TMI Blog2011 (9) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... in assuming jurisdiction u/s 263 of the Income Tax Act and observing that the assessment is erroneous and prejudicial to the interest of revenue. 2. That the original assessment had been framed after due application of mind by the concerned Assessing Officer and the CIT-III has failed to appreciate the detailed submissions made both on merits and otherwise during the course of proceedings before him. 3. Notwithstanding the above said ground of appeal, the CIT-III has erred in holding that the assessee was liable to deduct TDS on the freight charges paid to the tune of ₹ 9,45,84,074/- and also erred in holding that the since the TDS having not been deducted, therefore, has wrong made the addition of ₹ 9,45,84,074. 4. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid to various truck owners and consequently application of provisions of Section 40(a)(ia) of the Act. b) In view of the provisions of Section 199 of the Income-tax Act, the credit for TDS is to be restricted to the payments credited to the Profit Loss Account as against gross receipts reflected in the TDS certificates. c) Verification of applicability of Section 40A(3) to cash payments made to individual truck owners. 5. The CIT, in view of the facts of the case and the legal position, invoking the provisions of Section 263 of the Act, decided the issues as under : i) Since there was failure to deduct tax by the Union on the amount of freight charges paid to the truck owners, the provisions of Section 40 (a)(ia) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT. Ld. AR submitted that the issue in question is directly covered by the ratio laid down by the Hon'ble Punjab Haryana High Court in the case of CIT V Truck Operators Union (date of decision : 23.03.2011) and hence there was no merit in the enhancement of income made by the CIT. 8. Ld. DR for the Revenue placed reliance on the order of the CIT. 9. We have heard the rival contentions and perused the record. The assessee Union is AOP constituted of truck operators. The said AOP was constituted mainly for taking contracts from various government agencies/companies for the transportation as it was difficult for acquiring and executing contracts in their individual capacities. The assessee AOP raises bills for transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a)(ia) of the Act, the assessee was held not entitled for deduction of the aforesaid sum of freight charges paid totaling to ₹ 9.45 Cr. The income of the assessee was enhanced by ₹ 9.45 Cr. by the CIT vide its order passed u/s 263 of the Act holding the order of the AO to be both erroneous and prejudicial to the interests of the revenue. 10. The Hon'ble Punjab Haryana High Court in CIT V Truck Operators Union in ITA No. 865 of 2010 vide date of decision 23.3.2011 on similar issue raised on payments to truck operators, members of truck union and the consequent disallowance u/s 40(a)(ia) of the Act had held as under : 4. Ld. Counsel for the revenue fairly states and we are also of the same view that Section 194C(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CC- 259/2011 in CIT, Shimla v M/s Ambuja Darla Kashlog Mangu Transport Co-operative Society. 12. Now coming to the facts of the present case, as the issue stands covered by the decision of the jurisdictional High Court and also by the Hon'ble Himachal Pradesh High Court, we find no merit in the order of CIT passed u/s 263 on the issue of deduction of freight charges paid by the assessee Union to the truck operators/owners. Following the abovesaid ratio laid down in various judgements, we hold that the provisions of Section 194C(2) are not attracted in respect of the payments made by the assessee Union to its truck operators/owners and consequently, the deduction claimed on account of such freight charges paid, amounting to ₹ 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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