TMI Blog2012 (4) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ation petition has been filed. On perusal of condonation petition and since assessee has got no objection, we condone the delay and admit the appeal for hearing. 3. The only issue in this appeal of revenue is against the order of CIT(A) in deleting the disallowance by invoking the provisions of section 40(a)(ia) of the Act for non-deduction of tax u/s. 194C(1) of the Act. The relevant assessment year involved is Assessment Year 2006-07 and assessee is an individual. The Assessing Officer made disallowance in respect of labour charges and advertisement charges by invoking the provisions of section 40(a)(ia) of the Act as no TDS was deducted on these two expenses. The CIT(A) deleted the disallowance by stating that the assessee being an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and-- (a) the Central Government or any State Government ; or (b) any local authority ; or (c) any corporation established by or under a Central, State or Provincial Act ; or (d) any company, or (e) any co-operative society ; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both ; or (g) any society re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax on income comprised therein. XXXX XXXX XXXX 6. From the above provisions of Section 194C(1), it is clear that the payments made by individual or Hindu Undivided Family does not come within the ambit of TDS i.e. the expenditure incurred for advertisement as individual and HUF are specifically excluded in the above provisions. The provision of Sub-Section (2) applies only to payments made to Sub-Contractors and not to Contractors. Accordingly, Assessing Officer can not made disallowance by invoking provisions of Section 40a(ia), as present assessee being an individual is not liable to deduct tax in view of provisions of Section 194C(1) as existed in the relevant assessment years. No doubt, assessee s turnover exceeds the mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to - (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein : Provided that no individual or a Hindu Undivided Family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu Undivided Family. 7. We find from the arguments of Ld.SR. DR that revenue want to invoke provisions of Sub-Section (2) of Section 194C for furtherance of this case but we are of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and the increasing volume of such payments to contractors, it was felt that there is need to require such persons to deduct tax at source from payments made by them to contractors. 54.4 There would be genuine difficulties if individuals or HUFs with small business turnovers or gross receipts of profession are required to deduct tax at source. An exception in such cases would be justified. Similarly the contracts awarded by an individual or a member of HUF of HUF exclusively for personal purposes merit exclusion. 54.5 Accordingly, the Finance Act, 2007, has substituted the said sub-section (1) to include in its ambit such individual or a Hindu undivided whose total sales, gross receipts or turnover from the business or profession car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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