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TMI Blog2017 (6) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by Hon'ble Apex court in various judgments. (4) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in appreciating the fact that during the course of assessment proceedings the assessee has not submitted details of PAN and the names of the parties to whom the freight charges paid. (5) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing expenditure in respect of freight charges for the period 01/10/2009 to 31/03/2010 involving total amount of Rs. 3,20,16,550/- as provisions of section 194C(7) are interconnected and assessee has not complied with the provisions of section 194C(7) of the I.T. Act." 2. The solitary issue involved in these grounds is whether the assessee was liable to deduct TDS u/s 194C and in case assessee failed in deducting the tax at source, then whether the amount of freight charges paid by the assessee were disallowable u/s 40(a)(ia) of the Income-tax Act, 1961. 3. The brief facts as culled out from the orders passed by the lower authorities are that assessee is an individual and during the year he derived income from business and other sources. The assessee is a proprietary unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the consignors and payments made by the assessee to the vehicle owners through its bank account would not constitute the receipts and expenses as part of any trading transaction of the assessee. The payments made to the vehicle owners, therefore, would not constitute assessee's business expenditure for the purpose of computation of profit and gains of any business carried on by the assessee in accordance with the provision of Income-tax Act. 4.13. Once it is proved that the Freight payments would not constitute the appellant's business expenditure for the purpose of computation of profit and gains of the business therefore there will be no applicability of section 40(a)(ia) of the Act as this section is applicable only for sums which are otherwise allowable under section 30 to 38 of the Act while computing the income chargeable under the head "profits of business or profession". 4.14. The fact that an earlier assessment, i.e. for A. Y. 2008-09 was completed u/s. 143 (3) of the Act by the same Assessing Officer Mr. K A Paryani proved that there was nothing on record for him to deviate from following the same principle of consistency for the year tinder consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year to the account of the sub-contractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum, in the prescribed form and verified in the prescribed manner and within such time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year. The aforesaid facts have been verified by the Auditor and forms part of the Audit Report and is on records. The Audit Report states the fact that the appellant has been covered under the second proviso to clause (1) of the sub section (3) of Section 194C till 30-09-2009. The aforesaid fact was again reiterated in the submission made dated 19-03-2013 before the Assessing Officer reproduced by me again. 4.20. Alternatively, during the course of assessment proceedings the AR has attached list of details of freight charges paid from 01-04-2009 to 30-09-2009 amounting to Rs. 3,16,84,130/- month wise, truck wise and PAN wise stating that since the aggregate contract amount paid to individual transporter had not crossed Ps.50,000/- then as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the business of transport contractors and supply of labourers. Further, our attention has been drawn on the profit & loss account of the assessee wherein Hamali Charges (i.e. loading and unloading charges) aggregating to Rsa.11,04,426 have been paid during the year indicating that assessee himself was engaged in the business of transport. Further, it has been stated that assessee has neither produced the books of account before the lower authorities nor did give proper details to show from where it could be seen that whether aggregate payment made to each person did not exceed Rs. 50,000 and wherever it exceeded Rs. 50,000 whether PAN has been obtained in such cases and given to the AO or not. Though certain charts were produced by the assessee before the AO, but in absence of ledger account of the payees and proper books of account, these facts could not be verified as to whether the payment made in aggregate exceeded the threshold limit of Rs. 50,000 or not. It was thus submitted that fairly speaking, all these issues should go back to the file of the AO where assessee shall produce all the book of account and supporting evidences where all the facts could be brought on re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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