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TMI Blog2015 (5) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is engaged in the business of transportation/carriage of goods as transport contractor. The assessee has debited in its profit and loss account an amount of Rs. 3,28,45,317/- on account of freight payment. AO observed that the assessee was required to deduct tax at source u/s 194C of the Act on the total payment of Rs. 2,65,48,566/-. The assessee submitted party wise details and submitted that no TDS is required to be deducted because the truck owners transport the goods without assuming any responsibility as sub-contractor and collect the payments against the delivery. Moreover, the assessee has collected specific forms 15I from various truck owners. The necessary explanation vide letter dated 27.12.2010 which is at pages 4 and 5 of the AO's order is reproduced herein below : "We are transport contractor transporting the goods within the specified time limit mentioned in the contract and earned freight from them. Trucks owned by the company were not sufficient to complete the contract and therefore hired the trucks from various truck owners available in open market/.truck depot as & when basis on day-to-day requirement without assigning/sub contracting the works order al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, Kolkata by under postal certificate on 30.06.2008 after a gap of one year from the month of collecting the alleged declarations in Form 15 I. On verification by the Inspector in the office of Commissioner of Income Tax, Kolkata it was found that no such documents as claimed by the assessee has been received by the CIT's office. Accordingly AO observed that there is no substance in the pleadings of the assessee and it was required to deduct tax at source u/s 194C of the Act and therefore provision of section 40(a)(ia) of the Act are attracted and accordingly an amount of Rs. 2,65,48,566/- was disallowed and added back to the total income of the assessee. 3.3. The ld. CIT(A) accepted the explanation of the assessee and in view of the decision of the Hon'ble Rajasthan High Court in the case of Chhogmal Chiranjilal 257 ITR 51 where it has been held that if the declarations are received before credit or before payment within the financial year the appellant is not liable to deduct the tax. It is only if such declaration are received after the close of the financial year then tax deduction has to be made under the provisions contained in respective provisions of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case. Therefore in our view once the specified forms have been collected under Rule 29D(4)(ii) by the assessee even if the same is not submitted to the CIT for one reason or another, the assessee is not required to deduct tax at source u/s 194C of the Act and therefore provisions of section 40(a)(ia) cannot be made applicable. The issue is covered by the decisions of ITAT, Kolkata Benches in the case of ITO vs Rajesh Kumar Garg (supra), Valibhai Khanbhai Mankad, Ahmedabad in ITA No.2228/Ahd/2009 dated 29th April, 2011 and in the case of ITO vs SS Impex (supra) and in the case of Vipin Mehta of ITAT, Mumbai (supra). The relevant decision in the case of Vipin P.Mehta which had been followed by various Kolkata Benches is reproduced herein below for the sake of convenience :- "6. We have carefully considered the facts and the rival contentions. Section 194A provides for deduction of tax from the interest paid by the assessee, at the appropriate rate. Section 197A(lA) provides that notwithstanding anything contained in section 194A no deduction of tax shall be made under the section if the payee of the interest furnished to the person responsible for paying the interest, a declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's claim on the basis of other evidence, except by way of inference, it would not be fair or proper to discard the claim. The Assessing Officer has not recorded any statements from the payees of the interest to the effect that they did not file any declarations with the assessee at the appropriate time or to the effect that they filed the declarations only at the request of the assessee in September /October, 2008. In the absence of any such direct evidence, we are unable to reject the assessee's claim. The Assessing Officer has stated in para 4.4 of the assessment order that he found that some of the loan creditors were having taxable income but still the assessee had submitted declarations from them in form no. 15G. Unless it is proved that these forms were not in fact submitted by the loan creditors, the assessee cannot be blamed because at the time of paying the interest to the loan creditors, he has to perforce rely upon the declarations filed by the loan creditors and he was not expected to embark upon an enquiry as to whether the loan creditors really and in truth have no taxable income on which tax is payable. That would be putting an impossible burden on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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