2024 (4) TMI 579 - AT - Income Tax

TDS u/s 194C - Non deduction of TDS on payment to the persons who were not the owner of the vehicle - computing and levying amount of TDS u/s 201(1) and interest u/s 201 (1A) - as per DR vehicle owners are not having PAN and person who filed declaration are not owner of the vehicle, therefore, the assessee is liable to make TDS and on account of such default demand has rightly been confirmed in the case of the assessee - whether the term owns be taken essentially to mean registered owner under Motor Vehicles (MV) Act or should it be read to mean the beneficial owner? HELD THAT - Declaration u/s 194C (6) is a statement made by a transporter and it confirms that the transporter does not own more than ten goods carriages during the previous year and is engaged in the business of the plying, hiring or leasing goods carriage. Thus, the term owner here refers to anyone who is in possession of the goods carriage, not necessarily the registered owner. Transporters provide this declaration along with their Permanent Account Number (PAN) to the payer to avoid TDS deduction. The Finance Act 2015 has approved amendment to section 194C (6) providing for deduction of tax at source unless the transporter who is engaged in the business of playing, hiring or leasing goods carriage, owns not more than goods carriages and furnishes a declaration to this effect along with PAN to the payer. The amendment is applicable from 01-06-2015. The meaning of the word owner as occurring in section 194C(6) regarding deduction of tax at source. For the purpose of section 44AE, the term owner means anyone in possession of the goods carriage and not the registered owner. This assumes importance in defining the term owns in section 194C(6) because, the taxation of the assessee transporter is squarely covered under the provisions of section 44AE. In addition we also take support of our view from the various judicial precedent on the issue and the apex court of the country has decide the question of ownership based on the intention of the legislature, namely to give benefit or to tax the assessee. Thus for the purpose of section 194C(6), the term who owns essentially means the one who possesses . Since it is not a case of the revenue that the assessee has not submitted the declaration, it is available on record and based on that declaration the contention of the revenue that persons to whom the payments were not the owner and the ultimately owners name was displayed and contended that the person who filed the declaration is not the owner of the vehicle. Based on the discussion recorded here in above, since in this case the declaration is already obtained by the assessee and the purpose of section 194C(6), the term who owns essentially means the one who possesses and the assessee has paid to the person who filed the declaration, ergo we order accordingly. Appeal of the assessee is allowed.

Summary

Issues involved:
1. Computation and levy of TDS under section 201(1) and interest under section 201(1A).
2. Validity of declarations obtained from vehicle owners for non-deduction of TDS under section 194C(6).

Summary:

Issue 1: Computation and Levy of TDS and Interest
The assessee, engaged in transportation and logistics services, was subjected to a survey under section 133A(2A) on 09.08.2018, revealing non-deduction of TDS on payments made to transporters based on declarations from vehicle owners. The Assessing Officer (AO) issued a show cause notice under section 201(1)/(1A) and subsequently raised a demand of Rs. 1,16,094/- for non-compliance with section 194C(6). The AO concluded that the declarations were invalid as they lacked the vehicle owners' PANs, thus holding the assessee in default under sections 201(1) and 201(1A).

Issue 2: Validity of Declarations under Section 194C(6)
The assessee argued that payments were made to authorized persons (drivers or relatives) on behalf of truck owners, supported by power of attorney and declarations. The assessee contended that section 194C(6) does not mandate PAN submission by vehicle owners if they are not liable to obtain one under section 139A. However, the AO and NFAC rejected this argument, emphasizing that declarations must be from vehicle owners with their PANs.

Tribunal's Findings:
The Tribunal noted that the term "owns" in section 194C(6) should be interpreted as "possesses," aligning with the intent to provide benefits to transporters. The Tribunal referenced section 44AE, which defines "owner" as anyone in possession of a goods carriage, and supported this interpretation with judicial precedents where beneficial ownership was considered over legal title. Consequently, the Tribunal concluded that the assessee's declarations were valid, as they met the requirement of possession rather than registered ownership.

Conclusion:
The Tribunal allowed the appeals, setting aside the AO's demand and interest computation. The decision in ITA No. 177/Jodh/2023 was applied mutatis mutandis to ITA Nos. 178 to 180-Jodh-2023, resulting in all four appeals being allowed. The order was pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963.