Salary expenditure allowed as payments were below taxable limits requiring no TDS under section 192

ITAT Chandigarh allowed the appeal regarding salary expenditure denial. Revenue authorities disallowed salary payments claiming lack of TDS deduction, but the tribunal found that salaries were below taxable limits requiring no TDS under section 192. The assessee provided adequate documentation including salary registers with employee details, signatures, and comparative data from previous years. The tribunal held no justifiable basis existed for disallowing genuine salary expenditure. Regarding freight expenses, the matter was remanded to AO for consideration of revised declaration under section 194C(6) after addressing deficiencies identified by CIT(A). The assessee was directed to provide corrected documentation for verification.

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Issues Involved:
1. Disallowance of salary expenses due to alleged non-deduction of TDS.
2. Disallowance of freight expenses due to alleged non-deduction of TDS.
3. Validity of the declaration/certificate from M/s Supreme Cargo Carriers.
4. Alleged denial of adequate opportunity of being heard.
5. General challenge to the order of the Ld. CIT(A).

Issue-wise Detailed Analysis:

1. Disallowance of Salary Expenses:
The assessee contested the disallowance of salary expenses amounting to Rs. 13,89,898/- for non-deduction of TDS. The AO disallowed the expenses on the grounds that the list of employees provided was not supported by proper documentary evidence, and the authenticity of the salary payments could not be proved. The Ld. CIT(A) upheld the disallowance, stating that the assessee failed to provide valid documentary evidence to substantiate the number of employees and the salaries paid. However, the Tribunal found that the assessee had submitted the monthly salary and wages register, which included particulars of each employee, such as name, father's name, service period, salary amount, and signatures. The Tribunal observed that the salary payments were below the taxable limit and did not attract TDS under section 192. The Tribunal concluded that there was no justifiable basis for the disallowance and directed the deletion of the disallowance of Rs. 13,89,898/-.

2. Disallowance of Freight Expenses:
The assessee challenged the disallowance of freight expenses amounting to Rs. 25,82,600/- for non-deduction of TDS. The AO disallowed the expenses, stating that the authenticity of the trucks provided by M/s Supreme Cargo Carrier could not be proved, and the declaration under section 194C(6) was not considered. The Ld. CIT(A) upheld the disallowance, noting that the declaration was general in nature and lacked vital information such as freight amount, registration number, and self-attested PAN copy. The Tribunal found that the assessee had submitted the ledger account of freight expenses, supporting bills/vouchers, and a declaration under section 194C(6). The Tribunal held that the decision to avail services from a single truck provider was within the assessee's business domain and could not be challenged by the Revenue. The Tribunal set aside the matter to the AO for consideration of a revised declaration and directed the AO to verify the same with M/s Supreme Cargo Carrier. The Tribunal allowed the ground of appeal for statistical purposes.

3. Validity of Declaration/Certificate from M/s Supreme Cargo Carriers:
The Ld. CIT(A) noted deficiencies in the declaration provided by M/s Supreme Cargo Carrier, such as the absence of freight amount, registration number, and self-attested PAN copy. The Tribunal directed the assessee to arrange for a revised declaration addressing these deficiencies and instructed the AO to verify the revised declaration. If found in order, the AO was directed to allow the necessary relief to the assessee.

4. Alleged Denial of Adequate Opportunity of Being Heard:
The assessee claimed that it was not provided with an adequate opportunity of being heard, violating the principles of natural justice. However, the Tribunal's order does not provide a specific finding on this issue, focusing instead on the substantive issues of disallowance of expenses.

5. General Challenge to the Order of the Ld. CIT(A):
The assessee generally challenged the order of the Ld. CIT(A) as erroneous, arbitrary, and opposed to the facts of the case. The Tribunal's detailed analysis and directions for deletion and reconsideration of disallowances address these general grievances.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, directing the deletion of the disallowance of salary expenses and setting aside the matter of freight expenses to the AO for reconsideration with a revised declaration. The order was pronounced in the open Court on 14/09/2023.

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