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2018 (6) TMI 1509 - AT - Income TaxTDS u/s 194C - Non-deduction of TDS on freight and transportation expenses - Furnishing of PAN by the transporters (GTA) - Held that - Undisputedly assessee provided the PAN Number of the transporters to the A.O. before the completion of assessment proceedings and has therefore complied to the provision u/s. 194C(6) of the Act. Once the assessee make sufficient compliance to the provision of section 194C(6), requirement to deduct tax at source seizes on the part of assessee. Section 194C(7) of the Act merely cast a duty on the assessee to furnish particulars of persons referred in section 194C(6) of the Act to the prescribed authority. Respectfully following the decision of the Kolkata Tribunal in the case of Soma Rani Ghosh (2016 (10) TMI 55 - ITAT KOLKATA) and given fact and circumstances of the case are of the view that section 194C(6) and 194C(7) are independent of each other and cannot be read together to attract disallowance u/s. 40(a)(ia) of the Act r.w.s. 194C of the Act. In the given case as the compliance to the provision u/s. 194C(6) of the Act has been duly performed, no disallowance was called for u/s. 40(a)(ia) of the Act. - decided in favour of assessee
Issues Involved:
1. Deletion of disallowance of freight and transport expenses under Section 40(a)(ia) of the Income Tax Act, 1961, for non-deduction of TDS under Section 194C. Detailed Analysis: Issue 1: Deletion of Disallowance of Freight and Transport Expenses under Section 40(a)(ia) for AY 2013-14 The revenue appealed against the CIT(A)'s decision to delete the disallowance of ?34,43,324 made by the Assessing Officer (AO) due to non-deduction of TDS under Section 194C. The AO had disallowed these expenses on the grounds that the assessee did not comply with the provisions of Sections 194C(6) and 194C(7) of the Income Tax Act, 1961. The assessee, a private limited company engaged in the manufacturing and trading of steel, sheets, and plates, claimed freight and transportation expenses amounting to ?36,33,014. The payments were made to three parties: Appu Logistics, Bhawani Freight Movers, and Shree Enterprises. The assessee argued that it had obtained PAN details from these transporters and furnished the same in the TDS return, thus negating the requirement to deduct TDS under Section 194C(6). The CIT(A) deleted the disallowance, referencing the decision of the ITAT Ahmedabad in the case of Le Modulor Pvt. Ltd. It was observed that the assessee had indeed obtained PAN numbers from the transporters and filed the TDS return in Form No. 26Q before the completion of assessment proceedings. The CIT(A) held that compliance with Section 194C(6) was sufficient and that Sections 194C(6) and 194C(7) are independent of each other, thus not attracting disallowance under Section 40(a)(ia). The ITAT upheld the CIT(A)'s decision, reiterating that the provision of PAN by the transporters to the assessee before the completion of assessment proceedings fulfilled the requirements of Section 194C(6). It was concluded that compliance with Section 194C(6) alone suffices to avoid disallowance under Section 40(a)(ia), irrespective of compliance with Section 194C(7). Issue 2: Deletion of Disallowance of Freight and Transport Expenses under Section 40(a)(ia) for AY 2014-15 The revenue also appealed against the CIT(A)'s decision to delete the disallowance of ?50,39,445 for AY 2014-15 on similar grounds as the previous year. The ITAT noted that the issue was identical to the one raised for AY 2013-14. Following the same rationale and legal precedent as discussed in the earlier appeal, the ITAT dismissed the revenue's appeal for AY 2014-15. The tribunal reiterated that the compliance with Section 194C(6) by providing PAN details of the transporters was sufficient to avoid disallowance under Section 40(a)(ia). Conclusion: Both appeals by the revenue were dismissed. The ITAT confirmed that the assessee's compliance with Section 194C(6) by obtaining and furnishing PAN details of the transporters was adequate to negate the requirement of TDS deduction, thus not attracting disallowance under Section 40(a)(ia). The tribunal emphasized that Sections 194C(6) and 194C(7) are independent and should not be read together to impose disallowance.
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