TMI Blog2016 (12) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. Nos. 320 to 323/Nag/2015, I.T.A. Nos. 314 & 315/Nag/2015 - - - Dated:- 23-11-2016 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For The Appellant : Shri A.R. Ninawe. For The Respondent : Shri Rajesh Loya.., Shri Rakesh Joshi, Shri K.P. Dewani ORDER. PER BENCH: These are appeals by the Revenue against respective orders of learned CIT(Appeals) for the concerned assessment years. Since the issues are connected, the appeals were heard together and these are being disposed of by this common order. 2. The sole issue arising in these appeals is whether on the facts and circumstances of the case the learned CIT(Appeals) is justified in deleting the demands raised u/s 201/201(1A) of the Act. Since the grounds raised are similar and relate to the above issue, for the sake of reference we are reproducing the grounds of appeal raised in ITA No. 316/Nag/2015: 1. Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in deleting the demand of ₹ 1,70,89,532/- for A.Y 2012-13 raised u/s 201/201(lA) of the Act? 2. Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to facts and figures of ITA No. 316/Nag/2015. 4. Brief facts of the case are as under : It was noted by the AO that the assessee had not deducted TDS u/s 194C in respect of freight charges paid by it to transport contractors. A survey u/s 133A was conducted at the business premises of the assessee on 01-10-2014 and during the course of survey it was found that no TDS had been deducted on freight payment made in respect of transportation charges. It was explained by the assessee that as per the provisions of section 194C(6) and as per clear explanation provided in circular No. 5/2010 dated 03-06-2010 issued by CBDT with regard to explanatory notes to the provisions of Finance Act, 2009, the assessee was not required to make any TDS if the transporter PAN is quoted. 5. The AO considered the various submissions of the assessee and also considered the provisions of the relevant section of the Act and came to the conclusion that the payments made by a person who is in the business of plying, hiring or leasing goods carriages to contractor are exempt from the purview of TDS if the contractor furnished his PAN to the deductor. Thus it was the contention of the AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual sub-contractor transporters who do not own more than two trucks. Subsequently the existing section 194C of the Act was completely replaced with a new section 194C by Finance (No.2) Act, 2009 and a specific sub section (6) contained therein provided in respect of payments to transporters as follows : (6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing of his Permanent Account Number, to the person paying or crediting such sum. 6.2 It is abundantly clear from the aforesaid amended sectio9n 194C(6) substituted by the Finance (No. 2) Act, 2009 w.e.f. 01-10-2009 that no deduction of tax is required to be made from any sum credited or paid to a transport operator, if the said contractor furnishes his PAN. The explanatory memorandum of Finance (No.2) Bill, 2009 explains the legislative intent behind the provisions as follows : b. Provisions for payments and tax deducted at source to transporters: Under Section 194C, tax is required to be deducted on payments to transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that vide Clause 49.2(B) of the circular, the Board has prescribed that new rate of TDS w.e.f. 1-10-2009 in respect of payment to sub-contractor and contractors in transport business as Nil if the tranbsporter quotes his PAN. It has also been prescribed that if PAN is not quoted, the rate will be 1% for an individual/HUF transporter and 2% for other transporters up to 31-03-2010. The plain reading of the section 194C(6) w.e.f. 1-10-2009 along with the above explanatory notes do not leave any confusion in this regard and it is clear that any payment made to a transporter (contractor) is exempt from TDS if such transporter (contractor) provides his PAN to the deductor and the deductor furnishes details of such payment and PAN to Income Tax Department in prescribed format. In the case of the appellant it is not disputed that the method of reporting as has been prescribed in Rule 31A(4)(vi) of Income Tax Rules has been duly complied by the appellant. In face of such clear provisions of section 194C(6) as explained by circular issued by CBDT as above, the Ld. ITO had no reason to hold that the payment made by transport operators to other contractors are exempt from TDS and not the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t also contrary to legislative intent and binding CBDT Circulars. In view of the above, the order passed by Id. AO u/s 201(1) and 201(lA) of the Act, holding the appellant as assessee in default in respect of transport charges paid to transport operators without deduction of TDS in compliance with' provisions of section 194C(6) is required to be cancelled. In such facts, the action of the ld. AO of raising the demand for tax of ₹ 1,70,89,532/-, ₹ 2,06,05,896/-, ₹ 1,71,95,647/- and ₹ 93,87,054/- u/s 201(1) of the Act for AY 2012-13, AY 2013-13, AY 2014-15 AY 2015-16 respectively is held to be erroneous and is therefore directed to be deleted. 7. Learned CIT(Appeals) further observed as under : Further, it has to be noted that the appellant had provided complete details in respect of each of the transport operators including their invoices, PAN etc. and hence it had duly discharged the onus cast upon it and that it cannot be treated as an assessee in default till it is found that deductees had also failed to pay such tax directly It is evident that the details of all the persons from whom tax was required to be deducted was available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of M/s Raymond UCO Denim Pvt. Ltd. in ITA Nos. 351 352/Nag/2015 vide order dated 30th Sept., 2015. Learned counsel submitted that the grounds of appeal raised in the said appeals were similar and the adjudication by the authorities below were also similar. Hence learned counsel submitted that when on identical issue this Tribunal has upheld the learned CIT(Appeals) order, the same may be followed. Learned counsel further placed reliance upon the ITAT Kolkata Bench decision in the case of Soma Rani Ghosh in ITA No. 1420/KOL/2015 vide order dated Sept. 9, 2016. It was submitted that similar issue was also considered in the said appeal and the matter was decided in favour of the assessee. 12. We have carefully considered the submissions and perused the records. We find that identical issue has been decided in favour of the assessee by this Tribunal in the case of M/s Raymond UCO Denim Pvt. Ltd. (supra) and by Kolkata Tribunal in the case of Soma Rani Ghosh (supra). We may gainfully refer to the Tribunal s decision in these cases as under : M/s Raymond UCO Denim Pvt. Ltd.: 7. I have heard both the counsel and perused the records. In this regard I may gainfully r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he combined reading of these two provisions make it clear that if there is any breach of requirements of Section 19,9C(3), the question of applicability of Section 40(a)(ia) arises. The exclusion provided in Sub-Section (3) of Section 194C from the liability to deduct tax at source under sub-section(2) would be complete, the moment the requirements contained therein are satisfied. This matter was extensively considered by the ITAT, Ahmedabad Bench in Valibhai Khanbhai Mankad's case (supra) and the said Judgment has been upheld by the High Court of Gujarat reported in (2013) 216 Taxman 18 (Guj) wherein it is held that once the conditions of Section 194C(3) were satisfied, the liability of the payee to deduct tax at source would cease and accordingly, application of Section 40(a)(ia) would also not arise. (Para 30) It is worth noticing that in ACIT -vs.- Mr. Mohammed Suhail, Kurnool in ITA No. 1536.Hyd/2014, order dated 13.02.2015, the Coordinate Bench of this Tribunal specifically held that the provisions of section 194C(6) are independent of section 194C(7), and just because there is violation of provisions of section 194C(7), disallowance under section 40(a)(ia) do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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