2010 (12) TMI 807

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.... aggregating to Rs.23,70,881/- and also according to him, the assesee filed no explanation before him. He, therefore, made the addition of Rs.23,70,881/- for non-deduction of tax as per the provisions of section 40(a)(ia) of the I.T. Act. Before the Ld. CIT(A) the assessee contended that the freight charges were not paid under any contract and, therefore, were not liable for deduction of tax. It was also submitted that the provisions of section 40(a)(ia) are applicable only in those cases where tax has been deducted but has not been paid. It does not apply in a case where no tax has been deducted at all. The relevant portion of the submissions as reproduced by the Ld. CIT(A) in his order at pages 5 and 6 are as under:   "The assessee ....

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....visions of section 194C are not applicable on such payments. The relevant portion of the submission is as under:   "The assessee purchased raw materials from Chemcrown Export Ltd and the arrangement was that the materials will be delivered at the factory of the assessee. The supplier billed the assessee showing value of goods and freight charges separately in the same bill. As per sale of Goods Act 1930, the sale is complete only when the ascertained goods are delivered to the buyer and till such delivery the ownership of goods do not pass from the seller to the buyer. For this reason, under the erstwhile sales tax laws and the present value added tax laws, the charges made for services rendered by a seller till the time of delivery o....

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....y to deduct tax u/s. 194C rests on them and not the assessee in these cases".   Finally, it was submitted that the provisions of section 194C are clearly not applicable on following payments which do not exceed Rs.20,000/-.   Date of Payment Recipient of Payment Amount 14-07-2005 Deepak Transport Agency Rs.17,600/- 24-01-2006 A R C India Ltd Rs.14,198/- 22-02-2006 Raghav Bulk Mover Rs.18,000/-     Rs.49,798/-" Considering the above submissions of the assessee, the Ld. CIT(A) has held as under:   "The Ld. AR appeared on behalf of the appellant and filed written submissions. I find no substance in the submissions of the appellant. The appellant was liable to deduct tax on freight charges as per the p....

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....the payment made to transporters is not sustainable as there is no such liability to deduct tax u/s. 194C rests on the assessee in these cases.   4. On the other hand, the Ld. DR relied on the orders of the lower authorities and submitted that before the Assessing Officer the assessee failed to explain as to why TDS was not made on the payment made to transporters. Therefore, the explanation offered before the Ld. CIT(A) is nothing but an afterthought, which was also not found acceptable by the Ld. CIT(A). Concluding his argument, he, therefore, prayed that the order passed by the Ld. CIT(A) may kindly be upheld.   5. After hearing the rival submissions and carefully perusing the material available on record, we find that the su....