The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench held that no TDS applicable if the threshold limit of Rs.20,000 is not satisfied. The revenue has raised the issue of whether the CIT(A) is right in deleting the addition of Rs.3,94,38,302/- made by the AO under section 40(a)(ia) of the Income Tax Act, 1961 under the facts and circumstances of the case.
Facts of the case:-
The AO disallowed hire charges for non-deduction of tax under section 40(a)(ia) of the Income Tax Act, with an observation that the appellant has not brought on record any supporting evidence that he had hired lorries and trucks in the manner the public hire an auto or a taxi on the road.
The AO further observed that the appellant did not produce supporting proof, but each of the trucks was hired in a casual manner. The contention of the AR of the appellant was that the appellant doing the transport business for transportation of goods as and when a particular company or person requires goods to be transported from one place to another without any specific contract with regard to the time, rate, etc.
Interpretation of law:-
The AO did not find out any existence of any contracts with complete names of the parties and examine the relationship between the assessee and the parties. Unless the fact of the existence of the contract or subcontract is proved by the AO, and also default under section 194C, if any, is brought on record with positive material, no disallowance can be made under section 40(a)(ia) of the Income Tax Act. Hence, AO is directed to delete the addition.
Mr.Mujumdar vehemently contended during the course of hearing that CIT(A) has erred in law and on facts in deleting the impugned sec.40(a)(ia) disallowance of Rs.3,94,38,302/- made by the Assessing Officer on account of assessee’s failure in not deducting TDS on the specified payments. And that too, after admitting additional evidence in violation of Rule 46A of Income Tax Rules.
The coram of L.P.Sahu and S.S.Godara held that the CIT(A) has gone by assessee’s payment instance(s) already forming part of assessee’s records that the same do not satisfy the threshold limit of Rs.20,000/- each and above for deducting TDS in the relevant previous year. No rebuttal of this clinching fact has come from the Revenue’s side qua the impugned statutory limit.