TMI Blog2010 (1) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in terms of section 194C of the Act on the amount of freight billed saperately by T. - 693 of 2009 - - - Dated:- 21-1-2010 - KUMAR M. M., JITENDRA CHAUHAN JJ. Ms. Urvashi Dhugga for the appellant. JUDGMENT The judgment of the court was delivered by M. M. Kumar J.- The Revenue has approached this court under section 260A of the Income-tax Act, 1961 (for brevity "the Act") challenging the order dated April 30, 2009, passed by the Income-tax Appellate Tribunal, Chandigarh (for brevity "the Tribunal") in respect of the assessment year 2006-07 while deciding I. T. A. No. 63/Chandi/2009. The Revenue has claimed that from the order of the Tribunal two substantial questions of law would emerge and are required to be adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rongly confirmed the disallowance of interest expenses amounting to Rs. 4,72,216. (iii) That the learned Commissioner of Income-tax (Appeals) wrongly confirmed the disallowance of Rs. 2,01,81,428 under section 40(a) of the Income-tax Act out of purchase of raw material for freight paid by the supplier of raw material. (iv) That the learned Commissioner of Income-tax (Appeals) wrongly confirmed the disallowance of labour and freight charges amounting to Rs. 82,937 on estimate basis." 3. Re : Question No. 1. On the first question, the Tribunal recorded a categorical finding of fact that there was no material on record to prove any written or oral agreement between the assessee and the recipients of goods for transportation or carriage t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nited Rice Land Ltd. [2008] 217 CTR (P H) 332 ; [2010] 322 ITR 594, in the instant case, it has to be held that the assessee was not liable to deduct tax at source under section 194C of the Act on the payment of freight charges of Rs. 1,72,723, as detailed by the Assessing Officer. Though the two parties in question have transported the goods for the assessee on more than one occasion during the financial year, yet it was based on individual G.Rs. which represent individual and separate contracts. There is no single contract for carriage or transportation of goods referred to between the assessee and the impugned parties which would make the assessee liable for deduction of tax at source under section 194C of the Act. Reliance placed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct any tax at source under section 194C of the Act on those freight charges. The non-deduction of tax at source under section 194C on such freight charges were disallowed by the Assessing Officer under section 40(a)(ia) of the Act. The amount was computed to be Rs. 2,01,81,428. The Commissioner of Income-tax (Appeals) affirmed the order passed by the Assessing Officer. On further appeal, the Tribunal referred to the provisions of section 40(a)(ia) which disallowed the expenditure if such expenditure attracts deduction of tax at source and such tax is either not deducted or if deducted it has not been remitted to the State exchequer within the time allowed. The amount of Rs. 2,01,81,428 stood paid by the assessee/ respondent to M/s. Tata S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of payment of expenses by way of freight. In that regard, the Tribunal has placed reliance on a Division Bench judgment of this court rendered in the case of CIT (TDS) v. Assistant Manager (Accounts) FCI, Jagadhri, [2010] 326 ITR 106 (P H), I. T. A. No. 407 of 2008 decided on August 21, 2008. In that case also the Food Corporation of India had made payments to State agencies on the basis of invoices raised in respect of the food grain pro-cured by them. The invoices reflected the cost of wheat apart from the cost of incidental expenses including VAT, transportation, interest or storage charges. This court negated the stand of the Revenue and held that if expenses incurred by a person on account of transportation and interest, etc., we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because the same is part of the cost of product purchased. The assessee could not be said to be an assessee in default for non-deduction of tax at source in terms of section 194C of the Act on the amount of freight billed separately by M/s. Tata Steel. As a consequence, it follows that the provisions of section 40(a)(ia) of the Act cannot be applied to disallow the amount of such freight amounting to Rs. 2,01,81,428. Following the aforesaid discussion, we set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to delete the impugned addition. The assessee accordingly, succeeds on this ground." 7. We asked learned counsel for the Revenue as to whether any appeal has been filed against the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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