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2014 (8) TMI 803 - AT - Income TaxDeduction of transport charges u/s 40(a)(ia) - Incorrect PAN furnished by assessee – Requirement to deduct TDS u/s 194C – Compliance of provisions of section 194C – Held that:- On being questioned by the AO the assessee furnished the party-wise details of the truck owners, addresses, truck numbers, PAN numbers, amount paid etc. - the AO on verification of the PAN numbers of the truck owners from the AST on online maintained at the Income Tax Office, noted that in a number of cases of transporters/truck owners, the PAN Nos. were not correct or the PAN Numbers had been given without proper verification and in a casual manner by furnishing either wrong PAN numbers or wrong names - the action of the AO is not justified - When he has accepted the rectified PAN Numbers in case of certain persons due to wrong spelling of names mentioned due to clerical mistakes, wrong spelling of PAN Numbers or change in name due to marriage, it could not be understood as to how he can deny the assessee the same benefit where the assessee had rectified the PAN Numbers of the transport operators subsequently who had given the wrong PAN Numbers originally - from the details furnished by the assessee, Shri Balbir Farman Singh, PAN Number given originally as well in the rectified statement was wrong and therefore the amount paid to Shri Balbir Farman Singh has to be disallowed u/s.40(a)(ia) for not giving the correct PAN Number - the disallowance made at ₹ 28,05,995/- is restricted to ₹ 82,170 – Decided partly in favour of Assessee. Transport charges paid by assessee to his relatives disallowed u/s 40A(2)(b) – Held that:- The assessee has paid transportation charges to outsiders as well as to related persons - assessee has not given any details to justify trip-wise payment paid to the related parties as compared to the outsiders as reasonable - the contention of the assessee that whenever the payments to family members were made at higher rate the destination of the delivery was difficult or at remote places is not borne out from records or with any evidence - invoking the provisions of section 40(A)(2)(b) of the I.T. Act by the AO is justified - the AO has also not brought out any comparative case and the disallowance made by the AO at 15% of the transportation charges being on adhoc basis appears to be on the higher side, therefore, such disallowance is restricted to 7.5% of the total payment - the disallowance is restricted to ₹ 5,66,222/- as against ₹ 11,32,445/- disallowed by the AO – Decided partly in favour of Assessee.
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