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Freight paymnet to truck owner

csl kdr (11 Points)

10 December 2016

Sir, We are manufacturing Co., earlier we are paying freight in cash to transporter. after demonetization and short fall of cash in bank, we are facing problem . Transporter asking us to pay ch. in the name of Truck owner , he is also providing us copy of PAN and RC of TRuck owner. kindly advice us can we issue ch in truck owner's name? while we are deducting TDS in transporte's name.

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11 Replies

Shubham Gupta (Business Consultants) (2077 Points)
Replied 10 December 2016

Hello,

Yes you can pay to transpoter after deducting TDS in indivisual name.

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csl kdr (11 Points)
Replied 10 December 2016

shubham is , my question is paymnet to truck owner (who is not transporter) not to tranporter.

Transporter is actually commission agent , he is earning comm on booking trucks.

transporter saying us to pay fright diretly to truck owner .

Thanks

P K Sharma

Shubham Gupta (Business Consultants) (2077 Points)
Replied 10 December 2016

sir,

we should be paying to transporter and as we have deducted tds on payment made to him.

if transporter wants that we make payment directly to truck driver, then bill will be raised by truck driver and we will pay after deducting TDS us 194C.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 10 December 2016

it seems there is 4 parties.

u are saying that transporter is not the truck owner but a commission agent.

in this case we(manufacturer) can avail the credit on outward freight,if paid by manufacturer upto the place of removal

also compliance with TDS provision to be made . as per said by mr Shubham ji.

thnks

Sanjay S (Chartered Accountant) (1375 Points)
Replied 11 December 2016

Yes, You can release the payment via cheque in the name of Truck driver provided the TDS has been made u/s 194C in the name of the party who has issued the invoice.

TDS is to be made on the Freight Invoice-issuing party and not on the payee. It can be rightly said that the Payee has no role to play in the deductibility of Tax at source. Only the Identity of Invoice raising party is relevant.

Hence, the issue may be summarised as follows:

If Invoice issued by Transporter -> TDS to be made on Transporter (Payee can be anyone since the amount released to truck driver is ultimately going to reach the transporter)

If Invoice issued by Truck driver -> TDS to be made on Truck driver itself.

Hope this clarifies the issue.

Contrary views are also encouraged.

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Ria (107 Points)
Replied 13 December 2016

Sir/madam
I have filed a return of income of 1.2 lacs in previous year u/s 139 (1)and now I have to revise it because I have not taken a deduction of 2.1lacs, and therefore loss of return of 0 .90 lac.is it valid?

Sanjay S (Chartered Accountant) (1375 Points)
Replied 13 December 2016

Hey,

Your query touches upon two aspects of income tax Act?

1.Validity of Filing a Revised Loss Return where Original Return was filed on or before Due date u/s 139(1)

For deciding this we go straight to the Madras HC decision in CIT. v. Periyar District Co-Operative Milk Producers Union Ltd. (2004), where it was held that "There is no bar in filing Revised Return u/s 139(5) showing a loss for First time". This means, eventhough your original return was an income return, you may subsequently file a revised return u/s 139(3) showing a loss.

2. Whether the term "DEDUCTION" you have used implies Deductions under Chapter VIA?

If its a Chapter VIA deduction, then the deduction (Rs. 2.1 Lakhs in your case) shall have to restricted to the amount of Gross Total Income (Rs.1.2 Lakhs in your case). The excess of deduction available (Chapter VIA) over income cannot be carried over as a Loss and shall lapse instead.

However, if the term deduction is not a Chapter VIA deduction, then you may claim the loss by filing a revised loss return.

Hope this helps.

Ria (107 Points)
Replied 13 December 2016

a high court has inherent power to review .is it correct

Sanjay S (Chartered Accountant) (1375 Points)
Replied 13 December 2016

Ria23456ass,

I dont mean to offend you or anything... but please try to post your new queries as a separate thread under the Forum. It is helpful that way for everyone viewing the query and answers.

Ria (107 Points)
Replied 13 December 2016

okkk.....apologise. ..but its last doubt from my end..if u resolve it will b grateful of u sir

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 13 December 2016

Okay.

Anyways, eventhough the Power to review has not been expressly provided anywhere in the Act. The Governing sections of the Income Tax Act, 1961 would be section 260A.

This issue has been put to rest by the recent Supreme Court decision in CIT vs. Meghalaya Steels Ltd. (2015) 377 ITR 112. The SC had held that the High Courts being courts of record under Article 215 of the Constitution of India, the power to review would inhere in them. There is nothing in the Act to prevent a High Court from exercising the power of review, to prevent miscarriage of justice or to correct Grave and Palpable errors committed by it while delivering its judgements.

Hence it is right in saying that High Courts do have the power to review its own judgment (mainly to correct grave errors or to prevent miscarriage of justice)

Hope this helps.