In M/s. Sukumar Dutta versus Income Tax Officer, the Kolkata ITAT recently held that the provisions relating to Tax deduction at source ( TDS) under section 194C of the Income Tax Act are not applicable to off-transactions made by the assessee.
In the instant case, the Assessee having a partnership firm in the field of fertilizers, pesticides, and seeds filed his return of income. During the course of assessment proceedings, AO found that Assessee made a single payment to Sri Rama Road lines towards transport charges without deduction of tax at source as required by section 194C of the Income Tax Act. Accordingly, the AO invoked the provisions of section 40(a)(ia) and made a disallowance of Rs.31,900/-.
On appeal before the Commissioner of Income Tax (Appeals), the authority confirmed the said addition and dismissed the appeal of the assessee by finding that the above transactions are subject to TDS. Being further aggrieved, the Assessee carried the matter to the Tribunal on the second appeal.
Accountant Member P.M. Jagtap heard the contention of Assessee and noted that Sri Rama Road lines was not a regular transporter and the said transporter was engaged by the assessee for transportation of goods only once in the year under consideration.
Finally, the Tribunal found merits in the contention of assessee noted that “the transportation of goods by Sri Rama Roadlines thus was only one off transaction and in the absence of any written or verbal contract with the said party, the assessee was not under an obligation to deduct tax at source from the one-off payment made to Sri Rama Roadlines under section 194C of the Act. The disallowance made by the Assessing Officer under section 40(a)(ia), in my opinion, therefore, was not sustainable and the ld. CIT(Appeals) was not justified to confirm the same.” Accordingly, the bench reversed the findings of the CIT(A).
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