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Income-tax Officer, Ward 12 (1) , Ahmedabad Versus M/s Prakash Agro Mills,

2015 (12) TMI 755 - ITAT AHMEDABAD

TDS u/s 194 - Addition u/s 40(a)(ia) - non deduction of tds on road transportation charges - CIT(A) deleted the addition - Held that:- Assessee was not under any obligation to incur transportation charges because they are reimbursed by the APO. It has only accommodated the APO by making the payments to the transporters. In other words, the APO reimbursed the actual expenses incurred on their behalf. Therefore, the assessee has maintained a separate account for this purpose. This aspect has been .....

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Shri D. C. Mishra, Sr.DR For The Respondent : Shri Pratik Jain ORDER PER Shri Rajpal Yadav, Judicial Member. The Revenue is in appeal before us against the order of CIT(A) dated 4th July,2011 passed for AY 2008-09. 2. The appeal was presented by the Revenue on 21st September, 2011. An acknowledgement-cum-notice for fixing the hearing in the appeal was issued on 21/9/2011 itself. Simultaneously the Tribunal had issued notice to the assessee also. The assessee has filed Cross Objection bearing No .....

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77; 7,83,300/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the auditors in the audit report have given a remark in column No.27 tax was not deducted at source in respect of freight recoverable (Rs.41,14,375/- paid during the year) as the assessee was of the opinion that no TDS liability arises in such cases. Armed with this remark, ld. AO issued a sh .....

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n that it has not incurred any expenditure for freight. Therefore, it was not supposed to deduct TDS. The ld. AO has observed that Army Purchases Organizations (APO) entered into contracts with Gujarat State Co-op. Consumer Federation Ltd. who in turn further entered into contracts with several sellers/suppliers including the assessee for supply of the items ordered by APO as per terms of contract. On an analysis of the contract ld. AO observed that para 2 of the contract provides that incidenta .....

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held by him that the appellant should have deducted TDS on the freight payment made to transporters and since it was not done, the payment was not deductible in computing the income. Accordingly, he made the impugned disallowance u/s 40(a)(ia). The contention of the ld. AR in this regard in brief are as follows. The appellant maintained freight recoverable account separately, wherein the freight amount paid to transporters and the reimbursement of freight amount received were entered, as may be .....

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pellant nor the amount reimbursed was appellant s income, if the said amount is reflected in the P & L account it would in fact give a distorted picture of the income of the appellant, since there is a time lag between the payment of freight amount and getting it reimbursed from the APO; in accordance with para-6.11(a) of the Tender, the transportation charges are to be reimbursed; in the same para, it is also clearly mentioned that tender should not include cost of transportation; since the .....

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l not be included by the tenderer. Because it will be reimbursed separately. This clause reads as under: 6.11 (a) The road transportation charges are reimbursed to the suppliers, as per the Govt. approved rates, only in the case of Pulses, Animal Rations (crushed), WMP, Butter Tinned, Ghee, Edible Oils, Vanaspati and Tea. (b) For all other items the Supplier Tenderer will have to bear the entire cost of transportation. (c) The tenderers should not include cost of transportation in their offered .....

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