Case Law Details
ACIT Vs Late D. Mahendran (ITAT Hyderabad)
The AO disallowed hire charges for non-deduction of tax u/s 40(a)(ia) of the I.T.Act, with an observation that the appellant has not brought on record any supporting evidence that he had hired lorries and trucks in the manner the public hire an auto or a taxi on the road. The AO further observed that the appellant did not produce supporting proof, but each of the truck was hired in a casual manner. The contention of the AR of the appellant was that the appellant doing the transport business for transportation of goods as and when a particular company or person requires goods to be transported from one place to another without any specific contract with regard to the time, rate, etc. The AR of the appellant further contended that there is not even a contract either written or oral with regard to the transport, the relevant company or persons are not deducting any TDS in respect of payment made by them with regard to the transportation of goods undertaken by the appellant. The AR of the appellant further submitted that the appellant, apart from use of his own vehicles, also engaged the vehicles of outsiders as and when requires on need basis without any specific contract. The contention of the AR of the appellant the appellant is doing only transport business and not a transport contract to supply his parties on regular basis. AR of the appellant further submitted that the payment made to outside vehicle owners on simply hire charges and not sub-contract payments which attract provisions sec.194C(2) of the I.T. Act. The AR of the applicant also filed ledger accounts of outside lorry payment and each payment made to various parties are below Rs.20,000/-‘ along with the written submission dated 3.1.2019. I have considered the submissions of the appellant carefully and also seen the ledger accounts of various parties which shows that each payment is below Rs.20,000/-. The provisions of sec.194C provide that there is no TDS liability on the amount of any sum paid/credited to the account of the contractor or sub-Contractor, if such payment does not exceed Rs.20,000/-. Further, the AO did not bring any material on record to prove that there exists any specific contract or sub-contract between the assessee and various parties and also each payment or aggregate of payment to such parties exceeds Rs.20,000/-. The AO did not found out any existence of any contracts with complete names of the parties and examine the relationship between the assessee and the parties. Unless the fact of existence of the contract or sub-contract is proved by the AO, and also default u/s 194C, if any, is brought on record with positive material, no disallowance can be made u/s 40(a)(ia) of the I.T. Act.
Mr. Mujumdar vehemently contended during the course of hearing that CIT(A) has erred in law and on facts in deleting the impugned sec.40(a)(ia) disallowance of Rs.3,94,38,302/- made by the Assessing Officer on account of assessee’s failure in not deducting TDS on the specified payments. And that too, after admitting additional evidence in violation of Rule 46A of Income Tax Rules. We find no substance in Revenue’s instant grievance. The fact remains that CIT(A) has gone by assessee’s payment instance(s) already forming part of assessee’s records that the same do not satisfy the threshold limit of Rs.20,000/- each and above for deducting TDS in the relevant previous year.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
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