2015 (5) TMI 1066 - AT - Income Tax

TDS u/s 194C - payment to the truck owners - non deduction of tds - disallowance under section 40(a)(ia) - whether the assessee has duly received the Form No. 15-I from the t ruck owners but could not deposit the same before the ld. CIT(Appeals)? - Held that - Restore the issue to the file of the Assessing Officer with the direction that the assesese shall file all these forms 15-I which has been received by him. The Assessing Officer will duly examine these forms and in case he finds that these forms are in order to that extent the assessee should not be treated to be in default. - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Applicability of Section 194C for payments to truck owners.
2. Consideration of payments made to individual truck drivers under Section 40(a)(ia).
3. Applicability of Section 40(a)(ia) to sums already paid.
4. Charging of interest under Section 234B.

Issue-wise Detailed Analysis:

1. Applicability of Section 194C for Payments to Truck Owners:
The primary issue was whether payments made by the assessee to truck owners required deduction of tax at source (TDS) under Section 194C of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed Rs. 1,28,20,814/- under Section 40(a)(ia) for non-deduction of TDS. The assessee contended that there was no contractual relationship necessitating TDS deduction. However, the Tribunal held that a contract need not be in writing; even an oral contract suffices for invoking Section 194C. Payments made for hiring goods carriage vehicles were deemed to be in pursuance of a contract, thereby necessitating TDS deduction.

2. Consideration of Payments Made to Individual Truck Drivers Under Section 40(a)(ia):
The assessee argued that payments to individual truck drivers were below Rs. 50,000/- and were supported by Form 15-I, thus not warranting disallowance under Section 40(a)(ia). The Tribunal noted that payments should be aggregated to ascertain TDS applicability, as the contract is inferred from the conduct of the parties. The Tribunal directed the AO to verify the details of payments and taxes paid by the recipients, and if the recipients had paid taxes, the disallowance should be deleted.

3. Applicability of Section 40(a)(ia) to Sums Already Paid:
The assessee contended that Section 40(a)(ia) applies to sums payable and not to those already paid. The Tribunal referred to the second proviso to Section 40(a)(ia) inserted by the Finance Act, 2012, which is curative and has retrospective effect. The Tribunal restored the issue to the AO to verify if the recipients had paid taxes on the income and, if so, to delete the disallowance.

4. Charging of Interest Under Section 234B:
The assessee challenged the charging of interest amounting to Rs. 13,86,714/- under Section 234B. The Tribunal did not provide a separate detailed analysis for this issue, implying that the primary focus was on the applicability of TDS provisions and the resultant disallowances.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to verify the details of payments and taxes paid by the recipients. If the recipients had paid taxes, the disallowance under Section 40(a)(ia) should be deleted. The Tribunal emphasized that a contract, whether written or oral, suffices for invoking Section 194C, and payments should be aggregated to determine TDS applicability. The second proviso to Section 40(a)(ia) was deemed curative and applicable retrospectively, providing relief to the assessee if the recipients had paid taxes.