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M/s. Sri Venkateswara Padmavathi Company Versus The Income Tax Officer, Ward-2, Khammam

2016 (8) TMI 596 - ITAT HYDERABAD

Revision u/s 263 - A.O. had failed to invoke section 40(a)(ia) of the Act on freight charges paid by the assessee to 20 vehicles without deducting tax at source - Held that:- The assessee has obtained Form 15-I from its transporters and filed the same before the Commissioner of Income tax. Copies of these forms were also produced before the A.O. during the original assessment proceedings. The A.O. has verified these forms and came to the conclusion that the assessee has not violated the provisio .....

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ch suspicion cannot be a ground for review. Hence, the same is quashed. - Unmatched financial charges - Held that:- There is no finding of the Ld. CIT that there is an error in the assessment order much less prejudice to the revenue. The method of accounting adopted by the assessee is being followed year after year. There is no fault that could be found in this system of accounting. Under these circumstances, the revision is bad in law. - Assessee appeal allowed. - ITA.No.1186/Hyd/2014 - .....

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contentions, I condone the delay and admit the appeal. 3. The assessee, in this case is a partnership firm and is in the business of transportation of coal as a contractor. It filed its return of income for the A.Y. 2009- 2010 on 21.10.2010, admitting total income of ₹ 14,53,190. The A.O. completed the assessment under section 143(3) on 22.12.2011. The Ld. CIT, Vijayawada passed an order under section 263 of the Act, setting aside the assessment and directing the A.O. to re-do the assessme .....

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d freight paid to twenty vehicles and debited Rs.l,26,97,222 upon which no TDS was made. Though it was claimed as most of the freight payments were outstanding and shown under "sundry creditors' and hence no TDS was made, provisions of Sec.194C of the Act apply and failure to comply with them call for disallowance of such expenditure u/s 40(a)(ia) of the Act. (b) The nature of 'Loading charges' at Rs.l,50,000/- debited to the P & L A/c has not been enquired into apart from f .....

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rd revealed that the assessee has shown the above outstanding payments on the debit side (assets side) of the Balance Sheet. The AO obtained any clarification/explanation nor examined the same. 4. After hearing the rival contentions, I hold as follows. 4.1. The first issue on which the revision was directed by the Ld. CIT was that the A.O. had failed to invoke section 40(a)(ia) of the Act on freight charges paid by the assessee to 20 vehicles without deducting tax at source. The assessee relies .....

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d be treated as a separate contract and under those circumstances, there is no obligation on the part of the assessee to deduct tax at source. It was further submitted that the A.O. had examined this matter and the assessee had filed Form 15-I obtained from the transporters before the Ld. CIT and that these forms were produced before the A.O. during the original assessment proceedings and under such circumstances, the A.O. could not to have made disallowance under section 40(a)(ia) of the Act. I .....

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bmitted that the revision cannot be made merely on suspicion. He submitted that during the course of transportation of coal, there will be situations where trucks are subjected to mechanical defects and breakdowns and new trucks have to be engaged and coal has to be transferred from the broken down truck to the new truck to transport coal to the destination and hence, there is necessity to incur loading charges. He further submitted that the expenditure was incurred by way of account payee chequ .....

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hown on the assets side of the assessee s balance sheet and is disclosed as unmatched financial charges. The interest charged during the year is reduced both from the unmatched financial charges and the loan account. Thus, it was argued that there is no error much less prejudice caused to the Revenue by this method of accounting. He relied on number of case laws in support of his contention that the order passed under section 263 is bad in law. 7. The Ld. D.R. on the other hand, submitted that t .....

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