Freight Inward Charges Are Part And Parcel Of Purchase Of Goods, TDS Not Deductible: ITAT
Mariya Paliwala
30 Sept 2023 1:00 PM IST
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has observed that freight inward charges were part and parcel of the purchase of the goods. It is settled law that the provisions of the TDS cannot be attracted to the transaction of the purchase and sale of the goods.The bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) has observed that the assessee...
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has observed that freight inward charges were part and parcel of the purchase of the goods. It is settled law that the provisions of the TDS cannot be attracted to the transaction of the purchase and sale of the goods.
The bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) has observed that the assessee was not under the obligation to deduct TDS of inward freight expenses incurred for Rs. 16,15,291 under the provisions of Section 194C.
The appellant/assessee is an individual and is in the trading business of the Gypsum Board. The Assessing Officer has made the disallowance representing the inward freight expenses on account of the non-deduction of TDS under Section 194C read with Section 40(a)(ia) and added to the total income of the assessee.
The assessee preferred an appeal before the CIT (A), who has also confirmed the order of the Assessing Officer by observing that the assessee has disclosed the expenses for the purchases and inward freight expenses separately in the financial statements. The CIT (A) rejected the contention of the assessee that the inward freight expense was part and parcel of the purchase of the materials.
The assessee contended that there was no separate and independent contract subsisting between the assessee and the contractor for the freight charges incurred by the assessee. Since in the purchase bills, the transportation charges were shown separately, the assessee recorded transportation charges separately in the books of accounts. But that does not mean that there was a separate contract between the assessee and the transporters.
The tribunal set aside the order of CIT (A) and directed the assessing officer to delete the addition made by him. Thus, the grounds of appeal of the assessee are allowed.
Counsel For Appellant: Palak Pavagadhi
Counsel For Respondent: Ashok Kumar Suthar
Case Title: Kalpesh Ganpatlal Patel Versus ITO
Case No.: ITA No. 1426/Ahd/2017
