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TMI Blog2013 (7) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... non deduction of tax at source? (B) Whether section 40(a)(ia) of the Income-tax Act can be invoked only to disallow expenditure of the nature referred to therein, which is shown as 'payable' as on the date of the balance sheet or it can be invoked also to disallow such expenditure which became payable at any time during the relevant previous year and was actually paid within the previous year?" 2. The Tribunal in the impugned judgment relied on the decision in case of Prashant H. Shah to come to the conclusion that the provisions of section 194C of the Income-tax Act, 1961 were made applicable in respect of individuals with effect from 1.6.2007. Present case concerns the assessment year 2005-2006. Such provision therefore, will not be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual or HUF have also been inducted vide sub-clause(k) in section 194C(1) of the IT Act. At this juncture, it is worth to hold that as far as the AY in hand in concerned, i.e., AY 2007-08, this latest amendment of section 194C(1)(k) of the Act being introduced with effect from 01/06/2007 has no applicability. We therefore, hold that if the Revenue Department had made an endeavour to invoke the provisions of section 40(a)(ia) for the infringement of the provisions of section 194C of the Act by holding that the assessee being an individual got covered by sub-section (1), then according to us, it was an incorrect application of law. We therefore hold that for the Asstt. Year under consideration 2007-08 the provisions of sub-clause(k) of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or responsible for paying any sum to any resident sub-contractor in pursuance of a contract with the sub-contractor for carrying out or for supply of labour for carrying out the whole or any part of the work undertaken by the contractor or for supplying any labour, which the contractor had undertaken to supply has to, at the time of credited such sum to the account of sub-contractor, or at the time of payment in cash or in any other manner, deduct TDS at the specified rate. (9) For application of sub-section (2) of section 194C, the requirement is that there is a contractor who has undertaken to carry out any work or supply of labour, a part of such work or supply of labour is executed through a sub-contractor and in pursuance of execution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nship of a contractor and sub-contractor between the assessee and the transporters was missing. The Tribunal, in our view, was perfectly justified in holding that liability to deduct tax at source in the present case do not arise. (12) Relevant portion of Explanation-III of section 194C only provides that for the purpose of this section, the expression "work" shall also include carriage of goods and passengers by any mode of transport other than by railways. This Explanation applies both to sub-section (1) as well as sub-section (2) of section 194C. Additionally, the Explanation at any rate cannot be pressed in service to bring the case of an assessee within the scope of sub-section (2) of section 194C, if the same is otherwise not includa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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