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TMI Blog2023 (9) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... on that salary expenditure itself is not genuine. Comparative data of salary expenditure for last two years were also submitted and on perusal thereof, it is noted that though there is a marginal increase in the salary expenditure as a percentage of sales but the fact of the matter is that salary expenditure has been incurred by the assessee in the past and the same has been allowed by the Revenue. Therefore, on what basis, the whole of the salary expenditure has been disallowed during the year is beyond any comprehension. CIT(A) has also summarily rejected the same reiterating the findings of the AO. There is no justifiable basis for denial of the salary expenditure and disallowance is hereby directed to be deleted. Disallowance of freight expenses - The fact that the assessee has availed the services of only one truck provider cannot be held against the assessee as the said decision is within the domain of the assessee and its business exigency which cannot be challenged by the Revenue. Regarding the format and contents of the declaration u/s 194C(6), the ld CIT(A) has referred to certain deficiency therein in the impugned order and for removing the said deficiency, we deem it ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed off. 6. That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable. 3. Briefly the facts of the case are that the assessee firm filed its return of income declaring total income at NIL. Subsequently, notices were issued calling for information and documentation. Taking the same into consideration, the AO completed the assessment proceedings and passed an order u/s 143(3) dated 2/12/2019 made an addition of Rs. 39,72,458/- by disallowing the salary expenses of Rs. 13,89,858/- and freight expenses of Rs. 25,82,600/-. 3.1 During the course of assessment proceedings, the AO noticed that the assessee has not deducted TDS on salary payment to its employees. As per the AO, the list of employees supplied by the assessee is not supported by proper documentary evidence. Thereafter the assessee was asked to upload the bills vouchers of the salary payment and in response the assessee submitted its reply. However the AO observed that the assessee has uploaded some papers of salary paid to its employees of which the authenticity cannot be proved in any way, and thereafter it was finally held that the genuineness of the salary paid is not pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as the mode of payment were duly submitted during the course of assessment proceedings and therefore the authenticity of the truck provider namely M/s Supreme Cargo Carrier stands fully proved beyond any doubt. It was submitted that Section 194C(6) clearly states that where a Director owns ten or less goods carriage at any time during the previous year and furnished a declaration to that effect along with his PAN to the person paying or credited such sum, no deduction shall be made from such sum. It was submitted that in the present case, the declaration has been duly submitted by M/s Supreme Cargo Carrier which has neither been considered nor rejected by the AO. Without prejudice, it was further submitted that even in case the explanation so submitted by the assessee is not considered, the disallowance made should have been restricted to 30% and not 100% in terms of 40(a)(ia) of the Act. 4.2 It was further submitted that the addition have been made without rejection of books of account and therefore in absence of rejection of books of account, no disallowance can be made in the hands of the assessee. 5. The submissions so filed by the assessee were considered but not found acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .... for transportation of goods by goods carriages having Registration Number ............. ..may be paid or credited to my account without deduction of tax under section 194C of the Income Tax Act, 1961. l/We .............. in the capacity of ............... hereby declare that l/We do not own more than ten goods carriage and also did not own more than ten goods carriage at anytime during the period from 1st April ............. to ...... My Permanent Account Number (PAN) is .................. I hereby enclose a self attested photocopy of my PAN card. Place Signature of the person making declaration 6.4 As can be seen above, when compared with the declaration filed by the appellant, many vital information like freight amount, registration number, self attested PAN copy, are missing. In this connection attention is drawn to the decision of the Hon'ble ITAT, Amritsar in the case of DCIT v Satish Aggawal Co. (2018) 122 ITD 35 (Asr) wherein it had been held that provision of trucks without drivers cannot be called as carrying out any 'work'. In the case of the appellant, the provision of trucks is considered to be doubtful. The onus is upon the appellant to prove that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Carrier under section 194C(6) of the Act, the assessee is absolved from its liability to deduct any TDS and in any case there is no finding recorded by the lower authorities as to why the declaration so submitted by the M/s Supreme Cargo Carrier furnished during the course of assessment proceedings has not been taken into consideration. It was accordingly, submitted that the addition so made by the AO and confirmed by the Ld. CIT(A) be directed to be deleted. 7. Per contra, the Ld. DR relied on the findings of the AO as well as that of the Ld. CIT(A) which we have already taken note of and the same are not been repeated for the sake of brevity. 8. We have heard the rival contentions and purused the material available on record. Firstly, regarding the salary expenses, as we have noted above, the assessee vide its submission, which was filed on 24/07/2019 during the course of assessment proceedings, has submitted the monthly salary and the wages register which are available at pages 141 to 165 of assessee s paperbook. The salary and wages register has the particulars of the each of the employees in terms of name, father s name, period of rendering the service during the relevant mon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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