SATISH ISHWARDAS AGRAWAL,SOLAPUR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 1, SOLAPUR

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ITA 1282/PUN/2019Status: DisposedITAT Pune30 May 2022AY 2007-084 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal deleted the disallowance on freight and transportation charges, finding no contractual relationship that attracted Section 194C. The disallowance on advertisement expenses was set aside to the Assessing Officer for factual verification and fresh adjudication.

What were the facts?

The assessee appealed against the disallowance of freight and transportation charges and advertisement expenses under Section 40(a)(ia) for non-deduction of TDS. The lower authorities disallowed these expenses, holding that TDS was deductible under Section 194C.

What were the issues?

Whether payments for freight and transportation charges and advertisement expenses attracted TDS provisions under Section 194C, leading to disallowance under Section 40(a)(ia) for non-deduction.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI S.S.GODARA

For Appellant: Smt. Deepa Khare
For Respondent: Shri Arvind Desai

PER S.S. GODARA, JM :

This assessee’s appeal for AY 2007-08 arises against the CIT(A)-9, Pune’s order dated 23-05-2019 passed in case No. CIT(A),Pune-9/10226/2017-18/30 involving proceedings under Section 143(3) of the Income Tax Act, 1961 in short the Act.

Heard both the parties. Case file perused.

2.

Coming to the assessee’s first and foremost substantive ground that both the lower authorities have erred in law and on facts in invoking section 40(a)(ia) disallowance of Rs.16,62,422/-, it transpires during the course of hearing that the same pertains to his freight and transportation charges in wholesale activity. Both the lower authorities held him to have made contractual payments to transporters requiring TDS

2 Satish I. Agrawal

deduction u/s.194C of the Act. The Revenue also vehemently contended that even an oral agreement is suffice to attract the foregoing TDS deduction provision. It also concluded by the hon’ble apex court’s recent decision in Shree Chaudhary Transport Co. Vs. ITO - 2020 SCC Online 610 (SC) in support of the impugned disallowance.

3.

I have given my thoughtful consideration to the pleadings and find no merit in the Revenue’ stand. There would be hardly any dispute in contractual payment u/s.194C indeed attracts TDS deduction subject to all the terms and conditions therein. The vexed question herein is that of contractual relation between the assessee and the payees herein. The latter are found to have only transported assessee’s goods without having undertaken any contractual liability demurrage etc. That being the case, I quote Bhail Bulk Carriers Vs. ITO in ITA No.3536/Mum/2011, dated 07-03-2012 that Section 194C itself does not apply in the given facts and circumstances. The impugned disallowance stands deleted thereby. The assessee succeeds in his instant former substantive ground.

4.

Next comes similar 40(a)(ia) disallowance on assessee’s advertisement expenses of Rs.1,44,020/-. He first of all contended to have only claimed an amount of Rs.42,308/- wherein no payment exceeding the statutory limit of Rs.20,000/- had been made to the payee(s) concerned. I am of the view that the same requires AO’s factual verification and 3 Satish I. Agrawal

fresh adjudication. I order accordingly. This latter substantive ground is set aside to the Assessing Officer accordingly.

No other ground has been pressed.

5.

This assessee’ appeal is partly allowed in above terms. Order pronounced in the Open Court on 30th May, 2022. (S.S.GODARA) JUDICIAL MEMBER पुणे Pune; "दनांक Dated : 30th May, 2022 Satish

आदेश क" ""त"ल"प अ"े"षत / Copy of the Order is forwarded to : 1. अपीलाथ" / The Appellant;

2.

""यथ" / The Respondent;

3.

The CIT(A)-9, Pune

4.

The Pr.CIT-6, Pune

5.

"वभागीय ""त"न ध, आयकर अपील!य अ धकरण, पुणे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड" फाईल / Guard file.

आदेशानुसार/ BY ORDER,

//// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

4 Satish I. Agrawal

Date

1.

Draft dictated on 26-05-2022 Sr.PS

2.

Draft placed before author 30-05-2022 Sr.PS

3.

Draft proposed & placed before -- JM the second member

4.

Draft discussed/approved by -- JM Second Member.

5.

Approved Draft comes to the Sr.PS Sr.PS/PS

6.

Kept for pronouncement on Sr.PS

7.

Date of uploading order Sr.PS

8.

File sent to the Bench Clerk Sr.PS

9.

Date on which file goes to the Head Clerk

10.

Date on which file goes to the A.R.

11.

Date of dispatch of Order.

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