2012 (9) TMI 960 - AT - Income Tax

Tribunal remands cases for verification, rules on disallowance under section 40(a)(ia). Assessments allowed for statistical purposes.

Cee Pee Granites Pvt. Ltd. And Cee Pee Marbles & Granites Versus The Assistant Commissioner of Income-tax, Circle-2 (2), Tirur.

The tribunal set aside the orders of the Ld. CIT(A) for both assesses and remanded the matters to the Assessing Officer for verification and decision ... Addition of freight payments u/s. 40(a)(ia) - amounts which have already been paid during the course of relevant previous year without deducting tax at source - Held that:- The assessee has filed a statement before us in both the cases, wherein the details of freight debited, freight paid and freight payable are given. In our view these facts require verification at the end of the Assessing Officer. Accordingly, we set aside the orders passed by the Ld. CIT(A) in the hands of both the assesses and restore the matters back to the file of the Assessing Officer with a direction to verify the statement furnished by the assessee before the Bench and decide the issue by following the decision of the Special Bench of ITAT, Vishakapatnam in the case of Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM]. In the result, the appeals of the assesses are treated as allowed for statistical purposes. Issues:Appeals against orders upholding addition on freight payments u/s. 40(a)(ia) of the Act for assessment year 2006-07.Analysis:The appeals were directed against separate orders by the Ld. CIT(A)-II, Kozhikode concerning the assessment year 2006-07. The solitary issue in these appeals was identical, so they were heard together. The assesses contested the decision of the Ld. CIT(A) regarding the addition made by the Assessing Officer on freight payments under section 40(a)(ia) of the Act.During the assessment proceedings, it was discovered that the assesses did not deduct tax at source on the freight charges paid by them. Consequently, the Assessing Officer disallowed amounts under section 40(a)(ia) of the Act. Cee Pee Granites Pvt. Ltd. had &8377; 43,88,574 disallowed, and Cee Pee Marbles and Granites had &8377; 50,98,944 disallowed. The assesses appealed to the Ld. CIT(A) but were unsuccessful, leading them to appeal to the tribunal.The Ld. Counsel for the assesses argued that one concern paid the entire freight amount before the end of the relevant previous year, while the other concern paid most of the amount before the year-end. Citing the decision of the Special Bench of ITAT, Vishakapatnam in the case of Merilyn Shipping and Transports, the Ld. Counsel contended that disallowance under section 40(a)(ia) should only apply to expenditure remaining payable as of 31st March. The Ld. DR, however, supported the Ld. CIT(A)'s orders.The tribunal considered the arguments and the Special Bench's decision, agreeing that section 40(a)(ia) should only apply to payable expenditure as of 31st March and not to amounts already paid during the relevant previous year without TDS deduction. The tribunal directed the Assessing Officer to verify the statement provided by the assesses and decide the issue in line with the Special Bench's decision.Consequently, the tribunal set aside the Ld. CIT(A)'s orders for both assesses and remanded the matters to the Assessing Officer for verification and decision in accordance with the Special Bench's decision. The appeals of the assesses were treated as allowed for statistical purposes.