Case Law Details
Cargo Handling Corporation Vs ITO (ITAT Kolkata)
The case of Cargo Handling Corporation Vs ITO revolves around the disallowance made under section 40(a)(ia) of the Income Tax Act for non-deduction of TDS on transportation charges. The appellant, Cargo Handling Corporation, filed an appeal before ITAT Kolkata challenging the disallowance imposed by the Assessing Officer (AO). This article provides an analysis of the ITAT’s order and its interpretation of the provisions of section 40(a)(ia).
Analysis: The appellant paid transportation charges to various parties, and the Assessing Officer disallowed the expenses under section 40(a)(ia) for non-deduction of TDS. The appellant argued that two of the parties had already offered the alleged sum as revenue in their income tax returns and paid taxes on the same. They provided supporting documents, including income tax returns, balance sheets, and bank statements of the parties, to substantiate their claim.
The ITAT considered the appellant’s arguments and referred to the judgment of the Supreme Court in Hindustan Coca Cola Beverage (P.) Ltd. vs. CIT. The Supreme Court had held that if the deductee has already paid taxes on the amount received, the Department cannot recover tax from the deductor for the same income. Based on this principle, the ITAT concluded that no disallowance was necessary for the transportation charges paid to the two parties who had already paid taxes on the amounts received.
However, the ITAT noted that the appellant failed to provide sufficient details regarding the third party. As a result, the disallowance for the transportation charges paid to that party was confirmed.
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