TMI Blog2013 (4) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... making an addition of Rs.300.000/- out of legal expenses. 5. The authorities below have erred in law and facts in making an addition of Rs.51974/- being an adhoc 15% disallowance out of Telephone expenses, Tea Expenses, Vehicle Running expenses, Depreciation on Car and interest on Car Loan whereas Fringe Benefit Tax has already been paid on these heads of expenditures 6. The authorities below have erred in law and facts in making an addition of Rs.136450/- by treating loss on account of sale of Tractor as Capital Loss. 3. The issue in ground No.1 raised by the assessee is against the addition of Rs.44,92,123/- under section 40(a)(ia) of the Act. 4. The brief facts of the case are that the assessee was running a petrol pump and was dealing in purchase and sale of motor spirit, high speed diesel and lubricants of M/s Reliance Industries Ltd. During the year under consideration the assessee had claimed total freight expenses of Rs.44,92,123/- out of which payment of freight amounting to Rs.44,59,412/- was made to M/s Reliance Industries Ltd. The Assessing Officer found the assessee not to have deducted TDS out of the said freight payment. The Assessing Officer further ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o laid down by the Hon'ble Punjab Haryana High Court in CIT(TDS), Chandigarh Vs. Assistant Manager (Accounts), Food Corporation of India (Pay office), Jagadhri in ITA No.407 of 2008 date of decision 21.8.2008 and the Chandigarh Bench of the Tribunal in M/s Rana Wines (L-1), HO Klin Area, Nangal Vs. Addl.CIT, R-1, Chandigarh in ITA No.599/CHD/2011 date of decision 17.10.2011. The second aspect of the argument of the learned A.R. for the assessee was that the case of the assessee was sale of petrol products and all the costs were part of the purchase cost as the assessee was only getting margin on sale of diesel. The learned A.R. for the assessee in this connection placed reliance on the decision of the Hon'ble Punjab Haryana High Court in CIT Vs. Bhagwati Steels [326 ITR 108 (P H)]. 8. The learned D.R. for the Revenue pointed out that though the case built up by the learned A.R. for the assessee was that the present case was reimbursement of expenses but the invoice does not say so. 9. In rejoinder the learned A.R. for the assessee pointed out that the bill was raised by M/s Reliance Logistics Pvt. Ltd. and the same was reimbursed by way of payment to M/s Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x at source. The case of the Revenue is that the said payments are not to be allowed as deduction because of non deduction of TDS in view of the provisions of section 40(a)(ia) of the Act. We find no merit in the orders of the authorities below in view of the facts of the present case where the amount paid by the assessee was in relation to reimbursement of freight expenses incurred by M/s Reliance Logistics Pvt. Ltd. who was not a transporter. The transportation of the goods has been carried out by M/s RITCO Logistics Pvt. Ltd. who was engaged by M/s Reliance Logistics Pvt. Ltd. and this transaction may attract deduction of tax at source. However, reimbursement of freight expenses by the assessee to M/s Reliance Logistics Pvt. Ltd. by way of payment to M/s Reliance Industries Ltd. is outside the purview of deduction of tax at source. In the totality of the above said facts and circumstances of the case we find no merit in invoking of provisions of section 40(a)(ia) of the Act and disallowance of freight expenses in the hands of the assessee. We find support from the ratio laid down by the Chandigarh Bench of the Tribunal in M/s Rana Wines Vs. Addl. CIT (supra). We also find merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was found that as the assessee had not paid any amount to the procurement agencies on account of transportation, interest or storage charges as such, accordingly, there was no liability for deduction of tax. The contention of learned counsel for the revenue that in fact all these factors had been taken care of while fixing the price at which the food grain was to be billed to the assessee, carries no weight. If expenses incurred by a person on account of transportation, interest, storage etc. are added to the cost of the goods, it cannot be inferred that the person who is billed had paid certain amount on account of those services separately as the same becomes part of the commodity so sold. For the reasons mentioned above, we do not find any substantial question of law arises in the present appeal. The same is accordingly dismissed. 12. Following the above we direct the Assessing Officer to delete the addition of Rs.44,92,123/-. The ground No.1 raised by the assessee is allowed. 13. The ground No.2 raised by the assessee is not pressed and hence the same is dismissed as not pressed. 14. The ground No.3 raised by the assessee is against the disallowance of Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by the Reliance towards training of the dealer and its staff and supervision and coordination of the construction of the said retail outset by Reliance. The assessee during the year under consideration had shown income from running of petrol pump and the products of Reliance. The said amount of Rs.3 lacs which initially was paid by its sister concern was claimed as an expenditure during the year under consideration and the amount was debited on 31.3.2007 on account of HKTC Oil Division. The nature of expenditure being training of the dealer and its staff and also monitoring of the construction of the retail outset of the assessee being relatable to running of the business by the assessee was allowable expenditure. Merely because the amount was initially paid by the sister concern of the assessee and was also claimed as expenditure during the year does not merit the disallowance in the hands of the assessee. Further under the provisions of the Act there is no requirement for deduction of tax out of such payments and consequently non-deduction does of the Act attract the provisions of section 40(a)(ia) of the Act. In view thereof, we direct the Assessing Officer to allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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