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2016 (2) TMI 1280 - ITAT CHANDIGARHTDS u/s 194C - default fur non-deduction of tax on payments made to the transport cooperative societies for carrying out transportation work - payments made to the Himachal Pradesh Road Transport Corporation (HRTC) as a trust registered u/s 12A - CIT- A treating the appellant as an assessee in default fur non-deduction of tax u/s 194C - HELD THAT:- CIT(A) has taken a correct view that that there is no provision in the Income Tax Act, 1961 to the effect that tax is deductable at source in case of exempt income. The assessee claimed that the deductee HRTC is registered as a Trust and enjoyed the benefit of exempt income as per sections 11 & 12 - In our opinion, the taxability of income or exemptions u/s 11 & 12 is subject to various conditions and subject to assessment of income by the Assessing officer. Deductor (assessee) cannot assume that since HRTC is a Trust / Charitable Institution registered u/s 12A of the Act and its income is non-taxable. We do not see any infirmit y to the above extent in the order of the CIT(A) on this issue as he has correctl y directed the ITO (TDS) to find out the extent of quantum of tax paid by the payees. CIT(A) has also directed the ITO (TDS) that if entire tax amount has been claimed from the deductor has been paid by the deductees, then for that amount the deductor cannot be treated as assessee in default. Accordingly, the CIT(A) has directed the AO to give relief subject to verification as above. In our opinion, before deciding the issue the Assessing officer should give an opportunity of being heard to the assessee. AO is further directed to decide the issue keeping in view the relevant provisions of Income-tax Act, 1961 applicable to the facts of the present case. Remand this issue to the Assessing officer for a fresh decision. Accordingly, the order of the C IT(A) is modified to the above extent. Ground allowed for statistical purposes.
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