NAYAK & CO,BURDWAN vs. I.T.O WD - 2(2),BURDWAN, BURDWAN

The assessee in the present case is a partnership firm, which is engaged in the business of trading of Seed and Table Potato as well as running agency of consumer products. The return of income for the year ./2013 Assessment year: 2007-2008 Page 2 of 4 under consideration was filed by it declaring total income of Rs.4,30,853/-. In the assessment originally completed under section 143(3), the total income of the assessee was determined by the Assessing Officer at Rs.38,98,520/- after making disallowance, inter alia, on account of transport charges under section 40(a)(ia) for the failure of the assessee to deduct tax at source. On appeal, the ld. CIT(Appeals) allowed part relief to the assessee on this issue and sustained the disallowance made by the Assessing Officer on account of transport charges under section 40(a)(ia) to the extent of Rs.10,57,700/-. On further appeal, the Tribunal restored the matter back to the Assessing Officer vide its order dated 28.01.2011 passed in with a direction to the Assessing Officer to verify the claim of the assessee that the transporters having been engaged by the suppliers, there was no contract between the assessee and the said contractors and consequently there was no question of any requirement for deduction of tax at source under section 194C. As per the direction of the Tribunal, the Assessing Officer verified the claim of the assessee and found the same to be not acceptable on the ground that there was failure on the part of the assessee to produce any documentary evidence to show that the transporters were not engaged by it but they were engaged by the suppliers. Accordingly, in the fresh assessment completed under section 143(3) read with section 254 of the Act vide order dated 17.11.2011, the disallowance on account of transport charges amounting to Rs.12,57,700/- under section 40(a)(ia) was repeated by the Assessing Officer.

Against the order passed by the Assessing Officer under section 143(3) read with section 254, the assessee again went in appeal before the ld. CIT(Appeals) and keeping in view the conflicting stand taken by the assessee at different stages, the ld. CIT(Appeals) held that there was no case of giving any relief to the assessee on this issue. Accordingly the disallowance made by the Assessing Officer on account of transport charges under section 40(a)(ia) was confirmed by the ld. CIT(Appeals). ./2013 Assessment year: 2007-2008 Page 3 of 4 Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. As pointed out by the ld. counsel for the assessee, a specific direction was given by the Tribunal to the Assessing Officer to verify the claim of the assessee that the concerned transporters having been engaged by the suppliers, there were no contracts between the assessee and the said transporters thereby making it obligatory on the part of the assessee to deduct tax at source in terms of section 194C. He has submitted that all the relevant details in this regard were duly filed by the assessee before the Assessing Officer and invited our attention to the said details placed at page nos. 8 & 9 of his paper book. He has also invited our attention to some of the copies of lorry receipts and corresponding bills raised by the concerned suppliers as samples to show that the transporters were not only engaged by the suppliers at their level but even the transport charges paid to them were charged by the said suppliers in the bills raised to the assessee. A perusal of these lorry receipts and suppliers bills filed by the assessee as samples clearly shows that the transporters were engaged by the concerned suppliers and the transport charges paid to them were charged by the said suppliers in the bills raised to the assesese and this position is not disputed even by the ld. D.R. In our opinion, this documentary evidence filed by the assessee is sufficient to support and substantiate its claim that there was no contract entered into by it with the concerned transporters and in the absence of such contract, there was no requirement of deduction of tax at source as per the provisions of section 194C.

In the case of Shri Anilkumar Arjundas Sharda -vs.- ITO (ITA No. 2425/AHD/2013 dated 06.02.2015) cited by the ld. counsel for the ./2013 Assessment year: 2007-2008 Page 4 of 4 assessee, a similar issue was involved in identical facts and circumstances and the Coordinate Bench of this Tribunal has held that the seller having engaged the transporters and the assessee having merely made payment to such transporters as per the instruction of the seller, the assessee was not liable to deduct tax at source under section 194C in the absence of any contract with the transporters and the provisions of section 40(a)(ia) were not attracted. Keeping in view this decision of the Coordinate Bench of this Tribunal in the case of Shri Anilkumar Arjundas Sharda (supra) and having regard to the facts of the case, we are of the view that the disallowance made by the Assessing Officer under section 40(a)(ia) on account of transport charges and confirmed by the ld. CIT(Appeals) is not sustainable and deleting the same, we allow this appeal of the assessee.

In the result, the appeal of the assessee is allowed.