2022 (1) TMI 840

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....assessment year 2008-2009. An order of assessment under Section 143(3) of the Act was passed by the Assessing Officer disallowing the claim made under Section 40(a)(ia) of the Act mainly for the reason that the assessee has failed to deduct tax at source under Section 194C of the Act. Being aggrieved by the said order, the assessee preferred an appeal before the Commissioner (Appeals) which came to be dismissed, against which, an appeal was preferred before the Tribunal and the same having been dismissed, the assessee has preferred this appeal. 3. The appeal was admitted by this Court to consider the following substantial questions of law: "i. Whether on the facts and circumstances of the case, the Tribunal erred in law in failing to follow the decision of the co-ordinate bench of the same jurisdiction? ii. Whether, the findings of the Tribunal that the appellant had split the invoices, engaged in continuous transportation contracts and the price agreed not on the basis of per trip per lorry, are perverse? iii. Whether, in the facts and circumstances of the case, the Tribunal was right in law in aggregating the payments on the basis of truck numbers fo....

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....sion, no further proceedings were held by the Assessing Officer to deny the deduction claimed by the assessee. However, proceedings were initiated relating to the assessment year under consideration and the claim made by the assessee under Section 40(a)(ia) of the Act was denied for not deducting the TDS under Section 194C of the Act. 6. It was further submitted that having considered the material evidence placed on record, the First Appellate Authority has categorically recorded a finding in favour of the assessee in this regard but finally proceeded to dismiss the appeal on flimsy grounds. Further, the Tribunal has not properly appreciated the arguments advanced by the assessee on the well settled principles of law relating to Section 40(a) (ia) and 194C of the Act with reference to Deccan Roadways (supra). Thus, the learned counsel seeks for interference of this Court and to answer the substantial questions of law in favour of the assessee. 7. The learned counsel for the revenue would submit that the Tribunal as well as the authorities have extensively analysed the material evidence on record in arriving at a decision and the particulars of the trucks used by the assessee ....

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....vidual or a Hindu undivided family; ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section(1) is credited to any account whether called "Supense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly." 10. During the relevant period, Section 40 (a)(ia) of the Act reads as under: "Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", - [a] in the case of any assessee - [i] ......... [ia] Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or subcontractor, be....

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....t it had, in fact, entered into any contract - oral or otherwise - with the truck owners/drivers to carry the goods to their destinations. On the same breath, the assessee's contention that 'there was no instance of any goods being transported continuously in pursuance of a contract by any operator for any specific period or quantity Each trip by an operator is a separate contract and has no connection whatsoever with its earlier or future trips for us' cannot be taken on its face value since the AO had, in his impugned order, observed that 'In the course of assessment proceedings, the assessee has filed a Note Book where lorry No., amount paid and date, etc., are mentioned. The whole date ITA No.468/Bang10/ was fed into the computer and a programme was run to find out the payment done by the assessee to a particular lorry No. aggregating to Rs. 50,000/- or more during the whole year. It is found from this exercise that the assessee has paid Rs. 57,94,728/- to different lorry Nos. aggregating above Rs. 50,000/- during the whole year for several number of trucks under taken by them on behalf of the assessee..." This fact has neither been addressed by the ass....

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....of the Act, of course, after affording a reasonable opportunity to the assessee of being heard. In the meanwhile, the assessee, through its Ld. A.R, is advised to furnish the names of addresses of the drivers/owners of the vehicles to whom it had alleged to have negotiated with regard to freight charges at the time of actual dispatch of goods etc., which would facilitate the AO to carry out the directions of this Bench in an expeditious manner. It is ordered accordingly." 15. Though the learned counsel for the revenue has relied upon the judgment of the Hon'ble Apex Court in the case of Shree Choudhary Tansport Company (supra), we are not inclined to consider the same in the absence of any finding on the vital aspect of the matter as to the existence of any contract between the truck owner/ holder of the truck with the assessee. The action of the revenue in denying the deduction under Section 40 (a) (ia) of the Act on the premise that the aggregate of the truck amount paid by the assessee with the different truck drivers was exceeding Rs. 50,000/- cannot be countenanced as the contract cannot be with the trucks, it is with the personnel/driver of the truck/truck operators. The w....