2015 (10) TMI 1489 - AT - Income Tax

Disallowance u/s 40(a)(ia) with regard to Section 194C - non furnish the declaration to the income-tax authorities, within due date - Held that - Merely because the assessee did not furnish the declaration to the income-tax authorities, within due date, which was after the date on which the assessee could have otherwise deducted tax at source, it cannot be held that the assessee made any default by not deducting the tax at source. Therefore, as the assessee was not required to deduct the tax at source as per the provisions of second proviso to sub-section (3) to section 194C, the said amount cannot be disallowed by invoking the provisions of section 40(a)(ia) of the Act. If the assessee has defaulted in furnishing the copy of the prescribed form no.15-I received by it within the prescribed time, then the consequence for that default may follow, but certainly disallowance under section 40(a)(ia) of the Act cannot be made. DR could not produce before us the copy of form no.15-I furnished by the assessee to the income-tax authorities, and nor has been able to point any material to show that the assessee was liable to deduct TDS on payment made to sub-contractors from whom it received declaration in the prescribed form. Our above view finds supports from the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Valibhai Khanbhai Mankad, (2012 (12) TMI 413 - GUJARAT HIGH COURT ) wherein it was held that once conditions in second proviso to section 194C(3) are satisfied, liability to deduct tax at source ceases and requirement of furnishing Form No.15J is not related to liability to deduct tax at source. We, therefore, delete the addition - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Disallowance under section 40(a)(ia) with regard to Section 194C.
3. Disallowance under section 40(a)(ia) with regard to Section 194A.
4. Disallowance partly out of office expenses.
5. Confirmation of interest charged under section 234B of the IT Act.

Issue 1: Condonation of Delay in Filing the Appeal:
The appeal was filed by the assessee against the order of the Commissioner of Income-Tax (Appeals)-VI, Surat, which was one day beyond the prescribed limitation. The assessee filed a condonation petition, stating valid reasons for the delay. The Tribunal, after hearing both parties and finding the reasons satisfactory, condoned the delay and admitted the appeal for hearing.

Issue 2: Disallowance under Section 40(a)(ia) with regard to Section 194C:
The primary contention revolved around disallowance of Rs. 28,70,136 under section 40(a)(ia) for non-deduction of TDS under Section 194C. The assessee argued that as per the second proviso to sub-section (3) of section 194C, no TDS was required if Form No. 15-I was obtained from the deductee. The Tribunal noted that the assessee had indeed filed the declaration in prescribed form before the income-tax authorities, absolving the liability to deduct TDS. The Tribunal emphasized that receipt of the declaration was sufficient, and failure to furnish it within the due date did not warrant disallowance under section 40(a)(ia). Citing a Gujarat High Court decision, the Tribunal deleted the disallowance and allowed this ground of appeal.

Issue 3: Disallowance under Section 40(a)(ia) with regard to Section 194A:
The appeal included a contention regarding disallowance of Rs. 79,680 under section 40(a)(ia) for non-deduction of TDS under Section 194A. However, during the hearing, the assessee's representative did not press this ground of appeal, leading to its dismissal.

Issue 4: Disallowance Partly Out of Office Expenses:
Another issue concerned the disallowance of Rs. 6,400 out of office expenses by the Commissioner of Income-Tax (Appeals) - IV. The Tribunal noted that no arguments were presented during the hearing on this matter, resulting in the dismissal of this ground of appeal.

Issue 5: Confirmation of Interest Charged under Section 234B of the IT Act:
The appeal also raised concerns about the confirmation of interest charged under section 234B of the IT Act. However, as no arguments were made during the hearing on this issue, it was dismissed for want of prosecution.

In conclusion, the Tribunal partly allowed the appeal of the assessee, addressing various grounds and issues raised during the proceedings.

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