Tribunal upholds disallowance under section 40(a)(ia) for non-TDS deduction but allows appeal on voucher non-furnishing.

The Tribunal partly allowed the appeal, directing the deletion of the disallowance of Rs. 5,05,756/- for non-furnishing of vouchers. However, the disallowance of Rs. 38,00,098/- under section 40(a)(ia) for non-deduction of TDS under section 194C was upheld. The Tribunal rejected the argument to restrict the disallowance to 30% post-amendment to section 40(a)(ia), citing prospective application from AY 2015-16.

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Issues Involved:
1. Legality and jurisdiction of the assessment order.
2. Disallowance of Rs. 5,05,756/- for non-furnishing of vouchers.
3. Applicability of section 194C for payments to clearing and forwarding agents.
4. Extent of disallowance under section 40(a)(ia) post amendment.

Summary:

1. Legality and Jurisdiction of the Assessment Order:
The assessee contended that the assessment order was illegal, opposed to the facts, and without jurisdiction. However, the Tribunal did not address this issue in detail, implying no significant findings or changes were made regarding the legality and jurisdiction of the assessment order.

2. Disallowance of Rs. 5,05,756/- for Non-furnishing of Vouchers:
The assessee argued against the disallowance of Rs. 5,05,756/- for non-furnishing of vouchers. The Tribunal noted that the assessee had produced bills and vouchers for the majority of expenses and concluded that the AO erred in disallowing part of the expenditure solely for non-furnishing of vouchers. The Tribunal directed the AO to delete the addition made towards the disallowance of Rs. 5,05,756/-.

3. Applicability of Section 194C for Payments to Clearing and Forwarding Agents:
The AO disallowed Rs. 38,00,098/- under section 40(a)(ia) for non-deduction of TDS under section 194C on payments made to C&F agents. The Tribunal upheld this disallowance, agreeing with the AO and CIT(A) that there was a contract between the assessee and the C&F agents, making the provisions of section 194C applicable. The Tribunal referenced the ITAT Chennai Bench decision in Prahari Agency Private Ltd vs ITO, confirming that TDS is applicable for C&F charges and non-deduction leads to disallowance under section 40(a)(ia).

4. Extent of Disallowance under Section 40(a)(ia) Post Amendment:
The assessee argued that the disallowance should be restricted to 30% as per the amendment to section 40(a)(ia) by the Finance Act, 2014. The Tribunal rejected this argument, citing the Hon'ble Supreme Court in Shri. Choudhary Transport Company vs ITO, which held that the amendment is prospective from AY 2015-16 and not applicable retrospectively. Thus, the Tribunal upheld the full disallowance under section 40(a)(ia).

Conclusion:
The appeal filed by the assessee was partly allowed. The Tribunal directed the deletion of the disallowance of Rs. 5,05,756/- for non-furnishing of vouchers but upheld the disallowance of Rs. 38,00,098/- under section 40(a)(ia) for non-deduction of TDS under section 194C. The alternate plea for restricting the disallowance to 30% was rejected.

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