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TMI Blog2012 (12) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... t such sub-contractor does not own more than two goods carriages during the entire previous year. The moment, such requirements are fulfilled, the liability of the assessee to deduct tax on the payments made or to be made to such sub-contractors would cease. In fact he would have no authority to make any such deduction. once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable under sub-section (2) of section 194C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, no TDS was required to be deducted. 2.2 We are concerned with the payment of Rs. 7,91,02,011/-. The Assessing Officer disallowed such expenditure under section 40(a)(ia) of the Income Tax Act, 1961 (hereinafter to be referred to as "the Act") on the ground that the assessee had not furnished form No. 15J before 30th June 2006 as required under Rule 29D of the Income Tax Rules, 1962 (hereinafter to be referred to as "the Rules"). 2.3 The assessee carried the matter in appeal. Before CIT (Appeals), he did produce the requisite form No. 15J. The Appellate Authority, however, did not accept the assessee's appeal, upon which, the assessee approached the Tribunal. The Tribunal, by the impugned judgment, reversed the view of the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in sub-section (3) of section 194C of the Act. Such provision, as it stood at the relevant time, read as under:- "Section 194C(3):- No deduction shall be made under sub-section (1) or sub-section (2) from - (i) the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor or sub-contractor, if such sum does not exceed twenty thousand rupees: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, sub-section (2) shall be liable to deduct income-tax under this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AE." 4. Section 40(a)(ia) of the Act, in turn, provides that certain amounts shall not be deducted in computing the income chargeable to tax under the head 'profits and gains of business or profession', namely, payments made towards interest, commission or brokerage etc., on which tax is deductible at source and such tax has not been deducted or, after deduction, the same has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act. Section 40(a)(ia) of the Act, insofar as it is relevant for our purpose, reads as under:- "Section 40(a)(ia):- Any interest, commission or brokerage, [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum in the prescribed form and verified it in the prescribed manner within the time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year. 7. The exclusion provided in sub-section (3) of section 194C from the liability to deduct tax at source under sub-section (2) would thus be complete the moment the requirements contained therein are satisfied. Such requirements, principally, are that the sub-contractor, recipient of the payment produces a necessary declaration in the prescribed format and fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act. 10. When on the basis of the record it is not disputed that the requirements of further proviso were fulfilled, the assessee was not required to make any deduction at source on the payments made to the sub-contractors. If that be our conclusion, application of section 40(a)(ia) would not arise since, as already noticed, section 40(a)(ia) would apply when there is a requirement of deduction of tax at source and such requirement is either not fulfilled or having deducted tax at source is not deposited within prescribed time. 11. With respect to the Tribunal's earlier judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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