2018 (1) TMI 798 - AT - Income Tax

TDS u/ 194C - person responsible for paying or crediting any sum to the person carrying on the business of playing, hiring or leasing goods carriages - Held that - Payee is having a) PAN ABOPN 0110 H (copy of the Acknowledgement of the Return of Income enclosed). In view of this, no tax is required to be deducted at source u/s.194C(6), b) As regards Section 194C(7), it is slated that the same is required to be furnished in such form and within such time as may be prescribed. However, no reference has been made in the Act as to which form or which time it refers to. c) Without prejudice to the above, it is submitted that this is purely procedural, which should not be a cause for disallowance. Therefore, we remand this matter back to the file of the AO who will verify the details whether parties in question have deposited the Tax or not. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues involved:
1. Disallowance of foreign exchange fluctuation loss
2. Disallowance of freight charges/transport charges under section 40(a)(ia)
3. Levying of interest under section 234A/B/C
4. Initiating penalty proceedings under section 271(1)(c)

Analysis:

Issue 1: Disallowance of foreign exchange fluctuation loss
The appellant challenged the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of foreign exchange fluctuation loss. However, the Tribunal noted that Ground No.1 was general and not pressed, while Ground No.2 was not adjudicated. Therefore, this issue was not further discussed in the judgment.

Issue 2: Disallowance of freight charges/transport charges under section 40(a)(ia)
The Tribunal examined the case where the assessee failed to deduct TDS on payment made to a transport service provider, resulting in a disallowance under section 40(a)(ia) of the Income Tax Act. The appellant argued that as the payee had provided its PAN, no TDS was required under section 194C(6). However, the CIT(A) disagreed and confirmed the disallowance. Upon review, the Tribunal remanded the matter to the Assessing Officer for verification of tax deposits by the parties involved, emphasizing that procedural lapses should not lead to disallowances.

Issue 3: Levying of interest under section 234A/B/C
The Tribunal addressed the issue of levying interest under section 234A/B/C of the Income Tax Act. Since Ground No.5 was considered consequential, no specific discussion on this issue was provided in the judgment.

Issue 4: Initiating penalty proceedings under section 271(1)(c)
Regarding the initiation of penalty proceedings under section 271(1)(c), the Tribunal deemed it premature and did not delve into the specifics of this issue. Ground No.6 was mentioned as being premature, and no further analysis was provided.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, indicating that the disallowance of freight charges/transport charges under section 40(a)(ia) was remanded for further verification. The judgment highlighted the importance of procedural compliance and the need for thorough assessment before disallowing expenses based on TDS non-compliance.