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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER BENCH:
The Revenue has filed an appeal against the order of Commissioner of
Income Tax (Appeals)-1, Madurai in ITA No. 0028/2015-16, dated 24.03.2016
passed u/s. 143(3) and 250 of the Income Tax Act.
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The sole substantive ground raised by the Revenue that the CIT(A) has
erred in deleting the addition of Rs. 64,99,881/- u/s. 40(a)(ia) for non-compliance of
TDS provisions in respect of freight charges. The Ld. CIT(A) has also failed to
consider that section 194C(6) and 194C(7) of the Act are not independent and
should be read together. The CIT(A) erred in allowing the claim when the assessee
has failed to comply with the provision 194C(7) r.w.r.31A in filing details with the
Income Tax authorities.
The Brief facts of the case, are that the assessee company is engaged in
manufacture and sale of FIBC bags in domestic market and export market and filed
the Return of income for the assessment year 2012-13 on 28.09.2012 with total
income of Rs. 1,40,23,789/-. Subsequently, Return of income was processed u/s.
143(1) of the Act and notice u/s. 143(2) was issued. In compliance to the notice,
the Ld. AR appeared from time to time and submitted documents and particulars
with reference to the Books of Accounts. The Ld. AO found that the assessee
company has claimed a sum of Rs. 64,99,881/- under freight charges paid to various
parties. On verification the assessee has not deducted TDS and submitted that the
payments made to transport contractors and the contractors have provided PAN No’s
to the assessee. The Assessing Officer is of the opinion that the provisions of
Section 194C(6) and 194C(7) of the Act are not independent and they have to be
read together and the assessee has to file the From No. 26Q under the TDS
provisions of section 194C(7) r.w.r. 31A of the Income Tax Rules, 1962. Whereas,
the assessee has complied only one requisite condition of obtaining PAN No’s and
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not produced evidence of filing of Form No. 26Q in the assessment proceedings.
Hence, an amount of Rs. 64,99,881/- paid towards freight charges was disallowed
u/s. 40(a)(ia) of the Act and passed order under 143(3) dated 31.03.2013.
Aggrieved by the order, assessee filed an appeal before the Ld. CIT(A).
In appellate proceedings, the Ld. AR submitted that the assessee obtained PAN of
the deductees while making payments as per the provision required u/s. 194C(6) of
the Act. Further, the assessee company has furnished the information to the tax
authorities u/s. 194C(7) of the Act and subsequently, filed Revised Form No. 26Q,
and the Ld. AR relied on the decision of the Hyderabad Tribunal in case of ACIT Vs
Mr. Mohamed Suhail in ITA No. 1536/Hyd/2014 dated 13.02.2015 and CIT Vs.
Vector Shipping Services Pvt. Ltd., (357 ITR 642) on disallowance u/s. 40(a)(ia) of
the Act. The Ld. CIT(A) has considered the findings of the assessing officer and the
submissions of the assessee, and judicial decisions is of the opinion that the
assessee company has obtained PAN from deductees based on the information
produced along with the Quarterly return in the Form No. 26Q, since there is
compliance of provisions of section 194C(6) and 194C(7) of the Act. The Ld. CIT(A)
has directed the Assessing Officer to delete the addition and allowed the appeal.
Aggrieved by the CIT(A) order, the Revenue has filed an appeal before
this Tribunal. The Ld. DR argued that the CIT(A) has erred in directing the
Assessing Officer to delete the claim of Rs. 64,99,881/- irrespective of the fact that
the assessee has not deducted TDS on freight payments and not produced Form
No.26Q to the Assessing Officer. Whereas, the Ld. AR argued that the Assessee has
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complied the provision of 194C(6) and 194C(7) of the Act and produced the
evidence of filing Form No. 26Q with the Appellate Authority and relied on order of
the CIT(A) and opposed the grounds.
We heard the rival submissions, perused the material on record and the
judicial decisions, the crux of the issue lies, were the assessee has claimed the
expenditure of freight charges without deducting TDS under provisions u/s. 194C(6)
and 194C(7) and we read the provisions as under:
"194C (6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum. 194C (7) The person responsible for paying or crediting any sum to the person referred to in sub-section(6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed."
The Ld. AR submitted that the assessee has obtained PAN of the
deductees and filed the Form No.26Q under Rule 31A of IT Rules and the Ld. CIT(A)
relied on Form No. 26Q and judicial decisions and is of the opinion that there is no
violation of the provisions of 194C(7) of the Act and allowed the appeal. We found
Form No. 26Q filed by the assessee was submitted with the CIT(A) and the
Assessing Officer has not verified the genuineness to counter check the information
of PAN submitted by contractors. Further, the Ld. CIT(A) has not called for report
on these documents from the jurisdictional Assessing Officer. Considering the
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apparent facts, we are of the opinion that Assessing Officer should be provided an adequate opportunity to verify Form No. 26Q filed before the CIT(A) which was not available in the assessment proceedings. Therefore for limited purpose, we remit the disputed issue to the file of the Assessing Officer to verify the claim as per the provisions of the Act and pass the order on merits. Further, the assessee should be provided adequate opportunity of hearing before passing the order.
In the result, the appeal of the Revenue is allowed for statistical purpose.
Order pronounced on Monday, the 19th day of December, 2016 at Chennai.
Sd/- Sd/- (अ�ाहम पी. जॉज�) (जी. पवन कुमार) (ABRAHAM P. GEORGE) (G. PAVAN KUMAR) लेखा सद�य /ACCOUNTANT MEMBER !या�यक सद�य/JUDICIAL MEMBER
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