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2016 (7) TMI 340 - HC - Income TaxTDS u/s 194C - non deduction of tds in respect of freight charges paid - disallowance u/s 40(a)(ia) - responsibility to pay tax - Held that:- Answering the question who was responsible for paying any sum to any resident for carriage of goods? the answer obviously is that it was the seller who was responsible for paying and the seller admits to have done that. Therefore, the liability to deduct tax was that of the seller. In case seller is unable to show that he had made the deduction, Section 40(a)(ia) may be applied to his case but not to the case of the buyer/assessee. Even assuming that the supplier in transporting the goods to the assessee acted “as an agent of the assessee and the assessee has reimbursed the freight charges to the suppliers, who in turn have paid to the concerned transporters” as held by the learned Tribunal is conceptually correct, no other conclusion is possible. The agent being the supplier in this case has admittedly paid to the transporters and has also deducted tax at source. When the agent has complied with the provision, the principal cannot be visited with penal consequences. For one payment there could not have been two deductions. Moreover, when a person acts through another, in law, he acts himself. Thus the question, quoted above, is answered by holding that the Tribunal was wrong in holding that the appellant was liable to deduct tax at source in respect of the freight component. When the assessee was not liable to make any deduction under Section 194C, the rigours of Section 40(a)(ia) could not have been applied to him. - Decided in favour of assessee.
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