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2016 (6) TMI 324 - ITAT JAIPUR

2016 (6) TMI 324 - ITAT JAIPUR - TMI - TDS u/s 194C - payments on account of transportation expenses to the seven transporters w/o deduction on TDS - Held that:- We find that this issue is covered by the decision of coordinate Bench of the Tribunal in the case of ITO vs. Bhadreh Yarh Traders [2014 (1) TMI 864 - ITAT AHMEDABAD] wherein the Tribunal has decided the issue in favour of the assessee.

Addition on account of household expenses - Held that:- Looking to the cost inflation rai .....

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ne/mobile. Therefore, personal use of telephone cannot be ruled out. It will be reasonable to make disallowance @ 10% of the expenses. We therefore restrict the disallowance to ₹ 2833/- Decided partly in favour of assessee

Disallowance on account of shop expenses - Held that:- Looking to the facts and nature of business of the assessee, we do not find it reasonable to make disallowance of this petty amount of ₹ 5124/- on account of shop expenses. We, therefore delete the a .....

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No. 1031/JP/2013 - Dated:- 30-5-2016 - Shri T. R. Meena, AM And Shri Laliet Kumar, JM For the Assessee : Shri B. V. Maheshwari (C.A) For the Revenue : Ms Roshanta Meena (JCIT) ORDER Per Shri Laliet Kumar, J. M. This is an appeal filed by the assessee against the order of ld. CIT (Appeals), Kota dated 29.10.2013 for the A.Y. 2010-11. The grounds raised by the assessee are as under :- 1. That the ld. AO grossly erred in disallowing Transport expenses by applying Sec. 40(a)(ia) of I.T. Act, and th .....

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es ₹ 5,124/-. 5. That the ld. AO as well as ld.CIT (A) grossly erred in making/sustaining the addition on Vehicle expenses & depreciation thereon ₹ 34,716/-. 2. Brief facts of the case are that the assessee is an individual deriving income from trading of cattle feed and food grain etc. The assessee filed his return declaring income of ₹ 6,35,610/- and agricultural income of ₹ 40,000/- on 21.09.2010 for the year under consideration. Subsequently the return was revised .....

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; 87870/- ii) Ekta Container Goods Carrier ₹ 84160/- iii) Dwarka Transport Rs.217925/- iv) Shri Jain Transport Co., Bhulia Rs.162729/- v) Sharma Freight Carrier Rs.298995/- vi) GRC Ghoman Road Carrier Rs.346550/- vii) Ekta Cargo Carriers Rs.198850/- Rs.1397070/- The above expenses/payment is required to be disallowed as per the provisions of section 40(a)(ia) of the Act. The assessee was asked to furnish explanation/justification vide letter dated 17.12.2012. In compliance, the ld. A/R of .....

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ight Carrier 87870 AAGFN 6019 G 2. Ekta Cargo Carriers 198850 AIVPB 0274 C 3. Dwarka Transport 217925 AABPB 3202 D 4. Shri Jain Transport Co. 162720 ACYPJ 8451 G 5. Sharma Freight Carrier 198995 DKZPS 8290 E 6. GRC Ghoman Road Carrier 346550 7. Ekta Container Goods Carrier 84160 The assessee firm has received PAN of the transporter so TDS is not deducted, hence disallowance u/s 40(a)(ia) is wrong and unjustified. The AO considered the submissions of the assessee but he found no force in them. Th .....

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receiving query from the AO. Therefore, the submissions of the assessee is an afterthought and not acceptable. The AO considering these aspects, the expenses made on this account was disallowed u/s 40(a)(ia) to the extent of ₹ 13,97,070/- and added to the total income of the assessee, since no TDS was deposited by the assessee on these payments. 3. On appeal before ld. CIT (A), the ld. CIT (A) partly allowed the claim of the assessee by observing as under :- I have gone through assessee s .....

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erit. No person will carry out any work (in this case transportation of goods) without any understanding which can be oral or written. Therefore, it is held that the assessee had contractual obligation to pay transportation charges which were clearly covered under section 194C. The assessee took another plea that assessee had Permanent Account Number of the transporters and, therefore, no TDS was deducted as per provisions of section 194C(6). It was seen that the A.O. brushed aside this argument .....

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arrier (Rs. 84,160/-) the PANs was not furnished before AO. Therefore, it is held that TDS was deductible from the amounts paid to these persons and assessee has committed violation of section 40(a)(ia). Therefore, addition of ₹ 4,30,710/- is confirmed. The AO is directed to delete balance addition of ₹ 9,66,360/-. This ground of appeal is, therefore, partly allowed. 4. Now the assessee is in appeal before us. 4.1. The ld. A/R for the assessee submitted that in case of Transportation .....

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ing of freight work is done either by the seller or its agent and the assessee is just making the payment on arrival of goods at his place and made it part of his purchases as such the assessee has not entered into any contract with the lorry owner hence, he is not liable to deduct tax on the payment made by it. There is no contract between the assessee and the transporters and section 194C is applicable on works contract. The assessee is engaged in trading of goods, the cost of goods and transp .....

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ee was to make payment on receipts of goods. Admittedly, the assessee is engaged in purchase of yarn and trading thereon, and receive the goods from transporters through clearing and forwarding agents. The AO has made the impugned addition on the assumption that the assessee was having agreement with the transporter for transportation of its goods, was not based on any evidence on record. Therefore, in the absence of any documentary proof to establish that there is an agreement between the asses .....

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e. Therefore, the ld. A/R submitted that when PAN is available with the assessee, there is no requirement to deduct TDS and thus section 40(a)(ia) is not applicable. The ld. A/R, therefore, requested to delete the addition. 4.2. On the other hand, the ld. D/R for the assessee supported the order of the AO. 4.3. We have heard rival contentions and gone through the facts and circumstances of the case. It is seen that the assessee has made payments on account of transportation expenses to the tune .....

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paid during previous to the account of a contractor during the course of business of plying, hiring or leasing goods carriage, on furnishing of his Permanent Account No., to the person paying or crediting such sum. The assessee firm has received PAN of the transporter so TDS is not deducted, hence disallowance u/s 40(a)(ia) is wrong and unjustified. The AO holding that the explanation of the assessee is not tenable, he made the disallowance. On appeal before ld. CIT (A), the ld. CIT (A) allowed .....

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paid to these persons and assessee has committed violation of section 40(a)(ia). Therefore, he restricted the disallowance to ₹ 4,30,710/- and deleted balance addition of ₹ 9,66,360/-. We find that this issue is covered by the decision of coordinate Bench of the Tribunal in the case of ITO vs. Bhadreh Yarh Traders in ITA No. 2456/Ahd/2010 wherein the Tribunal has decided the issue in favour of the assessee. The observations of the coordinate bench of the Tribunal are reproduced here .....

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family consists of four members viz. two adult and two minor school going children. The assessee has not maintained any account regarding household expenses. The AO considering the cost inflation of kitchen expenses, cost of education of two school going children including expenses on books, copies, clothing etc. and social obligations, estimated the household expenses per family member at ₹ 2,500/- per month, which resultantly comes to ₹ 1,20,000/- p.a. for a family of four members. .....

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ble. Therefore, addition of ₹ 29,000/- is confirmed. 7. Now the assessee is in appeal before us. 7.1. The ld. A/R for the assessee submitted that household expenses of Sindhi families are much less in comparison to families of other communities. He estimated the household expenses of the assessee at ₹ 78,000/-. The ld. A/R further submitted that the AO has presumed the household expenses on the basis of surmises and conjectures, which is not fair. Therefore, he requested to delete th .....

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der of ld. CIT (A). The ground of the assessee fails. 8. Ground No. 3 relates to disallowances on account of Telephone/Mobile expenses. The AO while making assessment noted that the assessee has debited a sum of ₹ 28,331/- to the Profit & Loss account for the telephone/mobile expenses incurred. On being asked to produce the details of telephone/mobile charges on the basis of actual use of telephone, no details with telephone numbers has been produced for verification. Therefore, in abs .....

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before us. 10.1. The ld. A/R for the assessee submitted that the telephones/mobiles are used for business now a days and mostly the business is depended on communication. On a turnover of ₹ 946.50 lacs, the telephone/mobile expenses incurred is hardly 0.03% which is reasonable. He, therefore, requested to delete the addition. 10.2. On the other hand, the ld. D/R supported the orders of lower authorities. 10.3. We have heard rival contentions and perused the material on record. The assesse .....

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hers for the expenses incurred towards shop expenses are not properly maintained, the same are hand written and, therefore, in absence of proper vouchers, the same are not verifiable. Thus the AO made the disallowance of ₹ 5124/- @ 20%. 12. On appeal, the ld. CIT (A) confirmed the disallowance holding that considering the facts of the case and non-verifiable nature of shop expenses, some disallowance cannot be ruled out. Therefore, he considered it reasonable to confirm the disallowance ma .....

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and perused the material on record. Looking to the facts and nature of business of the assessee, we do not find it reasonable to make disallowance of this petty amount of ₹ 5124/- on account of shop expenses. We, therefore delete the addition. 14. Ground No. 5 relates to disallowance out of Vehicle expenses/depreciation on vehicles. The AO noted that the assessee debited a sum of ₹ 1,73,581/- (Vehicle expenses ₹ 1,32,590/-, Depreciation on Vehicle ₹ 11,028/- and Depreciat .....

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