2018 (4) TMI 258 - AT - Income Tax

TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment was made to CONCOR, a company which is engaged in the carriage of goods payment was made to CONCOR, a company which is engaged in the carriage of goods - Held that - The impugned payment does not attract the TDS u/s 194C of the Act and no disallowance is called for u/s 40(a)(ia) of the act. See Ras Polybuild Product Pvt. Ltd. Vs. DCIT 2017 (1) TMI 325 - ITAT HYDERABAD . Hence the order of the CIT(A) is upheld and the appeal of the revenue is dismissed.

Summary

Issues involved:
Appeal against order of Commissioner of Income Tax (Appeals) regarding assessment year 2005-06, addition of unexplained cash credit and disallowance of expenditure u/s 40(a)(ia) of the Income Tax Act.

Analysis:
1. The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2005-06. The assessee company, engaged in handling and transport contracting, had filed its return of income originally on 01.10.2005. Following search and seizure operations, a notice u/s.153A was issued, and the assessment was completed u/s. 143(3) r.w.s. 153A, assessing the total income at &8377; 1,33,430. Subsequently, a revision order was passed u/s. 263, leading to reassessment with additions totaling &8377; 73,67,360. The CIT(A) allowed the appeal of the assessee, deleting both additions.

2. The revenue appealed against the deletion of addition u/s 40(a)(ia) of the Act. The dispute centered around whether the payment made to CONCOR for carriage of goods attracted TDS u/s 194C. The revenue contended that since the payment was not directly made to Railways, TDS was applicable. Conversely, the assessee argued that as per section 194C, carriage of goods by Railways was excluded from TDS provisions. The Ld. CIT(A) and the coordinate bench of ITAT, Hyderabad, supported the assessee's position, emphasizing that the payment for carriage of goods by Railways did not fall under the purview of TDS u/s 194C.

3. Upon considering the arguments and orders of the authorities below, it was established that the payment made by the assessee to CONCOR for carriage of goods by Railways did not attract TDS u/s 194C. The Ld. CIT(A) upheld the assessee's position based on the ITAT Hyderabad decision, concluding that no TDS was required, and thus, no disallowance u/s 40(a)(ia) was applicable. The revenue's appeal was dismissed, and the cross objection of the assessee was sustained, leading to the affirmation of the Ld. CIT(A)'s order.

In conclusion, the judgment clarified the applicability of TDS u/s 194C concerning payments made for carriage of goods by Railways, ultimately ruling in favor of the assessee and dismissing the revenue's appeal.