Court :Mumbai Bench of the Income-tax Appellate Tribunal
Citation :Vikas Road Carriers Ltd. Vs. ITO [2010-TIOL-417-ITAT-MUM]
Brief :In the case of Vikas Road Carriers Ltd. v. ITO [2010-TIOL-417-ITAT-MUM] the Mumbai Bench of the Income-tax Appellate Tribunal (“the Tribunal”), ruled that, in light of the very typical facts of the case, no dis allowance could be made under section 40(a)(ia) of the Income Tax Act, 1961 (“the Act”), for non-withholding of tax since the payments to the transporters were less than Rs. 20,000 each, and less than Rs. 50,000 in a year to any party and hence did not attract the withholding tax provisions of section 194C of the Act.
The Tribunal relied very heavily on the fact that while the assessee had given details of expenses incurred, the revenue authorities were unable to dispute the assessee’s statement that the expenses in question did not exceed the limit of Rs. 20,000 per payment, and Rs. 50,000 per payee per year.
Facts of the case
- The assessee was engaged in the business of transportation and had paid freight during the year. Tax was not deducted from these payments. The assessee claimed that there were no contracts for transportation of goods, and payments made to each party (except in three cases), were less than the prescribed limits and hence did not attract the provisions of section 194C of the Act; and that, accordingly, the provisions of section 40(a)(ia) were not attracted.
- During assessment, the Assessing Officer (“AO”) observed that the assessee had only mentioned the drivers’ names along with the vehicle numbers, instead of the name of the party and that no separate registers were maintained in respect of the parties to whom freight was paid.
- The assessee contended that the freight paid for each transaction was less than Rs. 20,000 each and each party wise payment was also less than Rs. 50,000 per year.
- The AO however disallowed the freight paid under the provisions of section 40(a)(ia) of the Act, holding that no tax was deducted as required under the provisions of section 194C of the Act.
- The Commissioner of Income-tax (Appeals) (“CIT(A)”) upheld the decision of the AO.
Issue:-Whether the dis allowance under section 40(a)(ia) could be made considering the facts of the case viz. the assessee’s statement and details provided that the payments made were less than Rs 20,000 each and also less than Rs. 50,000 per year per party ?
Revenue’s contentions
