2013 (5) TMI 511 - HC - Income Tax

Non deduction of TDS on freight charges - addition was made invoking section 40(a)(ia) - Tribunal disposed of the appeal on the ground that addition could not have been following the decision of Merilyn Shipping and Transports Vs. Addl. CIT. 2012 (4) TMI 290 - ITAT VISAKHAPATNAM - Held that - As already delivered in CIT, Kolkata-XI Vs. Crescent Export Syndicates (2013 (5) TMI 510 - CALCUTTA HIGH COURT) holding that the views expressed in the case of Merilyn Shipping & Transports were not acceptable. That is one reason why the matter should be remanded to the Tribunal. Another reason for remanding the matter to the Tribunal is that the finding of facts recorded by the CIT (Appeal) was not tested by the Tribunal.

Summary

Issues:
1. Addition of sum on account of freight charge without TDS deduction under section 40(a)(ia) of the I.T. Act, 1961.
2. Interpretation of contract between the appellant and the transporter.
3. Applicability of the decision in the case of Merilyn Shipping and Transports Vs. Addl. CIT.
4. Acceptance of views expressed in the case of Merilyn Shipping & Transports.
5. Testing of the facts recorded by the CIT (Appeal) by the Tribunal.

Analysis:
1. The Assessing Officer added a sum to the returned income of the assessee due to the absence of TDS deduction on freight charges, invoking section 40(a)(ia) of the I.T. Act. The Appellate Authority noted the contention that freight charge was part of the goods' price but concluded there was no evidence of a contract with the transporter. Consequently, the addition was deleted as the payment was not subject to TDS under section 194C of the I.T. Act.

2. The Tribunal disposed of the appeal without considering the absence of a contract between the appellant and the transporter, citing the decision in the case of Merilyn Shipping and Transports Vs. Addl. CIT. However, a previous judgment highlighted that the views in the Merilyn Shipping case were not acceptable, leading to the need for a remand to the Tribunal for a fresh decision.

3. The Court set aside the order and remanded the matter to the Tribunal for a decision de novo due to the unacceptability of the views expressed in the Merilyn Shipping case and the lack of testing of facts recorded by the CIT (Appeal) by the Tribunal. The appeal was thus disposed of, and parties were directed to comply with formalities for obtaining a certified copy of the order.