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2012 (11) TMI 229 - AT - Income TaxNon deduction of TDS - disallowance of freight charges - Held that - The provisos of sub-section 3 under clause (i) of 194C is to be fulfilled by the assessee i.e. he has to obtain 15-I form from the sub-contractor while making the payments to them, form no.15-J is to file before the concern Commissioner on or before 30th June of following financial year and payment above Rs.50,000/- is made to the single sub-contractor in full year to deduct the TDS. But it was held when the appellant has obtained 15-I form then second proviso would be applicable. Therefore, it is not required to deduct tax. It was held that when form no.15-I had been obtained from the sub-contractor whose contents were not disputed or whose genuineness was not doubted then the assessee is not liable to deduct tax from the payment made to sub-contractor. Once, the assessee is not liable to deduct tax u/s.194C then the addition u/s. 40(a)(ia) cannot be made - in favour of assessee.
Issues:
Appeal against addition of expenses due to disallowed freight charges. Analysis: The appeal arose from the order of CIT(A)-II, Baroda, confirming the addition of Rs.53,89,873/- made by the A.O. by disallowing expenses claimed on account of freight charges paid to various transporters for the assessment year 2006-07. The appellant had debited Rs. 54,05,138/- in the p&l account without deducting TDS on freight charges. The appellant claimed to have obtained form no. 15-I from small transporters, but the A.O. found discrepancies regarding the submission of required forms and TDS deduction. The CIT(A) upheld the disallowance, noting payments made to the appellant's family members and lack of evidence for tax deduction exemption. The appellant, represented by Shri S.N. Soparkar, Sr. Advocate, argued for the deletion of the addition, citing compliance with TDS regulations and a previous case precedent. The Revenue, represented by Shri C.S. Anjaria, Sr. D.R., supported the CIT(A) and A.O.'s decision based on jurisdictional issues and lack of compliance with Section 194C of the IT Act. The Tribunal examined the submissions, the paper book, and relevant case law. It noted that the appellant, a transporter, had paid freight charges to small truck owners without TDS deduction. The appellant had submitted form no.15-J to CIT-II, Baroda, and to the A.O., demonstrating compliance with TDS regulations. Referring to a previous case, the Tribunal outlined conditions for TDS exemption, emphasizing the importance of obtaining form no.15-I and filing form no.15-J before the designated Commissioner. The Tribunal highlighted that when the appellant obtained form no.15-I and met all prescribed conditions, TDS deduction was not required. Citing precedents where similar issues were resolved in favor of the appellant, the Tribunal concluded that the appellant's submission of form no.15-J sufficed to exempt TDS deduction on freight charges. Consequently, the Tribunal allowed the assessee's appeal, overturning the addition of Rs.53,89,873/-. In conclusion, the Tribunal's detailed analysis focused on the appellant's compliance with TDS regulations, the submission of required forms, and adherence to prescribed conditions for TDS exemption on freight charges paid to small truck owners. By referencing relevant case law and highlighting precedents favoring the appellant's position, the Tribunal concluded that the appellant's submission of form no.15-J justified the exemption from TDS deduction, leading to the allowance of the appeal and the deletion of the disputed addition.
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