TaxTMI 
TaxTMI 
2016 (7) TMI 340
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....al. The assessee is aggrieved by the following finding of the learned Tribunal : "We are of the considered view that the assessee was liable to deduct TDS as per Section 194C of the Act in respect of freight charges paid; and since the assessee had failed to deduct TDS in respect thereof, there is no infirmity in the order of the learned CIT(A) in confirming the action of the Assessing Officer to make the disallowance of the said amount Rs. 69,57,975 as per Section 40(a)(ia) r.w.s. 194C of the Income Tax Act, 1961." The reasons which weighed with the learned Tribunal in arriving at the aforesaid conclusion are as follows : "On perusal of invoices/bills placed at pages 20 to 30 of the PB, there is no dispute to the fact that freight ch....
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....e finding of the learned CIT(A) given at pages 5 and 6 of the impugned order. 'The appellant submitted that M/s. Reliance Industries Ltd. (IPCL) had reimbursed total freight charges of Rs. 66,15,675/- in their invoices from him and paid to the transporter M/s. Reliance Logistics Ltd. during the F.Yr. 2005-06, after making necessary TDS deduction which have been deposited under TAN No. BRDIOO275C. I have gone through the documents furnished before me. As seen from the invoice produced before me for the months of April, 2005 and May, 2005, the transporter's name is mentioned as Delhi, Assam Roadways Corporation Ltd. and not M/s. Reliance Logistics Ltd. This was pointed out to the Ld. Authorized Representative. However, no explanation in th....
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....he goods and in upholding the disallowance of Rs. 69,57,975/- under section 40(a)(ia) of the Act ?" Mr. Khaitan has produced before us a price list issued by Indian Petro Chemicals Corporation Limited dated 30th December, 2006 which contains the following stipulations as regards freight : i) Freight : I) For Ex-factory sales : Freight to customers' destination will be paid to the GTA on their behalf and collected in the supply invoices. II)The freight rates are Exclusive of Unloading charges at Customers' end. Unloading charges at Customers' end will be extra and will have to borne by the Customers. III) For Ex-stock point sales, freight from Depot to the customers' location will be arranged and paid by the customers themselves....
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....lants located at Hazira, Jamnagar, Baroda, Gandhar & Nagothane. Hence in your case the material was transported through M/s. Delhi Assam Roadways Corporation Limited who is a sub contractor for transportation of material by road from plant of M/s. Reliance logistics limited." We understand that Indian Petrochemical Corporation Limited merged with Reliance Industries Limited. Therefore, Reliance Industries Limited is a transferee company or in other wards, the amalgamated company and the Indian Petrochemical Corporation Limited is the amalgamating company. Therefore, the fact, which emerges, is that the amalgamating company, Indian Petrochemical Corporation Limited sold the goods to the assessee. Reliance Logistics Limited (RLL) was th....
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....o in turn have paid to the concerned transporters." The aforesaid view formed by the Learned Tribunal is patently wrong. Under the contract of sale, the seller was bound to send the goods to the buyer. The price list goes to show that the seller was bound to pay the transportation charges to the goods transport agency. The seller was, however, entitled to recover the same from the buyer. The question naturally in the facts of the case is as to who was liable to deduct the tax at source. Section 194C in so far as the same is material for our purpose at the relevant point of time provided as follows: "Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any wor....
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.... Therefore, the relevant question to be asked is, who was responsible for paying any sum to any resident for carriage of goods? The answer obviously is that it was the seller who was responsible for paying and the seller admits to have done that. Therefore, the liability to deduct tax was that of the seller. In case seller is unable to show that he had made the deduction, Section 40(a)(ia) may be applied to his case but not to the case of the buyer/assessee. Even assuming that the supplier in transporting the goods to the assessee acted "as an agent of the assessee and the assessee has reimbursed the freight charges to the suppliers, who in turn have paid to the concerned transporters" as held by the learned Tribunal is conceptually corre....