TaxTMI 
TaxTMI 
2011 (1) TMI 1360
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....at freight paid Rs. 9,96,151/- (Rs.11,58,302/- less part allowed by the Ld. CIT(A) for Rs. 1,62,151/-) (out of gross disallowance of Rs. 29,76,643/-) were within the purview of Section 194C and therefore, invocation of sec. 40(a)(ia) of the Act in disallowing parent expenditure for non-deduction of TDS was bad in law. (3) For that no TDS was required to be made under Section 194C of the Act where the amount of any sum paid or credited to subcontractors did not exceed Rs. 20,000/- or it did not exceed Rs. 50,000/- being aggregate amount of such sum during the financial year and in these cases Section 40(a)(ia) would not be invoked under the facts and circumstances of the case. (4) For that Ld. A.O. as well as Ld. CIT(A) both had erred in fact in holding that loading and unloading charges paid Rs. 2,41,580/- (out of gross disallowance of Rs. 29,76,643/-) were within the purview of Section 194C and therefore, invocation of Section 40(a)(ia) of the Act in disallowing parent expenditure for non-deduction of TDS was bad in law. (5) For that Ld. A.O. as well as Ld. CIT(A) had erred in disallowing the amount of expenses which were actually paid within the previou....
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....ng total business income at Rs. 59,03,179/- and after setting off of brought forward losses, finally assessed the taxable income at Rs. 43,44,620/-. Being aggrieved the assessee filed appeal before the 1st appellate authority. 7. It is observed from page 3 of Ld. CIT(A)'s impugned order that the assessee stated before him that there was difference in amount on which TDS was not made as per assessment order and as per books of account. The said table is given at page 3 of order of the Ld. CIT(A), which is as under:- Sl.No. Head of Account Amount as per Asstt. Order Amount as it should be 1. Freight Paid Rs.15,76,761/- Rs.15,75,910/- 2. Transportation charges Rs.9,96,151/- Rs.11,58,302/- 3. Loading and unloading charges Rs.4,03,731/- Rs.2,41,580/- Total Rs.29,76,643/- Rs.29,75,792/- 8. The Ld. CIT(A) has confirmed the addition made by the Assessing Officer on account of freight paid i.e. Rs. 15,76,761/-, addition made on account of transportation charges of Rs. 11,58,302/- and has also confirmed the transportation charges after rejecting the contention of the assessee that the payment of Rs. 1,62,1....
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....rred expenditure. Therefore, no disallowance could be made as the expenditure was incurred by the assessee for its business purposes and the same is covered by Section 28 of the Act. The Ld. Authorised Representative for the assessee submitted that provision of Section 40(a)(ia) of the Act are applicable only to expenditure allowable u/s. 38 of the Act and not to the expenditure allowable u/s. 28 of the Act. The Ld. Authorised Representative for the assessee further submitted that provisions of Section 40(a)(ia) are applicable only to the amount payable and does not include paid. He submitted that if the expenditure has already been paid no such disallowance can be made u/s. 40(a)(ia) of the Act. 10.1 The Ld. Authorised Representative for the assessee further referred pages 14 to 18 of the paper book filed alongwith memo of appeal and submitted that it contains details of the freight paid by the assessee for hiring trucks. The Ld. Authorised Representative for the assessee submitted that out of the total payments of Rs. 15,76,761/-, an aggregate amount of Rs. 4,77,637/- was paid wherein each payment was below Rs. 20,000/- and aggregated payment made in the financial year to each....
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....nd therefore, the Ld. CIT(A) has rightly confirmed the order of the Assessing Officer for making disallowance of it. The Ld. Departmental Representative further submitted that in respect of balance amount of Rs. 10,98,273/- out of Rs. 15,76,761/-, the assessee stated that it obtained Form 15-I from truck owners but admittedly the said Form 15-I alongwith Form 15-J was not submitted before the Jurisdictional CIT. The Ld. Departmental Representative further submitted that the assessee also could not substantiate of submitting Form 15-I as the assessee took plea that it misplaced the said Forms. The Ld. Departmental Representative submitted that no details of persons to whom payments were made have been filed and only truck numbers are given. Therefore, the Ld. CIT(A) is also justified to confirm the disallowance made by the Assessing Officer of Rs. 10,98,273/- out of Rs. 15,76,761/-. The Ld. Departmental Representative submitted that ground No1 of the appeal taken by the assessee be rejected. 12. We have carefully considered the orders of the authorities below and the submissions of the Ld. Representatives of both the parties. We have carefully perused pages 14 to 18 of the paper ....
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....ly, if a plain literal interpretation of statutory provisions produced manifestly absurd an unjust result, which the legislature could not have intended. Sometimes, it has to be interpreted having regard to the contest in which the expression is used and having regard to the job and purpose for which the same is indicated. Therefore, term used in Section 40(a)(ia) of the Act payable means the amount already paid or credited and does not mean the amount yet to be paid or credited. Hence, we reject the contention of Ld. Authorised Representative that no disallowance could be made u/s. 40(a)(ia) of the Act in respect of its business expenditure if assessee has failed to deduct TDS as per provisions of Act. We may state that if the assessee is required to deduct TDS as per provisions of the Act on the payments made by the assessee and if assessee fails to do so the provisions of Section 40(a)(ia) will be attracted. 14. Now, coming to disallowance of freight paid, we observe that the assessee has filed details at pages 14 to 18 of the paper book with memo. of appeal given alongwith truck numbers. Aggregate amount of Rs. 15,76,761/- is bifurcated in two parts i.e. Rs. 4,77,637/- and R....
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...., the Ld. CIT(A) has stated that the assessee has not given details of transporters to verify whether provisions of Section 194C was applicable or not. The Ld. CIT(A) has stated that from the details filed by the assessee of transportation charges, it is true that all the payments are below Rs. 20,000/- to each truck. However, details are required; to verify whether the payments per truck is below Rs. 20,000/- and the payments in aggregate within the financial year did not exceed Rs. 50,000/- to an individual. Ld. CIT(A) has stated that the details of the persons/transporters who received the payments are available in self made vouchers produced by the assessee. As a result, application of Section 194C could not be ruled out. That the assessee has not maintained proper evidences regarding expenditure. Therefore, Ld. CIT(A) has confirmed the disallowance made by the Assessing Officer u/s. 40(a)(ia) read with Section 194C of the Act. Hence, the assessee is in further appeal before the Tribunal. 17. During the course of hearing, Ld. Authorised Representative for the assessee made his submissions in regard to applicability of Section 40(a)(ia) and Section 194C of the Act on the line....
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....servations, we are of the considered view that the disallowance made u/s. 40(a)(ia) of the Act could not be made merely because there is an apprehension/suspicion that application of Section 194C could not be ruled out. The Department has not brought even a single instance on record that out of above amount aggregating to Rs. 11,58,302/-, there was any case where payment exceeding Rs. 20,000/- was made at a time and/or the total payments made to an individual truck owner in the financial year was exceeding Rs. 50,000/- by the assessee. If the assessee has not maintained proper evidences, the disallowance could be made under other provisions of the Act on the ground of non-genuineness or as per Section 40A(3) of the Act if applicable, but no disallowance could be made u/s. 40(a)(ia) of the Act merely on the presumption that application of Section 194C could not be ruled out because the payments were supported by self made vouchers without containing details of transporters/truck owners. In order to make disallowance u/s. 40(a)(ia) of the Act, the Department has to specifically bring out a case that the assessee was required to deduct TDS on the payments made as per provisions of the....
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....was exceeding Rs. 20,000/- at a time. Further, no payment to an individual payee also exceeded Rs. 50,000/- in the financial year. Therefore, no TDS was required to be deducted. The Ld. Authorised Representative for the assessee also referred to remand report and stated that Assessing Officer has also stated that payments are reflected into the ledger and cash book but disallowance has been made by applying Section 40(a)(ia) of the Act because the expenses are made on self made vouchers. He submitted that the disallowance made is not justified. 23. On the other hand, the Ld. Departmental Representative in his submissions supported the orders of the authorities below and submitted that assessee could not file said details before the Assessing Officer and the Ld. CIT(A). 24. We have carefully considered the submissions of the Ld. Representatives of both the parties and have perused the orders of the authorities below. We have also considered pages 22 to 24 of the paper book filed alongwith memo of appeal. It is relevant to state that assessee has also filed, as per direction of the Bench, the statements containing names of the payees to whom payments were made as unloading char....
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....ent account by 31.03.2006 as per provisions of Section 40- (a)(ia) of the Act to claim expenses in assessment year 2006-07. Since assessee deposited TDS amount into Government account on 31.05.2006, the expenditure is allowable as per provisions of Section 40(a)(ia) of the Act in assessment year 2007-08. Therefore, Ld. CIT(A) has confirmed the disallowance on the ground that assessee had violated provisions of Section 40(a)(ia) of the Act as the assessee remitted TDS amount on 31.05.2006 when the payment was made in the month of October, 2005 on different dates from 23.10.2005 to 29.10.2005. Hence, the assessee is in further Appeal before the Tribunal. 26. The Ld. Authorised Representative for the assessee referred to copy of remand report and submitted that the Assessing Officer has stated that TDS on transportation charges of Rs. 21,42,279/- were deducted in the month of October, 2005. Since the said TDS was required to be deposited by 31.03.2006 to get claim of expenses in the previous year relevant to assessment year 2006-07 as per provisions of Section 40(a)(ia) of the Act, the assessee deposited the same into Government account on 31.05.2006. Hence, the assessee has violat....