2011 (1) TMI 1360 - AT - Income Tax

Issues Involved:
1. Disallowance of freight paid due to non-deduction of TDS.
2. Disallowance of transportation charges due to non-deduction of TDS.
3. Applicability of TDS provisions for payments below specified limits.
4. Disallowance of loading and unloading charges due to non-deduction of TDS.
5. Disallowance of expenses actually paid within the previous year without TDS.
6. Disallowance of transportation charges due to non-furnishing of names and addresses of the parties.

Issue-wise Detailed Analysis:

1. Disallowance of Freight Paid Due to Non-Deduction of TDS:
The assessee contended that out of the total freight paid of Rs. 15,76,761, an amount of Rs. 4,77,637 comprised payments to individual persons where each payment was less than Rs. 20,000, thus not requiring TDS deduction. For the remaining amount of Rs. 10,98,273, the assessee claimed to have obtained Form 15-I from truck owners, exempting them from TDS. However, the Assessing Officer and Ld. CIT(A) disallowed the total amount due to the failure to submit Form 15-J to the jurisdictional CIT and lack of satisfactory evidence. The Tribunal partially allowed the appeal, deleting the disallowance of Rs. 4,77,637 but upheld the disallowance of Rs. 10,98,273 due to non-compliance with TDS provisions.

2. Disallowance of Transportation Charges Due to Non-Deduction of TDS:
The assessee argued that the transportation charges of Rs. 11,58,302 were below the threshold for TDS deduction. The Ld. CIT(A) disallowed the amount due to insufficient details to verify compliance with Section 194C. The Tribunal found that the Department failed to prove that any payments exceeded the specified limits for TDS deduction and allowed the appeal, deleting the disallowance of Rs. 11,58,302.

3. Applicability of TDS Provisions for Payments Below Specified Limits:
The Tribunal noted that the Department did not dispute that individual payments were below Rs. 20,000 and aggregate payments did not exceed Rs. 50,000 per payee. Thus, the Tribunal held that disallowance under Section 40(a)(ia) was not justified for payments below the specified limits and deleted the disallowance of Rs. 4,77,637.

4. Disallowance of Loading and Unloading Charges Due to Non-Deduction of TDS:
The assessee contended that no payment exceeded Rs. 20,000 at a time, and no aggregate payment to any payee exceeded Rs. 50,000 in the financial year. The Tribunal found that the Department did not provide evidence to the contrary and held that disallowance under Section 40(a)(ia) was not justified. The Tribunal deleted the disallowance of Rs. 2,41,580.

5. Disallowance of Expenses Actually Paid Within the Previous Year Without TDS:
The Tribunal addressed this issue in conjunction with the other grounds, noting that the provisions of Section 40(a)(ia) apply to amounts paid or credited without TDS deduction. The Tribunal found that the general plea regarding non-applicability of Section 40(a)(ia) lacked merit and upheld the disallowance where TDS was not deducted as required.

6. Disallowance of Transportation Charges Due to Non-Furnishing of Names and Addresses of the Parties:
The Assessing Officer disallowed Rs. 21,42,270 due to the assessee's failure to provide names and addresses of the parties. The Ld. CIT(A) confirmed the disallowance on the ground of late TDS remittance. The Tribunal, relying on the decision of the ITAT Mumbai Bench, held that the amendment by the Finance Act, 2010, allowing TDS remittance by the due date of filing the return, applied retrospectively. Thus, the Tribunal deleted the disallowance of Rs. 21,42,270.

Conclusion:
The Tribunal allowed the appeal in part, deleting disallowances where the assessee complied with TDS provisions or where payments were below the specified limits. The Tribunal upheld disallowances where the assessee failed to comply with TDS requirements.

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