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TMI Blog2017 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that these provisions are applicable when any amount has been debited in the profit and loss account and deducted in computing the income chargeable under the head profits and gains of business or profession. In the present case, nothing has been deducted by the assessee from the income in the profit and loss account. Therefore, provisions of Section 40(a)(ia) of the Act are not applicable to the facts of the present case. See CIT Vs Hardarshan Singh [2013 (1) TMI 314 - DELHI HIGH COURT]. - Decided in favour of assessee. - ITA No. 6565/Del/2014 - - - Dated:- 30-5-2017 - Sh. N. K. Saini, Accountant Member For the Assessee : Sh. B. L. Gupta, ITP For The Revenue : Sh. Amrit Lal, Sr. DR ORDER This is an appeal by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,93,446/- made by the AO u/s 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 4. Facts of the case in brief are that the assessee filed the return of income on 30.11.2006 declaring an income of ₹ 1,79,327;/-. The AO initiated the proceedings u/s 148 of the Act for the reasons that the assessee had incurred an expenditure of ₹ 36,97,012/- on direct expenses which included freight etc., on which TDS was not deducted. It was further observed that the direct expenses exceeded threshold limit prescribed u/s 194C of the Act and since the assessee had not deducted tax on such payments those were to be disallowed as per the provisions of Section 40(a)(ia) of the Act. The AO made the impugned addition by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Flying Golden - Rs.1,96,270/- ii) V.L.T. - ₹ 99,001/- iii) Navrang Rs.1,13,536/- iv) Trains Rs.56,494/- v) Greens Rs.81,716/- Total Rs.5,47,017/- Grand Total ₹ 11,93,446/- From the above it is clear that the assessee has to deduct the tax on account of Freight paid amounting to ₹ 11,93,446/-as detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the profits and loss accounts, as alleged by the AO. A reference was made to page no. 30 of the assessee s paper book which is the copy of the profit and loss account for the year ended on 31.03.2006. It was stated that the assessee was earning the commission and no payment was made either to M/s Shriram Automotive Products Ltd. or M/s Honda Siel Power Products Ltd. It was further stated that the assessee was a clearing and forwarding agent and acting as an intermediary between the principal and the transporter, its total income was only from commission and interest and that the entire operation of the assessee was as per the directions and instructions of the principal. It was also stated that as per the agreement, the assessee first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the copy of profit and loss account placed at page no. 30 of the assessee s paper book. It is noticed that no such expenses were debited in the profit and loss account. The AO, however, made the disallowance u/s 40(a)(ia) of the Act. The provisions contained in the said Section, relevant to the year under consideration, read as under: 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession , - (a) in the case of any assessee - ... Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The principal contract was between the exporter and the airline. This court, in Cargo Linker's (supra), agreed with the view of the Tribunal which had mainly decided an issue of fact, namely, the nature of the contract between the parties concerned. The Court also observed that it had also been found as a matter of fact that the contract was actually between the exporter and the airline and the assessee was only an intermediary and, therefore, it was not the 'person responsible' for deduction of tax at source in terms of section 194C of the said Act. 9. We feel that the decision in Cargo Linkers (supra) completely covers the case in favour of the assessee and against the respondent. The Tribunal has already found as a mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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