DCIT, MADURAI vs. POLYSPIN EXPORTS LIMITED, RAJAPALAYAM

PDF · subscribers
ITA 1890/CHNY/2016Status: DisposedITAT Chennai19 December 2016AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the Assessing Officer should be given an opportunity to verify the Form 26Q filed before the CIT(A), which was not available during the assessment proceedings. The issue was remitted back to the Assessing Officer for verification.

What were the facts?

The assessee claimed freight charges of Rs. 64,99,881/- without deducting TDS. The Assessing Officer disallowed this claim under Section 40(a)(ia) for non-compliance with TDS provisions, specifically Section 194C(7) and Rule 31A.

What were the issues?

Whether the disallowance under Section 40(a)(ia) for non-deduction of TDS on freight charges is justified when the assessee claims compliance with Section 194C(6) and 194C(7) by furnishing PAN and Form 26Q.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C(6),Section 194C(7)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “C” BENCH, CHENNAI

Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR

Hearing: 15.12.2016

आदेश /O R D E R

PER BENCH:

1.

The Revenue has filed an appeal against the order of Commissioner of Income Tax (Appeals)-1, Madurai in dated 24.03.2016 passed u/s. 143(3) and 250 of the Income Tax Act.

:-2-: I.T.A. No. 1890/Mds/2016

2.

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.

3.

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 :-3-: I.T.A. No. 1890/Mds/2016 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.

4.

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 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.

5.

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 :-4-: I.T.A. No. 1890/Mds/2016 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.

6.

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."

7.

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 :-5-: I.T.A. No. 1890/Mds/2016 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.

8.

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.

More judgments on Section 40(a)(ia)

All 7,300 judgments and leading authorities on Section 40(a)(ia) →

Recent GST High Court judgments

Search GST case law →