ITAT CHENNAI

TDS u/s 194C or 194I

Lorry hire charges paid for vehicles for non-deduction of tax at source

Addition invoking provisions of section 40(a) (ia) –

 Admittedly, in the first round of litigation, the ld.CIT(A) has recorded categorical finding that provisions of section 194C of the Act has no application to the impugned payment towards lorry hire charges and said finding was based on the fact that the assessee has simply hired lorry from the agents and the same cannot be considered as formal contract between the assessee and the lorry owners to invoke the provisions of section 194C

when further appeal was filed by the Revenue before the Tribunal, the said finding was not challenged, which is evident from the fact that the Tribunal has set aside the appeal to the file of the AO on the issue of applicability of provisions of section 40(a)(ia) of the Act on amounts paid and payable at the end of financial year.

Tribunal while remanding the issue had further directed the AO to examine the applicability of provisions of section 194I of the Act. Therefore, when the issue of applicability of provisions of section 194C of the Act, has become final at the first appellate level and the said finding was not challenged before the Tribunal, then reconsidering the issue in the light of provisions of section 194C of the Act by the AO is beyond the scope of his powers, which is not permissible under law. Therefore on this count, the finding of the ld.AO cannot be accepted.

Applicability of section 194I – CIT(A) has recorded categorical finding that the impugned payments does not come under the provisions of section 194I of the Act, because the assessee has simply hired lorries from the owners and the cost of running the vehicles including salary and diesel expenses were borne by the owners of the vehicles – Revenue has failed to bring on record any evidences to prove that the impugned payments come under the provisions of section 194I of the Act.

Therefore, we are of the considered view that there is no error in the finding recorded by the CIT(A) to delete additions towards disallowance of hire charges u/s.40(a)(ia) of the Act, for failure to deduct tax at source. Hence, were are inclined to upheld the findings of the CIT(A) and dismiss appeal filed by the Revenue.