TaxTMI 
TaxTMI 
2015 (2) TMI 847
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.... a sum of Rs. 16,79,345, deduction claimed as payment of freight charges under section 40(a)(ia) of the Income-tax Act, 1961. Initially, the appellant-firm engaged in transport contract with M/s. Indian Potash Ltd. did not reflect the above said amount as freight charges paid to three different persons of which one was their partner, that is, Sri Koyakutty and others were two outsiders, Smt. Jabeena and Smt. Sabira. So far as the partner is concerned, the amount claimed to be freight charges is Rs. 7,02,010. 3. When the matter was taken up for scrutiny, it was found that the firm did not deduct TDS on the above said amount. According to the appellant- firm, as indicated in the orders of the Assessing Officer, Rs. 16,79,345 was the amount a....
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....a(ia). Section 40a(ia) reads as under : "40. (a)(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub- section (1) of section 139." The second proviso to section 40a(ia) is relevant for the purpose of this case which reads as under : ....
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....deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139 ; (ii) has taken into account such sum for computing income in such return of income ; and (iii) has paid the tax, due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed : Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such pers....