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TMI Blog2018 (6) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... . 34,43,324/- made u/s. 40(a)(ia) of the Act? 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary." 3. The only issue raised by the revenue in this appeal is that learned CIT(A) erred in deleting the addition made by the AO for Rs. 34,43,324/- on account of non-deduction of TDS u/s 194C of the Act. 4. Briefly stated facts are that the assessee is a private limited company and engaged in the manufacturing and trading business of steel, sheets, and plates. The assessee during the year has claimed freight and transportation expenses for Rs. 36,33,014/- only. These expenses were paid to the following parties: Sr No Name of the Parties 1. Appu Logistics 2. Bhawani Freight Movers 3. Shree Enterprises On a question by the assessee for non-deduction of TDS, the assessee submitted that all the transporters have furnished their PAN and the same also was furnished in the TDS return. Therefore assessee was not liable to deduct the TDS u/s 194C of the Act. However, the AO disregarded the contention of the assessee by observing that the provisions of Section 194C(6)/194C(7) have not been complied with. Therefore, the AO disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent of each other and cannot be reads together to attract disallowance u/s. 40(a)(ia) of the Act r.w.s. 194C of the Act. In the given case as the compliance to the provision u/s. 194C(6)of the ct has been duly performed, no disallowance was called for u/s. 40(a)(ia) of the Act." 3.5 In view of the above facts, and the issue being decided by the Honourable tribunal, Ahmedabad (supra), it is held that appellant was not liable for deduction of TDS u/s. 194C and therefore, the disallowance made by the AO u/s.40(a)(ia) is deleted. The ground of appeal is allowed." Being aggrieved by order of learned CIT(A) revenue is in the second appeal before us. The learned DR vehemently supported the order of AO. Ld. AR before us submitted that in the identical facts and circumstances the Hon'ble ITAT in the case of Le Modulor Pvt. Ltd. vs. ITO in ITA No.693/Ahd/2016 vide order dated 26-09-2017 has decided the issue in favor of the assessee. The learned AR for the assessee vehemently supports the order of learned CIT(A). 6. We have heard the rival contentions and perused the material available on record. At the outset, we note that in the identical facts and circumstances the Hon'ble ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking such payment shall not deduct any TDS. It is only by way of subsequent amendment by Finance Act, 2015 (w.e.f. 1-06-2015), the expression "where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with" was substituted in the place of "on furnishing of thereby introducing the requirement of the declaration to the effect indicated by the amendment. Therefore, under Sec. 194C(6), as it stood prior to the amendment in 2015 in order to get immunity from the obligation of TDS, filing of PAN of the Payee-Transporter alone is sufficient and no confirmation letter as required by the learned CIT is required. 26. On the aspect of observation of the learned CIT that Sections 194C(6) and Section 194C(7) have to be read together to extend the immunity from TDS, our attention is drawn to the fact that though the Finance Act, (NO.2) 2009 introduced, inter alia, Sec. 194C(6) and 194C(7), similar and analogous provision had been very much in existence under proviso 2 and 3 to Section 194C(3) of the Act. Placing such provisions in juxtaposition in the following chart makes it clear that they are very much anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 194C(6) and 194C(7) are similar to the Proviso (2) and (3) of the pre-amended Section 194C(3), and on this premise we shall proceed to examine whether Section 194C(6) and 194C(7) are to be read together to invoke provisions under section 40(a)(ia) of the Act. 28. After drawing an analogy between the pre-amended proviso between Clause (2) and Clause (3) of section 194C(3) and the present amended section 194C(6) and 194C(7), Learned AR submitted that even on earlier occasions when the declaration obtained in Form 151 (requirement similar to the PAN particulars under Sec. 194C(6)) obtained from the Transporter under Second Proviso is not submitted in Form 15J to the Commissioner of Income Tax in Form 15J (requirement similar as is provided under the third proviso and equivalent to the requirement Sec. 194C(7), the Department made attempts to make additions, but such additions have been deleted and rendered invalid. He submitted that the Courts and Tribunals consistently held that on obtaining of either the declaration contemplated under second proviso to the pre-amended section 194C(3) or the PAN details under the present section 194C(6), the assessee was not requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed. We may notice that under Rule 29D of the Rules, such declaration has to be made by the end of June of the next accounting year in question. (9) In our view, therefore, 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 the Act. In our view, therefore, the Tribunal was perfectly justified in taking the view in the impugned judgment. It may be that failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfilment of such requirement cannot 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be prescribed, if such subcontractor is an individual who has not owned more than two goods carriages at any time during the previous year. Provided also that the person responsible for paying any sum as aforesaid to the sub- contractor referred to in the second proviso shall furnish to the prescribed IT authority or the person authorised by it such particulars as may be prescribed in such form and within such time as may be prescribed: or (if) any sum credited or paid before the 1st day of June, 1972; or (Hi) any sum credited or paid before the 1st day of June, 1973, in pursuance of a contract between the contractor and a cooperative society or in pursuance of a contract between such contractor and the sub-contractor in relation to any work (including supply of labour for carrying out any work) undertaken by the contractor for the co-operative society. 4. The combined reading of these two provisions make it clear that if there is any breach of requirements of Section 194C(3), the question of applicability of Section 40(a)(ia) arises. The exclusion provided in Sub-Section(3) of Section 194C from the liability to deduct tax at source under sub-section(2) would be compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 40(a)(ia) does not arise just because there is violation of provisions of section 194C(7) of the Act. 34. From our above discussion it follows that,- (1) in the context of Section 194C(1), person undertaking to do the work is the Contractor and the person so engaging the contractor is the contractee; (ii) that by virtue of the Amendment introduced by Finance Act (No.2) 2009, the distinction between a contractor and a subcontractor has been done away with and Cl. (iii) of Explanation under 194C(7) now clarifies that "contract" shall include subcontract; (iii) subject to compliance with the provisions of Section 194C(6), immunity from TDS under sec. 194C(1) in relation to payments to transporters, applies transporter and nontransporter contractees alike (iv) under Sec. 194C(6), as it stood prior to the amendment in 2015, in order to get immunity from the obligation of TDS, filing of PAN of the Payee-Transporter alone is sufficient and no confirmation letter as required by the learned CIT is required; (v) Sections 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s 40(a)(ia) read with Section 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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