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TMI Blog2011 (4) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... 15J by 30th June 2006 is directory and not mandatory and that non-furnishing of Form No.15J in time does not invalidate Form No.15-I submitted by the sub-contractors who submit Form No.15-I before the payment is made in the beginning of the financial year. Whereas Form No.15-J is required to be filed before the end of three months from the end of financial year. 2. The ld. CIT(A) has erred in confirming disallowance of Rs.2,32,182/- u/s 40(a)(ia) where from No.15-I were not submitted by sub-contractors. 3. The ld. CIT(A) has erred in confirming 1/10th vehicle expenses of Rs.20,985/- on the ground that it is personal inasmuch as the expenditure is incurred wholly and exclusively for the purposes of business and there is no element of personal nature. 4. The ld. CIT(A) has erred in confirming 1/10th telephone expenses of Rs.24,673/- on the ground that it is personal inasmuch as the expenditure is incurred wholly and exclusively for the purposes of business and there is no element out of personal nature. 2. Ground No.2 is not pressed by the ld. AR and hence it is rejected. 3. Ground Nos.3 & 4 relate to disallowance of 1/10th vehicle expenses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o extends to requiring the contractor to furnish form No.15J to the CIT on or before 30th June of the following FY. This form No.15J gives details of declaration given in form No.15I furnished by sub-contractors for nondeducting the TDS. It was contended before the ld. CIT(A) that form no.15J was submitted to the CIT on 26.2.2009 i.e. after the completion of assessment and after delay of 2 years 8 months. The ld. CIT(A) rejected this contention holding that such delay defeats the very purpose of the section. She accordingly confirmed the addition. 6. Before us, the ld. AR for the assessee submitted that this is the first year of obtaining of form No.15-I. The sub-contractors have submitted form No.15-I being declaration under second proviso to clause (1) of subsection (C) of section 194, to the assessee as required by rule 29D(1). Once sub contractor have furnished form No.15-I then assessee is not required to deduct the tax on the payment made to the sub-contractors. Once there is no requirement of deducting the tax u/s 194C then there cannot be any default as mentioned in section 40(a)(ia). Even though there is a default on the part of the assessee in submitting form No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by obtaining declaration in the prescribed form. Therefore, there was no liability for deduction of tax at source. The genuineness of the certificate is not doubted by the authorities below. Therefore, the assessee has substantially complied with the provisions of law. In case of procedural irregularities, the assessee cannot be put to unnecessary hardship in the matter and that too when certain exemption has been given to the assessee in section proviso to section 194(c)(3) of the IT Act. Since, there is sufficient compliance of the provisions of law, therefore, the learned CIT(A) was justified in deleting the addition. We, therefore, do not find any justification to interfere with the order of the learned CIT (A). We confirm his findings and dismiss the appeal of the revenue." The ld. AR also submitted that genuineness of the payment has not been doubted and addition has been made only on technical ground even though substantial compliance has been made by the assessee. 7. Against this, the ld. DR submitted that facts as reported in the case of Shree Pramukh Transport Co. (supra) are different than the facts in the case of assessee. The Asst. Year involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine but tax is not deducted as required u/s 194C. 8. We have heard the rival submissions and perused the material on record. The undisputed facts are that assessee has obtained form No.15-I from the sub-contractors to whom a total payment of Rs.7,93,34,193/- has been made. It submitted form No.15-I to the AO during the course of assessment proceedings but did not submit form No.15J to the Commissioner by 30.6.2006 as required u/d 194C. For the sake of convenience we reproduce section 193C(3) as under :- "Sec.194C(3) No deduction shall be made under sub-section (1) or subsection (2) from - (i) the amount of any sub0credited or paid or likely to be credited or paid to the account of or to the contractor or sub-contractor, if such sum does not exceed twenty thousand rupees, Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for payment such sums referred to in sub-section (1) or as the case may be sub-ection (2) shall be liable to deduct income-tax under this section; Provided further that no deduction shall be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed manner within such time as may be prescribed, if such sub-contractor does not hold more than two goods carriers at any time during the previous year; (4) The assessee furnishes to the prescribed income-tax authority such particulars as may be prescribed in such form within such time as may be prescribed; (5) declaration as per second proviso to clause (i) of sub-section (3) of section 194C is form No.15-I; (6) the particulars referred to in 3rd proviso would be in form No.15J; (7) form No.15J shall be furnished to the Commissioner of Income-tax so designated by the Chief Commissioner of Income-tax. (8) it shall be furnished on or before 30th June following the FY. The three proviso mentioned in sub-section (3) under clause (i) are in continuity, as they are separated only by a colon (:) and not by word "or" meaning thereby the condition laid down in all the three provisos are to be satisfied simultaneously and cumulatively. In other words not only the assessee has to obtain form No.15-I from the sub-contractors while making the payment to them but it has also to file form No.15J to the Commissioner before 30th June followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd proviso only because it is at that point of time of assessee has to decide whether it has to deduct the tax or not. Where forms No.15-I are not submitted, it has to deduct the tax. Conversely where form No.15-I is submitted to the assessee by the subcontractors, the tax is not deductible and once tax is not deductible no addition u/s 40(a)(ia) can be made. From this it follows that third proviso to section 194C(3)(1) which requires the assessee to submit form No.15J is only procedural formality and cannot undo what has been done by second proviso. Non-submission of form No.15J to the Commissioner within the time prescribed in rule 29D cannot have any effect on deciding as to whether tax was deductible or not deductible from the payments made by the assessee to the sub-contractors. This can be decided under second proviso alone. Even though the Legislature in their wisdom have added third proviso as addenda to the second proviso by mentioning "provided also" meaning thereby that Legislature intended to put both the conditions mentioned in second and third proviso together to be satisfied by the assessee but in effect both the conditions cannot be satisfied together as both are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax from the payment made to the subcontractor cannot be deferred till 30th June of next FY. He has to take this decision (about deductibility of tax from payments being made by it to the sub-contractors) just at the time when he is releasing the payments to the sub-contractors. It is at this point of time second proviso would come into play and when form No.15I are submitted by the sub contractors to the contractor then contractor is not required to deduct tax from such payments. Once deductibility of tax depends upon submission or non submission of form No.15-I from the sub-contractor to the assessee then non-compliance of third proviso becomes merely technical without affecting in substance the deductibility or non-deductibility of tax on payments made by the assessee to the sub-contractors. Therefore, in our considered view non-compliance of third proviso becomes merely a technical default, which even if, remained non-complied would not affect the operation of section 40(a)(ia). The ld. DR has emphasized on the point that word used in rule 29D(4) is "shall" which would mean that it is mandatory to furnish the form No.15J on or before 30th June of following FY. There is no disp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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