2012 (4) TMI 709 - AT - Income Tax

Summary

Issues Involved: The appeal by revenue against the order of CIT(A) in deleting the disallowance u/s. 40(a)(ia) of the Income-tax Act for non-deduction of tax u/s. 194C(1) for Assessment Year 2006-07.

Issue 1: Time Barred Appeal

The appeal by revenue was time-barred by 3 days, and a condonation petition was filed. The delay was condoned upon perusal of the petition, and the appeal was admitted for hearing with no objection from the assessee.

Issue 2: Disallowance of Expenses

The main issue was the disallowance made by the Assessing Officer for non-deduction of tax u/s. 194C(1) on labour and advertisement charges. The CIT(A) deleted the disallowance, stating that as the assessee was an individual, not falling under the purview of section 194C(1) for the relevant assessment year, the disallowance was not justified.

Issue 3: Interpretation of Section 194C(1)

The Tribunal found that the provisions of Section 194C(1) did not apply to payments made by individuals or Hindu Undivided Families, as they were specifically excluded. The amendment to include such individuals was effective from 01.06.2007, and not applicable to the assessment year in question. The Tribunal held that since the assessee was not liable to deduct TDS under Section 194C(1), the disallowance under Section 40(a)(ia) was unwarranted.

Conclusion:

The Tribunal dismissed the revenue's appeal, confirming the CIT(A)'s decision to delete the disallowance. The Tribunal held that the amended provisions of Section 194C(1) did not apply to the assessment year in question, and therefore, the disallowance for non-deduction of TDS was not justified.