TDS on freight paid on seller's behalf

Hi Mr Sharvari,

I disagree with you. I didn't quite get what you meant by "the onuspasses on to the assessee". Section 194C opens with the words "anyperson RESPONSIBLE for paying any sum". Who in this case—payment tothe transporter made by the buyer on the seller's behalf and debitedto the latter's account—was the one responsible for paying freightto the transporter? The supplier of goods, it seems. Normally it'sthe customer who shells out the freight as the custom of "To-pay" GRis in vogue at most places. But in this case, the goods seem to havebeen supplied on an FOR basis; but the supplier didn't pay up thetransporter when the truck left the destination. Transporters areoften paid only part of the freight when they set sail. The customerupon proper delivery of the goods settles the freight bill anddebits the seller's account, as mutually agreed upon.In such a case, since the customer merely acts as the agent of theseller, it's the seller who'd be responsible for making the TDS.What the customer should do is withhold the tax payment out of thefreight payable and transfer the entry to the supplier. The supplierwould deposit the TDS and comply with the law.As long as it isn't a "To-pay" GR, I don't think the customer can becalled upon to deduct TDS. Section 40a, which disallows the expensefor non-deduction of TDS, targets the assessee who books the expenseand not the one who pays it on someone else's behalf and debits totheir account. Since there's no question of disallowance of thefreight amount in the customer's hands and it's the seller whose taxauditor would report this non-deduction of TDS on the amount offreight claimed as expense, it's logical to conclude that thecustomer can not be made liable for the consequences that ensue uponnon-deduction of TDS.And Mr Jain, disallowance would be applicable only for expenses onwhich TDS was DEDUCTIBLE. If an erroneously-deducted TDS isdeposited late, I don't think there can be any disallowance, basedon the language deployed in section 40a(ia). But once deducted,you're holding the tax amount in a fiduciary capacity as the trusteeof the government. So in case you don't turn it over to thegovernment within time or don't file the TDS return, issue TDScertificate, etc you'd be liable to the penal consequences.Thanks,CA Sanjeev Bedi--- In

ICAI_CIRC_MEERUT_CA@yahoogroups.com, sharvari.murkute@...wrote:>> Dear Mr Jain>> Yes TDS needs to be deducted because the onus passes on to theassessee.> When the supplier reimburses the amount, it is assumed that allthe> applicable laws has been adhered to.>> I think the 40(a) disallowance should not apply as first of allthe> aforesaid courier expense has not been claimed as an expense inthe first> place for it to be disallowed.>> Dear All>> I have joined this group very recently and i must say that thediscussion> is quite lively>>>>>>>> "R D JAIN" > Sent by: ICAI_CIRC_MEERUT_CA@yahoogroups.com> Oct 03 2008 05:05 PM> Please respond to> ICAI_CIRC_MEERUT_CA@yahoogroups.com>>> To> ICAI_CIRC_MEERUT_CA@yahoogroups.com> cc>> Subject> {amresh's-CA's} TDS on expenses>>>>>> Dear All,>> If an assessee pays tansport Charges on behalf of supplier anddebit> it to suppliers a/c. in books, whether TDS need to be duductedU/s.> 194C on such paymnets.> Also if TDS is not applicable and the same has been duducted butpaid> paid late to the Govt.(in june 08), whether 40a disallowance is> attracted.>> Thanks> R D Jain>