2015 (10) TMI 2108

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.... assessee company is engaged in the business of transportation. A survey operation under S.133A was conducted in the business premises of the assessee at Hyderabad on 24.3.2009 to verify compliance with TDS provisions. During the course of survey, it was noticed that the assessee has not effected TDS on payments made towards the following items of expenses- Items involved in all the three years 1. Lorry hire chares 2. Truck Operating expense 3. Business promotion expenses 4. Postage 5. Printing & stationery 6. Rent 7. Consultancy charges 8. Legal expenses Items involved only in assessment year 2006-07 9. Repairs and maintenance 10. Advertisement Expenses 3. The Assessing Officer held that TDS was deductible under S.....

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....e Assessing Officer, however, held that it is a fit case for levy of penalty as per the orders passed under S.201(1) and S.201(1A) of the Act. 5. Aggrieved, the assessee preferred appeals before the CIT(A), giving detailed head-wise reasons as to why TDS provisions are not applicable or were not complied with. After considering the assessee's contentions, the CIT(A) observed that the assessee was operating in an unorganized sector and was dealing with truck operators and therefore, had not deducted TDS when the payments were made. It was further observed that the assessee as remitted the demand raised by the Assessing Officer under S.201(1), and though the TDS was not reduced from the amounts paid to the payees, the assessee paid he TD....

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....nts include the payments made for repairs, highway tips, diesel expenses and purchase of spare parts from two parties referred to by the Assessing Officer, and therefore, the truck operating expenses do not attract the TDS provisions at all. (iii) As regards the business promotion expenses, these expenses consist of incentives for employees, sweets, small gifts, festival tips, meetings with customers, review meetings with branch heads, sales representatives, etc. and that the names of the persons mentioned in the order under S.201(1) were the names of sales representatives of the assessee who visit customers and submit the bills for expenses incurred, and to whom payments were made. It was submitted that the assessee was under bona fide b....

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....n addition to the above, for the assessment year 2006-07, it was submitted that expenses towards repairs and maintenance represent mainly expenses incurred towards purchase of machinery and spare parts, which do not fall under S.194C, as there was no contract with the suppliers; and with regard to advertisement expenses, it was below prescribed limit and the aggregate amount is less than Rs. 50,000, and therefore, the TDS provisions are not applicable. 8. Thus, I find that the assessee has filed detailed repl to the show cause notice under S.271C of the Act. I find that the provisions of S.271C are subject to the provisions of S.273B of the Act. As per S.273B of the Act, no penalty shall be leviable under the sections mentioned therein, if....