2010 (11) TMI 1015

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....e assessment year 2005-06. 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of expenditure of transport and carting expenses at ₹ 8,87,012/- for non-deduction of TDS in view of the provisions of Section 40(a)(ia) of the Act. For this, assessee has raised the following effective ground No.1-8:- "1. That the learned CIT(A) has erred both in law and on the facts of the case in confirming the order of the learned A.O. 2. On facts and circumstances of the case of the appellant there is no oral or written contract and as such Sec. 194C is not applicable and therefore Sec.40(a)(ia) applied and carting expenditure of ₹ 8,87,012/- disallowed by the learned A.O and confirmed by C....

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....nt has not committed default of Sec. 207 to 219 of the I.T. Act 1961." 3. The brief facts leading to the above issue are that the return of income was field on 14-10-2005 declaring total income at ₹ 11,457/-. The Assessing Officer noted that the assessee had paid the following amounts for transportation on goods. Name of the Transporter Payment (in Rs) Whether TDFS deducted u/s 194C of the Act. Bharat Road Line 3,82,824/- Nil Arvind Roadways 32,811/- Nil Sharma Roadways 4,42,456/- Nil Roadco (India) Corpt. 82,921/- Nil Total 8,87,012/- The assessee stated that it is a partnership firm doing business in trading in old and new gunny bags and it had shown purchase of bardan with carting expenses in the trading account ....

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....transported from Kolkata to Valasana. Therefore, it is established that the assessee has a contract be it oral with the above four parties. Section 194C states that any person responsible for paying any sum to any resident hereafter in this section referred to as the contractor for carrying out any work including supplying of labour in pursuance of a contract shall at the time of credit of such sum to the account of the contractor, or at the time of payment thereof which ever is earlier deduct income tax on such amounts. It is a fact that the appellant was responsible for paying a sum to the above transporters who are residents and who have carried out work for the appellant. This work has been carried out in pursuance of an oral contract f....

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....he case of M/s Pramukh Jute Traders v. ITO Ward-2, Anand, wherein vide para-3 has allowed the claim of assessee, which is being reproduced as under:- "3. It is the contention of the assessee that the transporters were engaged by agents in Calcutta and the assessee was merely paying the transport charges to them and that there was no transport contract between the assessee and the transporters named above. It was therefore submitted that there was no liability to deduct tax under Section 194C. We find that the contention is correct. At page 9 of the paper book the assessee has placed a copy of the account of Bharat Roadlines for the period ended 31-3-2005. which shows that there was four payments aggregating to ₹ 1,27,408/-. The bill....