2012 (6) TMI 813

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....s u/s 40 (a)(ia) of the Act. By confirming this addition the ld. CIT(A) has failed to interpret provisions of the newly introduced section in its proper perspective and further not taking into consideration various submissions, arguments and judgments relied upon by the appellant, this action of ld. CIT(A) being without any merit or justification requires to be quashed." 3. The brief facts of the case are that the assessee derives income from the operation of transportation of LPG Cylinders and soft drink bottles. In the profit and loss account furnished along with the return of income, the assessee declared commission of Rs. 14,43,0707-. On verification of IDS certificates, the Assessing Officer noted that the assessee had received inco....

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....ing Officer sought an explanation as to why disallowance u/s. 40(a)(ia) of the Income-tax Act be not made. Before the Assessing Officer the assessee submitted that he does not own any transport vehicle of his own He has contacts with various organisations that need vehicle on continuous basis. The persons who have transport vehicles and drivers, and are ready to give them to the organisation on a continuous basis approach the assessee. In such a type of arrangement though the entire payment is received by the assessee firm it is credited to the transport owner's account in the books of accounts maintained by the assessee firm. The operating cost of the transport vehicle rests with the transport vehicle owner only. Expenses like remunera....

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....a) and disallowed the expenditure of Rs. 1,38,30,000/-. 4. In appeal this action of the A.O. has been confirmed by ld. CIT(A). Further aggrieved, now the assessee is in appeal before us. 5. At the time of hearing, ld. counsel of the assessee submitted that payment has been made to transporters amounting to Rs. 1,38,30,000/- without deducting tax at source during the year under appeal. He further submitted that in such situation the ratio, as laid down by special Bench in the case of M/s Merilyn Shipping & Transports vs. ACIT in ITA No.477/Viz/2008 will apply wherein it has been held that the provision of Section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which were payable as on 31st March of every year and....