2016 (9) TMI 1250 - AT - Income Tax

TDS u/s 194C - non TDS on course of plying, hiring and leasing of goods carriages - demand raised u/s 201/201(lA) deleted by CIT(A) - Held that - TDS is not to be deducted from the payment made to transporters who furnished PAN. The Assessing Officer has wrongly interpreted that this provision is applicable to tax deducted by assessee who are engaged in transport business. This in my considered opinion is an erroneous interpretation not sustainable in law. In my considered opinion learned CIT(Appeals) has correctly appreciated the law and the facts of the case and the same does not need any interference.

Summary

Issues involved:
1. Deletion of demand under section 201/201(lA) of the Act for assessment years 2013-14 and 2014-15.
2. Interpretation of section 194C(6) regarding deduction of tax from payments made to transport contractors.
3. Applicability of section 194C(6) to both principal and contractor.
4. Ignoring the legislative intent behind the introduction of section 194C(6) in 2009.
5. Exemption provided to transporters owning up to 10 goods carriages post-amendment in 2015.
6. Relevance of circular no.5/2010 in the case of payments made to big transporters.
7. Admission of fresh grounds regarding double taxation without prior opportunity to the Assessing Officer.
8. Onus of demonstrating non-recovery of taxes from the person with primary liability to pay tax under section 201(1).

Analysis:

1. The case involved appeals by the Revenue against the CIT(Appeals) order regarding the deletion of demands under section 201/201(lA) of the Act for the assessment years 2013-14 and 2014-15. The primary issue was whether the CIT(A) was justified in deleting the demands totaling a significant amount.

2. The interpretation of section 194C(6) was a crucial aspect of the case. The Assessing Officer contended that the deductor should be in the business of plying, hiring, or leasing goods carriage for the provision of section 194C(6) to be applicable. However, the CIT(A) analyzed the legislative intent behind the introduction of this section in 2009 and concluded that the provision exempted payments to transport operators from TDS if they furnished their PAN.

3. Another issue was whether section 194C(6) applied only to contractors or to both principal and contractor. The CIT(A) held that the provision applied to both parties, i.e., the principal as well as the contractor, who are engaged in the business of transport.

4. The CIT(A) also considered the relevance of the legislative intent behind the introduction of section 194C(6) and the subsequent amendment in 2015 providing exemptions to transporters owning up to 10 goods carriages. The CIT(A) emphasized the importance of complying with the provisions and legislative amendments.

5. The case also involved the applicability of circular no.5/2010 and the admission of fresh grounds regarding double taxation without prior opportunity to the Assessing Officer. The CIT(A) analyzed these aspects and provided a detailed reasoning for the decision.

6. Furthermore, the issue of the onus of demonstrating non-recovery of taxes from the person with the primary liability to pay tax under section 201(1) was also discussed. The CIT(A) considered relevant case laws and held that the onus was on the revenue to demonstrate non-recovery.

7. Ultimately, the ITAT upheld the order of the CIT(A) and dismissed the appeals by the Revenue. The judgment provided a detailed analysis of each issue raised and concluded in favor of the assessee based on the interpretation of the relevant legal provisions and legislative intent.