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2017 (10) TMI 1342 - HC - Income TaxNon deduction of TDS u/s.194C(2) - freight payments to the subcontractors above ₹ 50,000/- was to be disallowed as per Section 40(a)(ia) - Held that:- AO’s action for disallowance u/s 40(a)(ia) totally unlawful and unjustified as the assessee not liable to deduct TDS u/s 194C(2) of the income tax act as (I) First year of tax audit u/s 44AB of the income tax act (Previous year assessee was not liable to tax audit because of permissible limit of gross receipts ₹ 40 Lacs), (ii) Discharging of liability for obtaining form no. 151 before making the payment to sub contractor against freight to 50 parties in compliance of provision of section 194C(2) for non deduction of TDS. The delay in submission of form no. 15J to the competent authority is a procedural formality, (iii) Not bringing any material, oral or written agreement between the assessee in the recipients of goods for transportation on record during the assessment proceeding to prove the relation of sub contract and (iv) The payment to the subcontractor has not been doubted by the AO. There was no contract between the assessee and the recipients of goods for transportation 2.If the assessee has obtained form no. 15-I then it is substantial compliance of the provision of section 194C. Hence, hereby delete the total disallowance made u/s 40(a) (ia) of the income tax act for non compliance of provision of section 194C (2) of the income tax act. Hereby delete the total disallowance made u/s 40(a) (ia) of the income tax act for non compliance of provision of section 194C (2) of the income tax act. - Decided in favour of the assessee and against the department.
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