TMI Blog2011 (1) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld. CIT(A) for ₹ 1,62,151/-) (out of gross disallowance of ₹ 29,76,643/-) were within the purview of Section 194C and therefore, invocation of sec. 40(a)(ia) of the Act in disallowing parent expenditure for non-deduction of TDS was bad in law. (3) For that no TDS was required to be made under Section 194C of the Act where the amount of any sum paid or credited to subcontractors did not exceed ₹ 20,000/- or it did not exceed ₹ 50,000/- being aggregate amount of such sum during the financial year and in these cases Section 40(a)(ia) would not be invoked under the facts and circumstances of the case. (4) For that Ld. A.O. as well as Ld. CIT(A) both had erred in fact in holding that loading and unloading charges paid ₹ 2,41,580/- (out of gross disallowance of ₹ 29,76,643/-) were within the purview of Section 194C and therefore, invocation of Section 40(a)(ia) of the Act in disallowing parent expenditure for non-deduction of TDS was bad in law. (5) For that Ld. A.O. as well as Ld. CIT(A) had erred in disallowing the amount of expenses which were actually paid within the previous year without TDS u/s. 40(a)(ia) of the Act. (6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the total income of the assessee. 6. The Assessing Officer completed the assessment, computing total business income at ₹ 59,03,179/- and after setting off of brought forward losses, finally assessed the taxable income at ₹ 43,44,620/-. Being aggrieved the assessee filed appeal before the 1st appellate authority. 7. It is observed from page 3 of Ld. CIT(A)'s impugned order that the assessee stated before him that there was difference in amount on which TDS was not made as per assessment order and as per books of account. The said table is given at page 3 of order of the Ld. CIT(A), which is as under:- Sl.No. Head of Account Amount as per Asstt. Order Amount as it should be 1. Freight Paid Rs.15,76,761/- Rs.15,75,910/- 2. Transportation charges Rs.9,96,151/- Rs.11,58,302/- 3. Loading and unloading charges Rs.4,03,731/- Rs.2,41,580/- Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gregate payments in the financial year did not exceed ₹ 50,000/- for an individual payee. Accordingly, the Ld. CIT(A) has confirmed the addition of ₹ 15,76,761/-. Hence, the assessee is in further appeal before the Tribunal. 10. At the time of hearing, Ld. Authorised Representative for the assessee firstly submitted that the provisions of Section 40(a)(ia) are not applicable as the assessee actually paid the amount and incurred expenditure. Therefore, no disallowance could be made as the expenditure was incurred by the assessee for its business purposes and the same is covered by Section 28 of the Act. The Ld. Authorised Representative for the assessee submitted that provision of Section 40(a)(ia) of the Act are applicable only to expenditure allowable u/s. 38 of the Act and not to the expenditure allowable u/s. 28 of the Act. The Ld. Authorised Representative for the assessee further submitted that provisions of Section 40(a)(ia) are applicable only to the amount payable and does not include paid. He submitted that if the expenditure has already been paid no such disallowance can be made u/s. 40(a)(ia) of the Act. 10.1 The Ld. Authorised Representative for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 50,000/- to an individual in respect of aggregate payment of ₹ 4,77,637/-. The Ld. Departmental Representative referred to pages 14 to 18 of the paper book filed with memo. of appeal and submitted that assessee has only given trucks number but names and addresses of payees are not stated. The Ld. Departmental Representative further referred to remand report dated 09.07.2009, copy placed on record and submitted that said payments were reflected only by self made vouchers and therefore, the Ld. CIT(A) has rightly confirmed the order of the Assessing Officer for making disallowance of it. The Ld. Departmental Representative further submitted that in respect of balance amount of ₹ 10,98,273/- out of ₹ 15,76,761/-, the assessee stated that it obtained Form 15-I from truck owners but admittedly the said Form 15-I alongwith Form 15-J was not submitted before the Jurisdictional CIT. The Ld. Departmental Representative further submitted that the assessee also could not substantiate of submitting Form 15-I as the assessee took plea that it misplaced the said Forms. The Ld. Departmental Representative submitted that no details of persons to whom payments were made have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act will become redundant. I.T.A.T., Calcutta Bench vide its order dated 15.01.2010 (supra) has held that even if the sum payable are paid to the contractors or subcontractors on which tax is deductible at source as per provisions of the Act, Section 40(a)(ia) of the Act will be attracted. We are of the considered view that the above view is in consonance with the provisions of the Act. It is well settled that expression used in the statute is not always to be interpreted literally or grammatically, if a plain literal interpretation of statutory provisions produced manifestly absurd an unjust result, which the legislature could not have intended. Sometimes, it has to be interpreted having regard to the contest in which the expression is used and having regard to the job and purpose for which the same is indicated. Therefore, term used in Section 40(a)(ia) of the Act payable means the amount already paid or credited and does not mean the amount yet to be paid or credited. Hence, we reject the contention of Ld. Authorised Representative that no disallowance could be made u/s. 40(a)(ia) of the Act in respect of its business expenditure if assessee has failed to deduct TDS as per prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the above facts, we hold that disallowance of ₹ 10,98,273/- as per provisions of Section 40(a)(ia) of the Act is justified as the assessee failed to deduct TDS as per provisions of Section 194C of the Act. 15. In view of the above, we allow ground No.1 of the appeal taken by the assessee in part by deleting sum of ₹ 4,77,637/- and restricting the disallowance to ₹ 10,98,273/- under the head freight paid. 16. In respect of revised ground No.2 of the appeal of disallowance of ₹ 11,58,302/- under the head transportation charges, the Ld. CIT(A) has stated that the assessee has not given details of transporters to verify whether provisions of Section 194C was applicable or not. The Ld. CIT(A) has stated that from the details filed by the assessee of transportation charges, it is true that all the payments are below ₹ 20,000/- to each truck. However, details are required; to verify whether the payments per truck is below ₹ 20,000/- and the payments in aggregate within the financial year did not exceed ₹ 50,000/- to an individual. Ld. CIT(A) has stated that the details of the persons/transporters who received the payments are available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments alongwith particulars of truck numbers and the date on which the payments were made. We also observe that in the said statement wherever payments were exceeding ₹ 20,000/-, the details of deducting TDS @ 1.020% is given alongwith truck number. We also observe that the Assessing Officer in his remand report has stated that the said payments aggregating ₹ 11,58,302/- claimed by the assessee under the head transportation charges are reflected in the ledger and cash book. However, it is stated that the said payments are based on self made vouchers. Considering the above observations, we are of the considered view that the disallowance made u/s. 40(a)(ia) of the Act could not be made merely because there is an apprehension/suspicion that application of Section 194C could not be ruled out. The Department has not brought even a single instance on record that out of above amount aggregating to ₹ 11,58,302/-, there was any case where payment exceeding ₹ 20,000/- was made at a time and/or the total payments made to an individual truck owner in the financial year was exceeding ₹ 50,000/- by the assessee. If the assessee has not maintained proper evidences, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer of ₹ 2,41,580/-. Hence, the assessee is in further appeal before the Tribunal. 22. The assessee has filed statement giving details of the aggregate amount of ₹ 2,41,580/- claimed under the head unloading charges. The assessee has also filed name of the payees alongwith particulars of truck numbers and dates and loading charges paid to each payees. The assessee has separately filed list of clubbing total amount paid to each payee(s). During the course of hearing, Ld. Authorised Representative for the assessee submitted that on perusal of the said statement, it could be revealed that no payment was exceeding ₹ 20,000/- at a time. Further, no payment to an individual payee also exceeded ₹ 50,000/- in the financial year. Therefore, no TDS was required to be deducted. The Ld. Authorised Representative for the assessee also referred to remand report and stated that Assessing Officer has also stated that payments are reflected into the ledger and cash book but disallowance has been made by applying Section 40(a)(ia) of the Act because the expenses are made on self made vouchers. He submitted that the disallowance made is not justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion charges paid to different parties, we observe that the Assessing Officer disallowed the same on the ground that assessee failed to furnish names and addresses of the parties to substantiate its claim. However, in first appeal, the Ld. CIT(A) has stated that all the payments accrued in the month of October, 2005 in the books of the assessee and the actual payments are made in two parts. That, according to information furnished by the assessee, TDS was deducted on transportation charges of ₹ 21,42,270/- in the month of October, 2005 and deposited into Government account on 31.05.2006 altogether. Ld. CIT(A) has stated that assessee should have remitted TDS amount to Government account by 31.03.2006 as per provisions of Section 40- (a)(ia) of the Act to claim expenses in assessment year 2006-07. Since assessee deposited TDS amount into Government account on 31.05.2006, the expenditure is allowable as per provisions of Section 40(a)(ia) of the Act in assessment year 2007-08. Therefore, Ld. CIT(A) has confirmed the disallowance on the ground that assessee had violated provisions of Section 40(a)(ia) of the Act as the assessee remitted TDS amount on 31.05.2006 when the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court in the case of GEM GRANITES vs. CIT [2004] 271 ITR 322 (SC). 28. We have carefully considered the submissions of the Ld. Representatives of the parties and the orders of the authorities below. We observe that the said amount of ₹ 21,42,279/- has been disallowed u/s. 40(a)(ia) of the Act on the ground that said payment was made in the month of October, 2005 and TDS was also deducted but TDS amount was deposited in Government account on 31.05.2006; therefore, assessee could claim deduction in next assessment year and not in assessment year under consideration. However, we observe that similar issue has been considered by I.T.A.T., Mumbai Bench vide its order dated 30.09.2010 (supra) wherein it has been held that amendment made by Finance Act, 2010 has replaced the earlier amendments. That the amendment by Finance Act, 2010 is curative in nature and would apply to earlier years also. Therefore, the expenditure incurred in respect of which TDS has been paid by the assessee before due date of filing of return, Assessing Officer not to disallow the expenditure by applying provisions of Section 40(a)(ia) of the Act. 29. In view of above and respectfully, fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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