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TMI Blog2014 (1) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... per book filed by the assessee, the total freight charges mentioned is Rs.18,969/-, TDS Rs. 568/- and only balance of Rs.18401 - the assessee has to pay to the lorry operator - it is mentioned as 'loading hamali' - So far as this aspect is concerned, the CIT(Appeals) has observed that instead of TDS, it was mentioned as 'loading hamali' and it has to be treated as TDS only – order of the CIT(A) upheld – Decided against Revenue. Advances made to sister concern through current account – Held that:- The assessee is in the business of running rice mill, which is a propriety concern - The assessee is also a partner of another rice mill namely M/s. Maharaja Modern Rice Mill - The assessee has advanced an amount - The Assessing Officer has disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 36(1)(iii) of the Act and the total income of the assessee was assessed at Rs.1,73,78,995/-. 3. The first ground of appeal relating to disallowance under section 40a(ia) of the Act. During the course of assessment proceedings, the Assessing Officer has observed that the assessee has purchased paddy from various parties. The assessee also pays lorry freight charges for that paddy purchased. The assessee has not deducted TDS on the payments of freight exceeding Rs.20,000/- as per section 194C of the Act. The Assessing Officer has called for explanation from the assessee and in reply the assessee stated that she had entered into an agreement with the supplier and as per the terms and conditions of the supplier, the price quoted by the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliers of paddy that the supplier has to deliver the goods at the factory premises of the assessee. As the payment in respect of the same is to be made to the lorry operator, the suppliers raised the freight wherein they mentioned the charges to be paid to the lorry operator and in the same memo, details of TDS wherever applicable were also mentioned. The ld. Counsel for the assessee, before the CIT(Appeals) submitted that the Assessing Officer has failed to appreciate the fact that there is no direct contract between the assessee and transport operators and the assessee is making the payment of lorry freight only as per the instructions of their suppliers and since the TDS in respect of the same stands deducted by the suppliers, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier has deducted the TDS and has asked the appellant to pay the balance amount to the lorry driver. Hence, the provisions of Section 40a(ia) was not applicable to the appellant's case. The Assessing Officer is directed to delete the addition." Being aggrieved, the Revenue preferred appeal before the Tribunal. 7. The ld. DR submitted that the assessee has not deducted the TDS on freight charges. Therefore, the Assessing Officer by invoking section 40(a)(ia) rightly disallowed the expenditure claimed by the assessee. He strongly supported the order passed by the Assessing Officer. 8. On the other hand, the ld. Counsel for the assessee has submitted that the assessee purchased paddy from the suppliers. The suppliers, in turn, entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(Appeals) examined the details filed by the assessee and observed that the freight details submitted by the lorry operators 'hamali' is nothing but TDS. In some of the vouchers, the 'hamali' was replaced by TDS and each were written as freight vouchers and TDS was deducted at 3% and are clear from the lorry freight vouchers/letters filed by the assessee. In majority of these lorry freight vouchers, the total freight payment on each bill did not exceed Rs.20,000/- and held that the provisions of section 40a(ia) have no application. 10. We have considered the paper book filed by the assessee. At page No.2, the total freight charges mentioned is Rs.18,969/-, TDS Rs. 568/- and only balance of Rs.18401/-, the assessee has to pay to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee could establish that the advances were made out of own funds to the sister concern on commercial expediency and therefore, directed the Assessing Officer to delete the addition. On being aggrieved, the Revenue preferred appeal before the Tribunal. 14. The ld. DR strongly supported the order passed by the Assessing Officer. 15. On the other hand, the ld. Counsel for the assessee submitted that the advances were given to the sister concern only on commercial expediency. Therefore, interest paid on borrowed funds cannot be disallowed. 16. We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee is in the business of running rice mill, which is a propriety con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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