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TMI Blog2016 (11) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The assessee filed the requisite information. On perusal of the information filed by the assessee, the AO observed that the assessee has debited finance charges of Rs. 34,91,410 and transportation charges of Rs. 5,05,61,850 to its P&L a/c. AO therefore, asked the assessee to furnish the details of the payments made and also indicate the compliance of TDS thereon. The assessee produced the details which are reproduced in page 2 of the assessment order. On perusal of the details of finance charges paid by the assessee, the AO observed that the assessee has made payments to various non-banking financial institutions and therefore, according to him, the provisions of section 194A are attracted and therefore, assessee's explanation as to why the disallowance u/s 40(a)(ia) should not be made was called for. The assessee submitted that the provisions of section 40(a)(ia) are applicable only if the deductee has not offered the income and paid the taxes thereon. The AO, however, observed that the copy of the return of income filed by the deductee and certificate from the C.A. in the prescribed form are necessary to be filed under the proviso to section 40(a)(ia) and since the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the provisions of section 40(a)(ia) are not applicable to the amounts already paid by the end of the relevant financial year: a) KLR Industries Ltd vs. DCIT in ITA No.1480/Hyd/2014, dated 15.07.2015 b) CIT vs. M/s. PEC Electricals P Ltd (ITTA No.263 of 2013) (Andhra Pradesh High Court) c) CBDT Circular No.19/2015 dated 27.11.2015 5. He also placed reliance upon the judgment of the Hon'ble Allahabad High Court in the case of CIT vs. Vector Shipping Services Ltd reported in 357 ITR 647 which has approved the above decision of the Special Bench and submitted that the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue against the said decision as reported in (2013) 262 CTR (All) 545. 6. The learned DR however, supported the orders of the authorities below. 7. Having regard to the rival contentions and the material on record, we find that the Coordinate Bench of this Tribunal in the case of KLR Industries Ltd (Supra) was also considering similar issue of payments of EMI of hire purchase agreements and by following the decision of the Special Bench of this Tribunal in the case of Merilyn Shipping & Transport (Supra) held that no disallowance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Merilyn Shipping & Transport Ltd (cited Supra) in support of this contention that all the payments have been made by the end of the relevant previous year and therefore, the provisions of section 40(a)(ia) are not applicable. 9. The learned DR, on the other hand, supported the orders of the authorities below. 10. Having regard to the rival contentions and the material on record, we find that there are exceptions to section 194C which requires that if the conditions specified therein are satisfied, an assessee need not deduct tax at source. The exceptions are (i) where the recipient is not owning more than 10 vehicles at the time of payment and (ii) the aggregate of the payment during the year does not exceed Rs. 75,000/-; and also (iii) where the vehicle owners have given their PAN numbers before the credit or payment to such parties. In the case before us, it is not disputed that the assessee has not collected the PAN Nos. of the parties to whom assessee had made payment without making the TDS. It is the case of the AO that the assessee has filed such details such as PAN Nos. etc. only after notices have been issued. The assessee has relied upon the decision of the Coordinate Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Coordinate Bench of this Tribunal in the case of Associate Roadways P Ltd vs. Dy.CIT in ITA No.63/Hyd/2013 for the proposition that non furnishing of form No.15I during the course of the assessment proceedings is only a procedural lapse and does not attract the liability created in section 194C of the Act. Further, he also placed reliance upon the decision of the Coordinate Bench of the Tribunal in the case of ACIT vs. Sri Sai Road Ways in ITA Nos 819 & 820/Hyd/2010 wherein by order dated 30.11.2010 it has been held that the reasoning of the AO to hold that the payment made for hire charges is a sub contract payment is not correct and is not based on relevant evidence and hence cannot be said that the payments made for hiring of vehicle would fall in the category of payment contractors and consequentially the assessee is not liable to deduct tax at source u/s 194 and the provisions of section 40(a)(ia) shall not apply to such applications. We find that this issue is covered by the decision of the Coordinate Bench of this Tribunal in the case of Sri Sai Road Ways (cited Supra) wherein at Para 6 of the order, it was held as under:- "6. We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X
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