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TMI Blog2018 (12) TMI 1514X X X X Extracts X X X X X X X X Extracts X X X X ..... lites nor there is any material on record indicating the assessee to have passed on any of its contractual liability to the four payees thereby treating them as sub-contractors inviting sec. 194C TDS deduction. The appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted We adopt the above detailed reasoning mutatis mutandis to conclude that both the lower authorities have erred in invoking the two disallowance(s) under challenge u/s 40(a)(ia) of the Act. The same are accordingly deleted. - Decided in favour of assessee. - ITA No.1454/Kol/2017 - - - Dated:- 26-12-2018 - Shri S.S.Godara, Judicial Member And Shri, M. Balaganesh, Accountant Member For The Appellant : Shri Brijesh Kr. Singh, Advocate For The Respondent : Shri A.K. Singh, CIT-DR ORDER PER S.S.Godara, Judicial Member:- This assessee s appeal for assessment year 2010-11 arises against the Commissioner of Income Tax (Appeals)-15, Kolkata s order dated 21.02.2017 passed in case No.385/CIT(A)-15/15-16/3(3)/R T/Kol involving proceedings u/s 143(3) of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(a)(ia). Now let us take a look at these provisions: Section 201(1) along with first proviso reads as under:- Where any person, including the principal officer of a company,- (a) Who is required to deduct any sum in accordance with the provision of this Act; or (b) Referred to in sub-section (1A) of section 192 , being an employer. does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: [ Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provision of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- ( i) Has furnished his return of income under section139; ( ii) Has taken into account such sum for computing income in such return of income; and ( iii) Has paid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying out any work (including supply of labour for carrying out any work) on which tax is deductible at source under Chapter XVII-Band such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub-section(1) of section 139;] [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139 such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid:] [Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provision of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.] Second proviso to section 40(a)(ia) mentions that it shall be deemed that the assessee has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d mandatory TDS thereupon. He strongly supports both the lower authorities action invoking the impugned disallowance. We find no reason to concur with Revenue s above vehement contentions. The CIT(A) s above extracted detailed reasoning makes it clear that he has nowhere concluded that the assessee s payees had ever made themselves liable for its freight or loading / unloading responsibilites nor there is any material on record indicating the assessee to have passed on any of its contractual liability to the four payees thereby treating them as sub-contractors inviting sec. 194C TDS deduction. This tribunal s coordinate bench s decision in Bhail Bulk Carriers vs ITO in ITA No. 3536/Mum/2011 decided on 07.03.2012 has declined Revenue s similar arguments in case of freight payments as follows:- We heard the arguments of learned counsel. Under section 194C, the tax is to be deducted when a contract was entered into for carrying out any work in pursuance of a contract ITA No : 3536/Mum/2011 M/s. Bhail Bulk Carriers between the contractor and the entities mentioned in sub-section (1) of section 194C. In the present case, there was no contract between the assessee and the shipp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating retrospectively, when the Explanation comes into force with effect from a future date. In this case, the Explanation introduced is with effect from July 1, 1995. Hence it will be applicable only for the future assessment orders and it ITA No : 3536/Mum/2011 M/s. Bhail Bulk Carriers will not be applicable to the assessment year in consideration. The Tribunal also considered the fact that the shipping companies which received the hire charges are also income-tax assessees and they had shown the hire charges in their respective incometax returns and paid the taxes on the same. The said fact was also not disputed by the Revenue. So, we are of the view that the payment of hire charges for taking temporary possession of the ships by the assessee-company would not fall within the provision of section 194C and hence no tax is required to be deducted, and there is no error or infirmity in the order of the lower authorities. Hence, no substantial question of law arises for consideration of this court. Hence, we dismiss the above tax case. No costs. Consequently, the connected TCMP No. 1253 of 2005 is closed. 8.4 Thus in view of the findings given above and the law laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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