TDS on freight charges of purchases
This query is : Open
04 May 2010
We purchases steel material from suppliers. Transportation arranges by suppliers and deliver goods to our factory. They charge freight at fixed rate per M.T as per order terms as follows :
Steel : 20 M.T x Rate 30000/- = 600000
Add : Excise 61800
Add : - CST 13236
Add: Freight charges 20000
(1000/- per M.T)
Total : 695036
My query is whether TDS should be deducted on such freight charges of Rs. 20000/-?
As per new amendment,TDS is not applicable on transporters if they provides PAN.
In this case what would be the treatment for TDS deduction as suppliers are not transporters but merely arrange transportation and charge freight in their Sale Invoice.
BE NOTED THAT THE FREIGHT AMOUNT IS CHARGED AT FIXED RATE AND IT IS NOT IN KIND OF ACTUAL REIMBURSHMENT.
Steel : 20 M.T x Rate 30000/- = 600000
Add : Excise 61800
Add : - CST 13236
Add: Freight charges 20000
(1000/- per M.T)
Total : 695036
My query is whether TDS should be deducted on such freight charges of Rs. 20000/-?
As per new amendment,TDS is not applicable on transporters if they provides PAN.
In this case what would be the treatment for TDS deduction as suppliers are not transporters but merely arrange transportation and charge freight in their Sale Invoice.
BE NOTED THAT THE FREIGHT AMOUNT IS CHARGED AT FIXED RATE AND IT IS NOT IN KIND OF ACTUAL REIMBURSHMENT.
04 May 2010
MY VIEW DEDUCT TDS U/S 194C.
PURCHASER WILL DEDUCT TDS FROM SUPPLIER @ 1 OR 2% AS APPLICABLE.(IF THE AMOUNT EXCEED THRESHOLD LIMIT)
PURCHASER WILL DEDUCT TDS FROM SUPPLIER @ 1 OR 2% AS APPLICABLE.(IF THE AMOUNT EXCEED THRESHOLD LIMIT)
04 May 2010
In my view, the freight being part of sale/purchase transaction, shall be out of purview of TDS net. This can not be construed as a contract for carrying any work.
Your view on applicability of new provision for non deduction of TDS is not attracted in this case is correct, as the supplier is not engaged in the business of leasing, hiring or plying of goods carriage.
More view solicited.
Your view on applicability of new provision for non deduction of TDS is not attracted in this case is correct, as the supplier is not engaged in the business of leasing, hiring or plying of goods carriage.
More view solicited.
04 May 2010
TDS is not required to be deducted from any amount in this arrangement. The TDS is the responsibility of the person who is making payment to the contractor / transporter. In this case the transport services are being paid by the seller, he is under obligation to deduct TDS, the seller in turn is taking the reimbursement from the buyer of payment he made to the transporter
04 May 2010
DEAR SIRS,
I WANT TO KNOW THAT PURCHASER IS CLAIMING EXPENDITURE UNDER THE HEAD FREIGHT. SO IF HE DOES NOT DEDUCT TDS ON THAT AMOUNT WONT THE EXPENDITURE BE DISALLOWED. I CAN UNDERSTAND THE POINT OF VIEW THAT IT IS A KIND OF REIMBURSEMENT. BUT IN A IT CASE THE ACIT DISALLOWED SUCH EXPENSES AS TDS WAS NOT DEDUCTED ON IT. CAN YOU PLEASE PROVIDE ANY CITATION IN SUPPORT OF YOUR VIEW. IT WILL BE HIGHLY APPRECIATED.
REGARDS
I WANT TO KNOW THAT PURCHASER IS CLAIMING EXPENDITURE UNDER THE HEAD FREIGHT. SO IF HE DOES NOT DEDUCT TDS ON THAT AMOUNT WONT THE EXPENDITURE BE DISALLOWED. I CAN UNDERSTAND THE POINT OF VIEW THAT IT IS A KIND OF REIMBURSEMENT. BUT IN A IT CASE THE ACIT DISALLOWED SUCH EXPENSES AS TDS WAS NOT DEDUCTED ON IT. CAN YOU PLEASE PROVIDE ANY CITATION IN SUPPORT OF YOUR VIEW. IT WILL BE HIGHLY APPRECIATED.
REGARDS
04 May 2010
No TDS to be deducted
04 May 2010
The following High Court's ruling is relevant for the issue at hand.
HIGH COURT OF PUNJAB AND HARYANA
Appeal No. - 724 of 2008
Order / Judgment No. - -
Dated - December 22, 2008
ADARSH KUMAR GOEL and L.N. MITTAL JJ.
Mr. Yogesh Putney, Sr. Standing Counsel for the appellant.
JUDGMENT
1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, "the Act") against the order dated 16.1.2008 passed by Income Tax Appellate Tribunal, Chandigarh Bench 'A', in I.T.A. No.704/Chandi/2007 for the assessment year 2005-06, proposing to raise following substantial questions of law:-
"1. Whether in the facts and in the circumstances of the case, the Hon'ble ITAT was right in upholding that provisions of section 194A, 194I and 194C were not applicable as no payment has been made separately on account of interest, rent etc. The transaction was a transaction of purchase & sale and not payment of expenses."
2. The assessee is a Government undertaking. The Assessing Officer created a demand, on the allegation that the assessee failed to make deductions at source in respect of payments made towards transportation and other charges. The demand was upheld by the CIT(A) but the Tribunal set aside the same on the ground that the payments made were not on behalf of the assessee but were part of cost of procurement of wheat and thus, provision for deduction at source was not applicable.
3. We have heard learned counsel for the revenue. It is not disputed that in an identical matter, this Court has taken the same view and upheld the view of the Tribunal in order dated 21.8.2008 in I.T.A. No.407 of 2008 Commissioner of Income Tax (TDS), Chandigarh v. The Assistant Manager (Accounts).
4. In view of above, we are unable to hold that any substantial question of law arises for consideration.
5. The appeal is dismissed.
HIGH COURT OF PUNJAB AND HARYANA
Appeal No. - 724 of 2008
Order / Judgment No. - -
Dated - December 22, 2008
ADARSH KUMAR GOEL and L.N. MITTAL JJ.
Mr. Yogesh Putney, Sr. Standing Counsel for the appellant.
JUDGMENT
1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, "the Act") against the order dated 16.1.2008 passed by Income Tax Appellate Tribunal, Chandigarh Bench 'A', in I.T.A. No.704/Chandi/2007 for the assessment year 2005-06, proposing to raise following substantial questions of law:-
"1. Whether in the facts and in the circumstances of the case, the Hon'ble ITAT was right in upholding that provisions of section 194A, 194I and 194C were not applicable as no payment has been made separately on account of interest, rent etc. The transaction was a transaction of purchase & sale and not payment of expenses."
2. The assessee is a Government undertaking. The Assessing Officer created a demand, on the allegation that the assessee failed to make deductions at source in respect of payments made towards transportation and other charges. The demand was upheld by the CIT(A) but the Tribunal set aside the same on the ground that the payments made were not on behalf of the assessee but were part of cost of procurement of wheat and thus, provision for deduction at source was not applicable.
3. We have heard learned counsel for the revenue. It is not disputed that in an identical matter, this Court has taken the same view and upheld the view of the Tribunal in order dated 21.8.2008 in I.T.A. No.407 of 2008 Commissioner of Income Tax (TDS), Chandigarh v. The Assistant Manager (Accounts).
4. In view of above, we are unable to hold that any substantial question of law arises for consideration.
5. The appeal is dismissed.
Message likes :
2 times
04 May 2010
THANKS
04 May 2010
FREIGHT CLAIMED BY SUPPPLIERS IN THIER INVOICE ARE AT FIXED RATES AND NOT AS ACTUAL REIMBURSMENT.
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