TMI Blog2013 (7) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years are 2008-09 and 2009-10. 2. The Revenue has, in its grounds of appeal for both the assessment years, raised an identical solitary issue which reads as under: "that the CIT (A) erred in deleting the additions of Rs.2,41,19,044/- and Rs.2,26,75,125/- made on disallowances of expenses u/s 40(a)(ia) of the Act in respect of freight charges for the AYs 2008-09 and 2009-10 respectively." 3. As the issues raised by the Revenue pertains to the same assessee, for the sake of convenience, both the appeals were heard, considered together and disposed of in this consolidated order. 4. Briefly stated, the facts of the issue are as under: 4.1 The assessee is an individual and she is the proprietrix of Sri Krishna Transport and Sneha Enterprises. The assessee had furnished her returns of income on 31.3.2009 and 11.3.2010, declaring total incomes of Rs.28,41,790/- and Rs.30,19,330/- for the AYs 2008-09 and 2009-10 respectively. 4.2 The assessing officers, for almost identical reasons recorded in their orders u/s 143(3) of the Act on 31.12.2010 and 23.12.2011 disallowed the freight charges of Rs.2,41,19,044/- and Rs.2,26,75,125/- for the AYs 2008-09 and 2009-10 respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he absence of contract between the assessee and the truck owner/driver, the provisions of s. 194C(2) do not get attracted in respect of payment of truck hire charges by the assessee to truck owner/driver and, hence, the assessee was not obliged to deduct tax at source u/s 194C (2) of the Act; - That the following Courts have ruled that the sums paid for hiring of trucks do not qualify to be regarded as 'work' for the purpose of sec.194C of the Act:- (i) Bombay High Court in the case of Bombay Goods Transport Association v. CBDT - (1994) 210 ITR 136 (Bom); (ii) ITAT, Vizag in Mythri Transport Corporation v. ACIT - (2009) 124 TTJ 970; (iii) ITAT, Vizag in Kranti Road Transport (P) Ltd v. ACIT (2012) 50 SOT 15. - That the hire charges do not qualify to be regarded as 'work' under Explanation III(c) to s. 194C of the Act and, hence, the assessee was not obliged to deduct tax at source u/s 194C(2) of the Act; - That the AO was not justified in holding that in certain cases the sums paid by the assessee to truck owners/drivers exceeded the limits specified u/s 194C of the Act; - That the proviso to s. 194C (3) provides that the contractor shall be liable to deduct tax at so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee shall be regarded as 'an assessee in default' if (a) the payer does not deduct tax, (b) the payer, after deducting fails to pay (c) payer does not pay. In other words, if the payer remits the tax to the Government, he/she shall not be regarded as 'an assessee in default'; - That the assessee had remitted TDS of Rs.3,03,211/- and Rs.4,40,897/- for the AYs 2008-09 and 2009-10 respectively. These very facts have been acknowledged by the AOs in the assessment orders and, thus, it is undisputed fact that the assessee had paid taxes in respect of hire charges paid to the truckers and once the payer has discharged the TDS compliance in accordance with the Ch XVII read with s. 195A of the Act, there cannot be any disallowance u/s 40(a)(ia) of the Act. Rely on the following case laws: (i) Tube Investments of India Ltd v. ACIT - (2010) 325 ITR 610 (Mad); (ii) Addl. CIT v. Farasol Ltd - (1987) 163 ITR 364 (Raj); (iii) ACIT v. M.G. Vishwanath Reddy - (2012) 51 SOT 420/(2012) 20 Taxmann.com 344 - (Bang ITAT) 5.2. In conclusion, it was argued that since the assessee had remitted the tax in respect of hire charges paid to the truckers for the relevant assessment years, the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...under such agreement or arrangement.' 6.2. From the literal reading of the above provision, it is clear that the provision for grossing up of the tax can be made only if the same forms part of the income concerned, where there is an agreement or arrangement to pay the income-tax by the prayer itself. In the case before us, the assessee has not stated anywhere that the labour charges to be paid are agreed to be paid tax free or that the assessee has to bear the taxes. Another aspect of the issue before us is where the assessee has pad the TDS amount into the account of the Government before the due date of filing of the return, whether the disallowance u/s 40(a) (ia) is called for. In the provisions of sec. 195A, there is reference to agreement or arrangement for the payment of tax free income. However, it is not clear as to whether such an agreement or arrangement has to be in writing. In the absence of specific provision for the arrangement or agreement to be in writing, it can be presumed that the agreement or arrangement can be oral also. From the fact that the assessee has failed to deduct the tax at source and has made the provision for such payment of tax at the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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