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2015 (5) TMI 784 - ITAT KOLKATA

2015 (5) TMI 784 - ITAT KOLKATA - TMI - Disallowance u/s 40(a)(ia) - non deduction of tds on payment against freight charges against form 15-I - Held that:- Once the specified forms have been collected under Rule 29D(4)(ii) by the assessee even if the same is not submitted to the CIT for one reason or another, the assessee is not required to deduct tax at source u/s 194C of the Act and therefore provisions of section 40(a)(ia) cannot be made applicable. SEE Rajesh Kr.Garg [2011 (8) TMI 632 - ITA .....

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rises from the order of ld.CIT(A)-VIII, Kolkata dated 13.07.2011 for Assessment Year 2008-09. 2. The revenue has raised the following grounds of appeal : "1. That on the facts and circumstances of the case, the Ld.CIT(A), Kolkata erred in law and in fact in deciding the appeal in favour of the assessee by deleting the addition made u/s 40(a)(ia) of the Income tax Act, 1961 on account of payment against freight charges of ₹ 2,65,48,566/-, where the assessee failed to deduct tax at the .....

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AO observed that the assessee was required to deduct tax at source u/s 194C of the Act on the total payment of ₹ 2,65,48,566/-. The assessee submitted party wise details and submitted that no TDS is required to be deducted because the truck owners transport the goods without assuming any responsibility as sub-contractor and collect the payments against the delivery. Moreover, the assessee has collected specific forms 15I from various truck owners. The necessary explanation vide letter dat .....

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allotted to us. We did not pay hire charges (freight payment) in pursuance to contract for a specific period, quantity or price. Since we did not assign/sub-contract with any truck owner, work order and did not enter either oral or written sub-contract with any truck owner, provision contained in section 194C are not applicable to assessee company. (c) Moreover, as a matter of abundant precaution, we had also collected specified form 15I from various truck owners, details of which are mentioned .....

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accept the explanation of the assessee and observed that the assessee received freight/transportation charges from various parties and for this, the assessee made payment to various truck owners/operators/drivers for transporting the goods so undertaken to have been handled by the assessee, whose trucks it had hired for handling the goods under contract with them. The assignment of work by the assessee to the truck owners/operators for carrying out the job for transportation of goods is nothing .....

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a preposterous statement by the assessee just to evade its legal obligation to furnish particulars in Form 15J to the jurisdictional Commissioner of Income Tax by 30th June, 2008. It was further observed from Form 15J filed in the assessment proceedings that they were collected by the assessee in the April, May and June, 2007 but the assessee had claimed to have sent Form 15J to Commissioner of Income tax, Kolkata by under postal certificate on 30.06.2008 after a gap of one year from the month o .....

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,65,48,566/- was disallowed and added back to the total income of the assessee. 3.3. The ld. CIT(A) accepted the explanation of the assessee and in view of the decision of the Hon'ble Rajasthan High Court in the case of Chhogmal Chiranjilal 257 ITR 51 where it has been held that if the declarations are received before credit or before payment within the financial year the appellant is not liable to deduct the tax. It is only if such declaration are received after the close of the financial y .....

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ssessee relied upon the submissions made before the AO and ld. CIT(A) and order of ld. CIT(A) and further argued that the case is covered by the decision of ITAT, Kolkata Benches in a number of cases i.e. in the case of M/s. Capital Transport Corporation vs ITO in ITA NO.1753/Kol/2009 dated 11th August, 2011, in the case of ITO vs Rajesh Kr.Garg in ITA NO.532/Kol/2011 dated 5th August, 2011 and also in the case of ITO vs M/s. S.S.Impex in ITA No.977/Kol/2011 dated 23.09.2011 and by the decision .....

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of Income Tax on 30th June, 2008 under certificate of posting being the last date/due date of submission of form 15J to the Jurisdictional Commissioner of Income tax. The objection of the AO is that the Inspector verified from the office of the jurisdictional Commissioner of Income Tax that no such Form 15J/I was found as claimed by the assessee. As against the assessee has filed the postal despatch documents with the AO which has not been proved false by the AO. The same is on record before bot .....

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present case. Therefore in our view once the specified forms have been collected under Rule 29D(4)(ii) by the assessee even if the same is not submitted to the CIT for one reason or another, the assessee is not required to deduct tax at source u/s 194C of the Act and therefore provisions of section 40(a)(ia) cannot be made applicable. The issue is covered by the decisions of ITAT, Kolkata Benches in the case of ITO vs Rajesh Kumar Garg (supra), Valibhai Khanbhai Mankad, Ahmedabad in ITA No.2228 .....

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that notwithstanding anything contained in section 194A no deduction of tax shall be made under the section if the payee of the interest furnished to the person responsible for paying the interest, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which the interest is to be included will be nil. Sub-section (2) provides that the person responsible for paying interes .....

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only by the Commissioner or Chief Commissioner of Income Tax as stated in clause (b) of sub-section 3 of Section 272A and sub-section 4 requires that an opportunity shall be given to the assessee before any penalty order is passed. 7. In the present case the claim of the assessee is that at the time of paying the interest to the 34 persons mentioned in the assessment order, he had before him the appropriate declarations in the prescribed form from the payees stating that no tax was payable by t .....

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ersion because according to them it is only when the Assessing Officer proposed the disallowance of the interest by invoking the section 40(a)(ia) in the course of the assessment proceedings that the assessee filed the declarations claimed to have been submitted to him by the payees of the interest, in the office of the CIT(TDS) as required by sub-section 2 of section 197A. Apart from this inference, there is no other evidence in their possession to hold that the declarations were not submitted .....

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he assessee in September /October, 2008. In the absence of any such direct evidence, we are unable to reject the assessee's claim. The Assessing Officer has stated in para 4.4 of the assessment order that he found that some of the loan creditors were having taxable income but still the assessee had submitted declarations from them in form no. 15G. Unless it is proved that these forms were not in fact submitted by the loan creditors, the assessee cannot be blamed because at the time of paying .....

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pt to desist from deducting tax from the interest. The sub-section uses the word "shall" which leaves no choice to the assessee in the matter. In the case of payment of leave travel concession and conveyance allowance to employees who are liable to deduct tax from the salary paid to the employees under section 192, the Supreme Court has held in CIT Vs. Larsen & Toubro Ltd. (2009) 313 ITR 1, that the assessee was under no statutory obligation under the Act or Rules to collect eviden .....

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uth of the declarations filed by the payee. Even if the assessee has delayed the filing of the declarations with the office of the CIT / CCIT (TDS) within the time limit specified in sub-section (2) of section 197A, that is a distinct omission or default for which a penalty is prescribed. Section 273B provides that no penalty shall be imposed under any of the clauses of subsection (2) of section 272A for the delay, if the assessee proves that there was reasonable cause for the same. We have alre .....

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