TMI Blog2015 (1) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. - Decided in favour of revenue. Non deduction of TDS on Freight payments - whether compliance of third proviso can be deferred till 30th June of next financial year? - Held that:- Once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable under sub-section (2) of section 194C of the Act. In our view, therefore, the Tribunal was perfectly justified in taking the view in the impugned judgment. It may be that failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfillment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer by relying on the few decisions but without successes. As observed by the Assessing Officer the provisions of Sec. 40(a)(ia) are applicable to the assessee and the Assessing Officer also relied on the few decisions of the other Co-ordinate Benches. The Assessing Officer, therefore, disallowed ₹ 4,29,03,093/- by invoking the provisions of Sec. 40(a)(ia) of the Act on the reason that the assessee has failed to make TDS as per the provisions of Sec. 194C from the transport hire charges paid/debited to in his books of account and which was also claimed as expenditure. 3.1 The Assessing Officer, accordingly, made the high pitch addition to the income of the assessee. The assessee challenged the addition made by the Assessing Officer by invoking the provisions of Sec. 40(a)(ia) of the Act before the Ld. CIT(A). Before the Ld. CIT(A) the assessee contended that the assessee is not required to deduct the TDS in respect of lorry hire charges in terms of 2nd proviso to Sec. 194C (3)(i) of the Income-tax Act as the recipients were not owing more than two vehicles. The assessee also submitted that additional evidence by way of copy of Form 15J and requested for ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue stands covered against the assessee by the following two decisions (i) CIT Vs. Sikandarkhan N Tunvar (2013) 33 taxmann.com 133 (Gujarat) and (ii) CIT, Kolkata Vs. Crescent Export Syndicate (2013) 33 taxmann.com 250 (Kolkata). In the case of Crescent Export Syndicate (supra) the decision of the Hon'ble Special Bench of the ITAT in the case of Merilyn Shipping and Transports 136 ITD 23 (SB) (Visakha) has come for the judicial scrutiny in which it was held that the disallowance u/s. 40(a)(ia) applies only to amounts payable as on 31st March of the previous year on which the TDS has not been deducted and no disallowance to be made in respect of sums paid during the previous year without deducting TDS. The Hon'ble High Court reversed the decision of the Special Bench in the case of Merilyn Shipping and Transport (supra). The operative part of the judgment is as under: In view of above discussion, we answer the question as under:- The provisions of section 40(a)(ia) of the Income Tax Act, 1961, are applicable not only to the amount which is shown as payable on the date of balance-sheet, but it is applicable to such expenditure, which become payable at any time during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the Learned Tribunal realized the meaning and purport of Section 40(a)(ia) correctly when it held that in case of omission to deduct tax even the genuine and admissible expenses are to be disallowed. But they sought to remove the rigour of the law by holding that the disallowance shall be restricted to the money which is yet to be paid. What the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron Steel Labour Board reported in 2010 (2) SCC 273. 'Unprotected worker' was finally defined in Section 2 (II) of the Mathadi Act as follows:- unprotected worker' means a manual worker who is engaged or to be engaged in any scheduled employment. The contention raised with reference to what was there in the bill was rejected by the Supreme Court by holding as follows: - It must, at this juncture, be noted that in spite of Section 2(11), which included the words but for the provisions of this Act is not adequately protected by legislation for welf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts credited or paid were used only in relation to a contractor or sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under Chapter XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor or sub-contractor shall not be deducted in computing the income of an assessee in case he has not deduced, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. A few words are now necessary to deal with the submission of Mr. Bagchi and Ms. Roychowdhuri. There can be no denial that the provision in question is harsh. But that is no ground to read the same in a manner which was not intended by the legislature. This is our answer to the submission of Mr. Bagchi. The submission of Ms. Roychowdhuri that the second proviso sought to become effective from 1st April, 2013 should be held to have already become operative prior to the appointed date cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has obtained the declarations from the truck owners/drivers in the prescribed form that the concerned truck owner was not having more than two goods carriers at any time during the previous year. It was further contended that the assessee has also filed return in Form No. 15J as per the provisions of Rule 29D of the I.T. Rules, 1962. It is stated that the assessee filed the copy of Form No. 15J in the office of ITO (TDS), Ajmer on 16-06-2009 as the assessee was having the branch office in Ajmer. The assessee also filed another copy of the Form No. 15J in the office of CIT-V, Pune on 18- 07-2012. The Ld. CIT(A) confronted the assessee why he has filed Form No. 15J in the office of the ITO (TDS), Ajmer when he was required to file the same in the office of the CIT-V, Pune. The assessee contended before the Ld. CIT(A) that it was due to the ignorance and also because the assessee has branch office in Ajmer. The assessee also submitted that Form No. 15J was filed in the office of the CIT-V, Pune as an abundant precaution. The Ld. CIT(A) has not impressed with the contention of the assessee and he rejected the same. 10. The Ld. AR submits that as per law applicable prior to the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the declaration form the truck owner was obtained in the prescribed form that he is not owning more than two trucks in the respective years. The said provision suggest that considering the nature of the transport business, it was difficult for the person hiring the trucks in the open market, which is mobile market, to deduct the tax at source and comply with the other provisions of the TDS like furnishing of the form, filing of the return or other things. When Sec. 194C has undergone the amendment by the Finance (No. 2) Act, 2009 w.e.f. 01-10- 2009, the transport business got more relaxation and it is clear from Sub-sec. (6) of Sec. 194C, now requirement is merely to obtain the PAN No. from truck owner irrespective of whether there are two vehicles or more than two vehicles. This also suggests the intention of the Parliament to mitigate hardship cause to the transporters. In the present case the assessee has filed the Form No. 15J in the office of the ITO (TDS), Ajmer as he is having branch office in Ajmer. Subsequently, the assessee also filed form No. 15J in the office of CIT-V, Pune. The Ld. AR also relied on the decision of the Hon'ble High Court of Gujarat in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich would arise at a much later point of time. Such requirement is that the person responsible for paying such sum to the sub-contractor has to furnish such particulars as prescribed. We may notice that under Rule 29D of the Rules, such declaration has to be made by the end of June of the next accounting year in question. 9) In our view, therefore, once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable under sub-section (2) of section 194C of the Act. In our view, therefore, the Tribunal was perfectly justified in taking the view in the impugned judgment. It may be that failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfillment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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