Tds on payment to transporters u/s 194c

This query is : Resolved

CA LOCHAN AGARWAL (Querist)
Follow

30 November 2012 An assessee is having a partnership firm with 6 partners. During the P.Y 2009-10 the firm got a transportation work contract from a reputated Company for transport of coal and sand to the company site. The firm entered into a verbal hiring contract with local vendors for hiring of trucks and used them for carrying out the contract. The company paid the contract amount after deducting the TDS to the firm. The firm paid to the owner of the truck the hire charges as per the rate decided in cash. However no TDS was deducted on the payment made to the truck owners. Further the firm didn’t informed the local ITO about the PAN numbers and name of payee.
Querry
Since no TDS had been deducted by the firm while making payment to local vendors the whole of the hire charges amounting to Rs. 36 lacs (turnover Rs. 41 lacs) has been added back by the AO. Whether AO is correct in adding back the hire charges paid without deducting tax at source? Does the transporting firm is eligible for any relief from deduction of TDS?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

02 December 2012 The firm has to comply the conditions of producing PAN No of the persons to whom hire charges exceeding 50000/- in total during the year or exceeding Rs. 20000/- in case of a single payment has been made.
.
If the firm is unable to produce PAN No of the payee in the required cases, the action taken by the ITO is justified.
.
It is highly illogical to even thinking of about getting a certificate of filing returns (to take remedial action in the light of proviso of Section 201(1)) in case of those truck owners, who could not provided even PAN No.

Message likes : 1 times

CA LOCHAN AGARWAL

CA LOCHAN AGARWAL (Querist)
Follow

03 December 2012 Can the PAN number of the transporters be provided to the ITO in the course of scrutiny assessment? Will it be a sufficient compliance of the TDS provision? In the above mentioned case the ITO didn't demanded the PAN of the transporters and added back the Payment straight forward? Is the ITO justified in his Act? Advice

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

03 December 2012 Before making any addition the ITO must exercise and act according to the principles of natural justice. Accordingly, he must have provided an opportunity to the assessee.
.
The details can be provided at the time of assessment proceedings also, and the AO has to consider the same.
.
In future, care must be exercised while furnishing the Qtly TDS Return in which details of non deductions are also required to be provided.
.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now