Retrospective TDS liability and depreciation proof govern freight, truck, and receipt-mismatch adjustments in assessment.

An amendment creating tax-deduction liability under section 194C applied only from 1 June 2007 and was not retrospective for assessment year 2007-08, so disallowance under section 40(a)(ia) for freight payments was unsustainable. Depreciation on trucks registered after year-end required proof that the vehicles were fit for road use and actually used during the year; absent such evidence, the claim was disallowed, while the ownership dispute over one vehicle required fresh verification. A mismatch between receipts in the return and TDS certificates could not be added as income without reconciliation, so the matter was remitted for factual examination.

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Issues: (i) Whether disallowance under section 40(a)(ia) was justified for non-deduction of tax at source on freight payments under section 194C; (ii) Whether depreciation on trucks was allowable where registration was completed after the relevant financial year and one vehicle's ownership was disputed; (iii) Whether the difference between receipts shown in the return and the TDS certificates could be added as income without verification.

Issue (i): Whether disallowance under section 40(a)(ia) was justified for non-deduction of tax at source on freight payments under section 194C.

Analysis: The relevant assessment year was 2007-08. The amendment introducing clause (k) in section 194C(1), making certain individuals or HUFs liable to deduct tax, came into effect from 01.06.2007 and did not apply to the year under consideration. The payments were treated by the lower authorities as covered by section 194C, but the Tribunal followed the binding view that the amendment had no retrospective application to that year.

Conclusion: The disallowance under section 40(a)(ia) was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): Whether depreciation on trucks was allowable where registration was completed after the relevant financial year and one vehicle's ownership was disputed.

Analysis: For the trucks registered after the year-end, the Tribunal held that a commercial vehicle cannot be said to be ready for use unless it is fit for road use and duly registered, and no material was produced to show actual use during the year. As to the second-hand truck, there was a factual dispute regarding ownership, and the record was insufficient for a final finding.

Conclusion: Depreciation on the trucks registered after year-end was disallowed, while the claim relating to the disputed truck was remanded to the Assessing Officer for fresh verification.

Issue (iii): Whether the difference between receipts shown in the return and the TDS certificates could be added as income without verification.

Analysis: The assessee explained that the mismatch arose from a calculation mistake in the TDS certificates and sought an opportunity to reconcile the figures. In view of the request and the need for factual verification, the matter required reconsideration by the Assessing Officer.

Conclusion: The addition was set aside for verification and the issue was remanded.

Final Conclusion: The appeal succeeded on the TDS disallowance issue, while the depreciation and receipt-mismatch issues were not finally accepted on merits and were either disallowed or restored for fresh examination.

Ratio Decidendi: An amendment creating a new tax-deduction liability applies only from its stated effective date, and depreciation requires proof that the asset was actually fit for use during the relevant year.

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