2019 (5) TMI 98 - AT - Income Tax

Addition invoking provisions of Sec.40(a)(ia) - TDS u/s 194C - payments to transporters - non furnishing of details obtained in 194C(6) of transporters in e-TDS return as per 194C(7) - HELD THAT - Two reasons assigned by the AO for not accepting the plea of the Assessee to invoke the provisions of Sec.40(a)(ia) of the Act in this case was held to be unsustainable. First reason given by the AO was that the provisions of Sec.194C(6) are applicable only to transport contractors and not to any other payee and that reason has been held to be not correct in the aforesaid decision in which it was held Sec. 194C(6) made it plainly clear that from the A.Y. 2010-11 onwards, by virtue thereof when Transport Operators furnish their PAN to the person responsible for making payments to them, the Transport Operators would be outside the purview of TDS u/s 194C and that immunity from TDS u/s. 194C(1) in relation to payments to transporters, applies transporter and non-transporter contractees alike. Second reason that the Assessee failed to comply with the provisions of Sec.194C(7) of the Act and that reason has also been held to be not correct in the aforesaid decision and the view taken is that if the assessee complies with the provisions of section 194C(6), disallowance under section 40(a)(ia) does not arise just because there is violation of provisions of section 194C(7) of the Act. CIT(A) was justified in deleting the addition made by the AO. We find no grounds to interfere with the order of CIT(A) and consequently dismiss this appeal by the Revenue.

Summary

Issues Involved:
1. Justification of CIT(A) in partly deleting the addition made by the AO under section 40(a)(ia) of the Income Tax Act, 1961.
2. Examination of whether the details of payees were furnished as per section 194C(7).
3. Consideration of additional evidence in contravention of Rule 46A of the Income Tax Rules.

Issue-Wise Detailed Analysis:

1. Justification of CIT(A) in Partly Deleting the Addition Made by the AO under Section 40(a)(ia):

The primary issue was whether the CIT(A) was justified in partly deleting the addition made by the AO under section 40(a)(ia) of the Income Tax Act, 1961. The Assessee had paid ?6,62,65,573 to various transporters without deducting tax at source, which the AO disallowed under section 40(a)(ia) for non-compliance with section 194C. The CIT(A) deleted the addition except for ?99,04,607, based on the submission of declarations from transporters and the CBDT Circular No. 19/2015, which clarified that TDS is not required if the transporter furnishes their PAN. The Tribunal upheld this view, referencing the ITAT Bangalore Bench decision in M/s. Fine Blanking Pvt. Ltd. and the Kolkata ITAT decision in Soma Rani Ghosh v. DCIT, which stated that furnishing PAN was sufficient for immunity from TDS under section 194C(6).

2. Examination of Whether the Details of Payees Were Furnished as per Section 194C(7):

The Revenue contended that the CIT(A) erred in allowing the claim without verifying if the details of payees were furnished to the prescribed authority as per section 194C(7). The Assessee admitted to not furnishing these details but argued that no disallowance should be made under section 40(a)(ia) due to compliance with section 194C(6). The Tribunal, referencing earlier decisions, concluded that compliance with section 194C(6) suffices for immunity from TDS, and non-compliance with section 194C(7) alone does not justify disallowance under section 40(a)(ia).

3. Consideration of Additional Evidence in Contravention of Rule 46A:

The Revenue argued that the CIT(A) considered additional evidence regarding 'Freight charges details uploaded' in contravention of Rule 46A of the Income Tax Rules. The Tribunal did not find merit in this argument, as the CIT(A) had based the decision on the CBDT Circular and existing legal precedents, which did not necessitate additional evidence for the assessment year in question.

Conclusion:

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to partly delete the addition made by the AO. The Tribunal emphasized that under section 194C(6), furnishing PAN by transporters suffices for TDS exemption, and non-compliance with section 194C(7) does not automatically trigger disallowance under section 40(a)(ia). The Tribunal found no grounds to interfere with the CIT(A)'s order, thereby upholding the deletion of the addition except for ?99,04,607, where TDS details were not uploaded. The appeal by the Revenue was dismissed, and the judgment was pronounced on April 26, 2019.