AI Insights
The case involves M/s. Ambuja Cements Ltd. challenging a decision by the Commissioner of Income Tax (TDS), Chandigarh, which directed the petitioner to pay 10% of the entire demand in addition to an amount already recovered. The petitioner argued that this demand was contrary to Section 194C(6) of the Income Tax Act, which prohibits deduction from payments to contractors if they furnish their Permanent Account Number. The Income Tax Officer, however, applied Section 44AE, treating the petitioner as the owner of the goods carriages and thus liable for the deductions. The High Court found merit in the petitioner's argument and stayed the demand until the appeal's disposal.
Appeal Details
Counselvise Citation
[2013] 140 COUNSELVISE.COM (IT) 724922 (HC-HIMACHAL_PRADESH)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
30-09-2013
Assessment Year
misc
Judgement Text
"IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No.7913 of 2013-A. Decided on:September 30, 2013. M/s.Ambuja Cements Ltd. ...Petitioner. VERSUS Union of India & Ors. …Respondents. Coram The Hon’ble Mr.Justice A.M.Khanwilkar, Chief Justice. The Hon’ble Mr.Justice Kuldip Singh, Judge. Whether approved for reporting? For the Petitioner: Mr.A.N.Haskar, Sr.Advocate with Mr.Goverdhan Sharma, Mr.Vayur Gautam and Ms.Mrinal, Advocates. For the Respondents: Mr.Ajeet Sharma vice counsel for respondent No.1. Mr.Vinay Kuthiala, Sr.Advocate with Ms.Vandana Kuthiala, Advocate for respondents No.2 to 5. ______________________________________________________________ Justice A.M. Khanwilkar, C.J. (Oral) Heard counsel for the parties. 2. This writ petition takes exception to the decision, dated 3rd September, 2013, passed by the Commissioner of Income Tax (TDS), Chandigarh (Annexure P-9), whereby the petitioner has been directed to pay 10% of the entire demand in addition to amount of Rs.59.6 lacs already recovered by coercive method. 3. According to the petitioner, the petitioner cannot be fastened with the stated liability. For, the same is contrary to the express mandatory provision, contained in Section 194C(6) of …2… the Income Tax Act, which has come into force w.e.f. 1st October, 2009. As a result of that provision, there is complete prohibition on the petitioner from deducting any amount credited or paid or likely to be credited or paid during the previous year to the account of its contractor during the course of business of plying, hiring or leasing goods carriages in the event the contractor furnishes his Permanent Account Number. 4. The petitioner asserts that in respect of each of the contracts, the petitioner has ensured that the contractor furnished his Permanent Account Number. The Income Tax Officer (TDS), however, relying on Section 44AE, in particular second explanation there-under, has held that the petitioner, in law, will have to be treated as owner and was, therefore, liable to set apart the requisite amount as has been demanded in terms of order dated 28th March, 2013. 5. It is, however, not in dispute that the order of the Income Tax Officer pertains to financial years 2009-10 and 2010-11. There is no indication in the said order that the petitioner has failed to make deduction from the amount payable to the contractor prior to coming into force of Section 194C(6). Since the demand is in respect of subsequent period after 1st October, 2009, prima-facie, there can be no difficulty in accepting the stand of the petitioner that the petitioner was bound by the provisions of Section 194C(6) of the Act. Reliance, placed by the department on Section 44AE, seems to be …3… inapposite as that provision is independent provision and moreso the non-obstante clause is with reference to Sections 28 to 43C and not 194C(6) of the Act as such. On the other hand, Section 194C(6) appears to be independent provision which was binding on the petitioner and prohibition from deducting the amount from the account of the contractor. 6. Prima-facie, we are of the opinion that there is force in the stand, taken by the petitioner, and as a necessary corollary thereof, the petitioner cannot be held liable to pay any amount as has been found by the Income Tax Officer. As a result, we are inclined to accede to the petitioner’s request to stay the operation of the demand notice and the decision of the Income Tax Officer until the disposal of the appeal by the Appellate Authority, which, admittedly, is pending since 29th April, 2013. Accordingly, respondents shall not act upon the decision (Annexure P-9) nor any coercive action be taken against the petitioner on the basis of demand notice sent by the department pursuant to the decision of the Income Tax Officer (TDS), Solan dated 28th March, 2013, until the final disposal of the appeal. The pending Appeal before the Appellate Authority be disposed of expeditiously. 7. We make it clear that any observation made in this order is not a final opinion on the interpretation of Section 194C(6) or for that matter 44AE as that issue will have to be …4… decided by the Appellate Authority in the pending appeal. In other words, all questions are left open. 8. Petition disposed of on the above terms, so also the pending application(s). Copy dasti. (A.M. Khanwilkar) Chief Justice 30th September, 2013. (Kuldip Singh) (s/sl) Judge "
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