TMI Blog2010 (12) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is directed against the order of the Ld. CIT(A) Kolkata dated 26.08.2009 for the assessment year 2006-07 on the sole ground of confirming the disallowance of Rs.23,21,083/- u/s. 40(a)(ia) on the ground of non-deduction of tax at source. 2. Briefly stated facts as observed by the Assessing Officer in the assessment order are that the assesee failed to deduct tax on freight charges aggregating to Rs.23,70,881/- and also according to him, the assesee filed no explanation before him. He, therefore, made the addition of Rs.23,70,881/- for non-deduction of tax as per the provisions of section 40(a)(ia) of the I.T. Act. Before the Ld. CIT(A) the assessee contended that the freight charges were not paid under any contract and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total payment is covered by supply of goods. In some cases the payments did not exceed the maximum limit for applicability of S 194C". Further, payments of 1,26,580/- were made to Chemcrown Export Ltd towards freight inward. It was argued that the appellant purchased raw materials from the said party and the freight charges were included in the purchase bills and therefore the provisions of section 194C are not applicable on such payments. The relevant portion of the submission is as under: "The assessee purchased raw materials from Chemcrown Export Ltd and the arrangement was that the materials will be delivered at the factory of the assessee. The supplier billed the assessee showing value of goods and freight charges separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n laws and if legally, a sum is not exigible to tax, then accounting of such sum in a particular manner can not make it taxable. Moreover, the payment of freight included in bill of Chemcrown Export Ltd. is a reimbursement of cost to the payee. The payee (Chemcrown Export Ltd) actually entered into a contract of carrying goods to the assessee and paid for such service. So the liability to deduct tax u/s. 194C rests on them and not the assessee in these cases". Finally, it was submitted that the provisions of section 194C are clearly not applicable on following payments which do not exceed Rs.20,000/-. Date of Payment Recipient of Payment Amount 14-07-2005 Deepak Transport Agency Rs.17,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on production of bills by the transporters. Under both these circumstances, it was emphasized that there could not have been any agreement between the assessee and the transporters as transporters were arranged by the supplier themselves. Since there was no contract between the assessee and the transporters, applicability of section 194C(2) of the Act does not arise. He, therefore, submitted that the addition made on account of non-deduction of TDS on the payment made to transporters is not sustainable as there is no such liability to deduct tax u/s. 194C rests on the assessee in these cases. 4. On the other hand, the Ld. DR relied on the orders of the lower authorities and submitted that before the Assessing Officer the assessee fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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