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Hightension Switchgears Private Limited Versus Commissioner of Income Tax, Kolkata

2016 (7) TMI 340 - CALCUTTA HIGH COURT

TDS u/s 194C - non deduction of tds in respect of freight charges paid - disallowance u/s 40(a)(ia) - responsibility to pay tax - Held that:- Answering the question who was responsible for paying any sum to any resident for carriage of goods? the answer obviously is that it was the seller who was responsible for paying and the seller admits to have done that. Therefore, the liability to deduct tax was that of the seller. In case seller is unable to show that he had made the deduction, Section 40 .....

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deducted tax at source. When the agent has complied with the provision, the principal cannot be visited with penal consequences. For one payment there could not have been two deductions. Moreover, when a person acts through another, in law, he acts himself. - Thus the question, quoted above, is answered by holding that the Tribunal was wrong in holding that the appellant was liable to deduct tax at source in respect of the freight component. When the assessee was not liable to make any dedu .....

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10 passed by the Income Tax Appellate Tribunal C Bench, Kolkata in ITA No. 2053/Kol/2009 pertaining to the assessment year 2006-07. The assessee has come up in appeal. The assessee is aggrieved by the following finding of the learned Tribunal : We are of the considered view that the assessee was liable to deduct TDS as per Section 194C of the Act in respect of freight charges paid; and since the assessee had failed to deduct TDS in respect thereof, there is no infirmity in the order of the learn .....

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has also paid the said freight charges as per invoices to the suppliers namely, M/s. Reliance Industries Ltd., and M/s. Gulshan Sugars & Chemicals Ltd. We also observe on perusal of the said bills/invoices that the name of the transporters are also stated through which the goods have been transported to the assessee. As per Section 194C of the Act, any person responsible for paying any sum to any resident for carrying out any work i.e., inter alia carrying of goods by any mode of transport .....

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who in turn have paid to the concerned transporters. The assessee has admittedly not deducted TDS in respect of freight charges reimbursed to the suppliers of goods. During the course of hearing, the learned AR of the assessee submitted that the said suppliers have deducted TDS and referred to pages 9 to 13 of the PB to substantiate his submission. However, in this regard we consider it relevant to mention the finding of the learned CIT(A) given at pages 5 and 6 of the impugned order. The appel .....

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elhi, Assam Roadways Corporation Ltd. and not M/s. Reliance Logistics Ltd. This was pointed out to the Ld. Authorized Representative. However, no explanation in this regard was given by him. The objective of TDS provisions is to ensure that there is proper tax compliance by the assessees. Similarly, in the case of M/s. Gulshan Sugars and Chemicals Ltd. the freight charges have been reimbursed through sale invoices to M/s. Limra Roadways. As seen from Form No. 16A filed by the appellant PAN/GIR n .....

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not have the scope of deduction of tax at source. The appellant could not also provide sufficient proof, that legitimate taxes due to the State have been paid……….. Although a number of questions were formulated on 24th December, 2010, there is consensus between the learned Advocates appearing before us that the substantial question is question no. 1 which is as follows : Whether on a true and proper interpretation of sections 40(a)(ia) and 194C of the Income Tax Act, 1961, .....

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ales : Freight to customers destination will be paid to the GTA on their behalf and collected in the supply invoices. II)The freight rates are Exclusive of Unloading charges at Customers end. Unloading charges at Customers end will be extra and will have to borne by the Customers. III) For Ex-stock point sales, freight from Depot to the customers location will be arranged and paid by the customers themselves. IV) Octroi charges or any other local levy will be borne by customers. The stipulations .....

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idate the aforesaid information available from the invoices, Mr. Khaitan has drawn our attention to a letter dated 18th March, 2010 which could not be brought to the notice of the Learned Tribunal because the letter was received after the hearing was concluded. The letter dated 18th March, 2010 addressed by Reliance Industries Limited to the assessee reads as follows: Sub: Furnishing of Information u/s 133(6) of the IT Act 1961 in respect of M/s. Hightension Switchgears Pvt. Ltd. for the A.Y. 20 .....

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d through M/s. Delhi Assam Roadways Corporation Limited who is a sub contractor for transportation of material by road from plant of M/s. Reliance logistics limited. We understand that Indian Petrochemical Corporation Limited merged with Reliance Industries Limited. Therefore, Reliance Industries Limited is a transferee company or in other wards, the amalgamated company and the Indian Petrochemical Corporation Limited is the amalgamating company. Therefore, the fact, which emerges, is that the a .....

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ways Corporation Limited was a sub-contractor of RLL. The invoices go to show that the seller has realised from the assessee freight for the goods. The Learned Tribunal has also recorded the following findings: The assessee has also paid the said freight charges as per invoices to the suppliers namely, M/s. Reliance Industries Ltd. and M/s. Gulshan Sugars & Chemicals Ltd. We already have quoted the relevant part of the price list concerning freight from which it appears that freight was paya .....

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assessee by acting as an agent on behalf of the assessee and the assessee has reimbursed the freight charges to the suppliers, who in turn have paid to the concerned transporters. The aforesaid view formed by the Learned Tribunal is patently wrong. Under the contract of sale, the seller was bound to send the goods to the buyer. The price list goes to show that the seller was bound to pay the transportation charges to the goods transport agency. The seller was, however, entitled to recover the s .....

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p;……………….. shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, [deduct an amount equal to - (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein Explanation III to Section 194C as it stood at the relevant point is also relevant for our pu .....

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