-wise, making it difficult to verify the aggregate payments. The Tribunal remanded the issue back to the AO for proper verification with complete details.

5. Compliance with Section 194C(7):
The CIT(A) observed that the assessee had complied with Section 194C(6) and (7) by furnishing PAN details for the period 01-10-2009 to 31-03-2010. However, the Tribunal found that the AO needed to verify the compliance with these provisions more thoroughly, considering the detailed submissions and documentary evidence.

Conclusion:
The Tribunal remanded the matter back to the AO for a fresh examination of all issues, including the nature of the assessee’s business, compliance with TDS provisions, and verification of payments made. The AO was directed to provide adequate opportunity to the assessee to present complete details and documentary evidence. The appeal by the Revenue was treated as allowed for statistical purposes.

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