2017 (2) TMI 579 - HC - Income Tax

TDS u/s 194C - whether the assessee is not required to deduct the tax if the sub-contractors produces the necessary declaration in the prescribed Form and the sub-contractor does not own more than two goods carriages during the previous year? - - Held that - Admittedly, the sub-contractors in the present case did not own more than two goods carriages during the previous year. Thus, the assessee was not required to deduct the tax at source. Merely because the Form No.15J was not filed before the concerned Authority, that too due to human mistake, the disallowance could not be denied to the assessee. The present case is clearly covered by the decision of the High Court of Gujarat in the case of Gurvinder Transport (2013 (7) TMI 141 - GUJARAT HIGH COURT )

Summary

Issues:
1. Disallowance under Section 40(a)(ia) of the Income Tax Act for failure to submit Form No.15J.
2. Interpretation of Section 194C(3) and the relevance of Form No.15J submission.

Issue 1: Disallowance under Section 40(a)(ia) for failure to submit Form No.15J:
The case involved an appeal by the Revenue against the order of the Income Tax Appellate Tribunal upholding the disallowance claimed by the assessee under Section 40(a)(ia) of the Income Tax Act. The Revenue contended that the failure to furnish Form No.15J before the appropriate Authority rendered the disallowance justified. The Tribunal had permitted the disallowance, leading to the appeal before the High Court.

Issue 2: Interpretation of Section 194C(3) and the relevance of Form No.15J submission:
The crux of the matter revolved around the submission of Form No.15J as required under Section 194C(3) of the Act. The assessee had inadvertently submitted the form to the wrong authority due to a human error, despite receiving Form No.15-I from the sub-contractors. The Assessing Officer acknowledged this error in the initial assessment order. The assessee argued that the inadvertent mistake did not invalidate the submission, citing Section 292B of the Act. Additionally, it was highlighted that the sub-contractors did not own more than two goods carriages during the previous year, exempting the assessee from deducting tax at source. The High Court referenced a similar case from the High Court of Gujarat to support the contention that the disallowance was not justified due to the technical error in form submission.

In conclusion, the High Court dismissed the appeal by the Revenue, emphasizing that the human error in submitting Form No.15J to the wrong authority did not warrant the disallowance under Section 40(a)(ia). The Court found merit in the assessee's arguments regarding the inadvertent mistake and the exemption from tax deduction based on the sub-contractors' circumstances. The judgment underscored the application of Section 292B and relevant precedents to support the decision, ultimately ruling in favor of the assessee.