10 July 2013
Sec. 194C: No TDS on Freight for Individual Truck Owners
The Assessing Officer made addition under section 40(a)( ia) of the Income Tax Act by disallowing the freight charges paid to truck drivers . The Commissioner (Appeals) confirmed addition. However, on second appeal, the Tribunal deleted the addition on the ground that payment of freight was based on individual GRs, which represented individual and separate contracts and there was no single contract for carriage or transportation of goods referred to between the assessee and the impugned parties which would make the assessee liable for deduction of tax at source under section 194C.
The issue before Punjab & Haryana High Court in Bhagwati Steels vs Commissioner of Income-tax, Chandigarh 326 ITR 108 was
Whether finding of fact recorded by Tribunal could not be gone into by Court merely because after reappreciation of evidence another view would be possible ? Hon’ble Punjab & Haryana High Court held vide its order 1/21/2010 as under :
The finding of facts recorded by the Tribunal, being the last court of fact, could not be gone into by the Court merely because after reappreciation of evidence another view would be possible. Therefore, the order of the Tribunal was to be confirmed. filed under: section 194c tagged with: contracts, finding of fact, freight, frieght, haryana high court, income tax act, lorry, on, tds, transportation of goods, tribunal, truck drivers
TDS on ocean freight and the charges
Please refer to Departmental Circular: No. 723, dated 19-9-1995.
Tax deduction at source from payment made to foreign shipping companies will be as follows :
1. Representations have been received regarding the scope of sections 172, 194C and 195 of the Income-tax Act, 1961, in connection with tax deduction at source from payments made to the foreign shipping companies or their agents.
2. Section 172 deals with shipping business of non-residents. Section 172(1) provides the mode of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India. An analysis of the provisions of section 172 would show that these provisions have to be applied to every journey a ship, belonging to or chartered by a non-resident, undertakes from any port in India. Section 172 is a self-contained code for the levy and recovery of the tax, ship-wise, and journeywise, and requires the filing of the return within a maximum time of thirty days from the date of departure of the ship.
3. The provisions of section 172 are to apply, notwithstanding anything contained in other provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172.
4. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any resident (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any resident. On the other hand, section 172 operates in the area of computation of profits from shipping business of non-residents. Thus, there is no overlapping in the areas of operation of these sections.
5. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply. Source(s): Circular: No. 723, dated 19-9-1995.
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