Kannan P.K., V. ACIT, Trichur

ITA 1004/COCH/2008

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6991 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2008
• Court: TRIBUNAL
• Keywords: Non-deduction of tax

Judgement Text

1 REFERENCE U/S. 255(4) OF THE INCOME TAX ACT, 1961 IN RE: ASSTT. CIT, TRICHUR VS. P.K.KANNAN, TRICHUR (IN ITA NO. 1004/COCH/2008 FOR A.Y. 2005-06) ______________________________________ THE INSTANT CASE IS OF A CONTRACTOR MAKING PAYMENTS TO SUB-CONTRACTORS, WHICH IS THE SUBJECT MATTER OF SEC. 194C(2) OF THE INCOME TAX ACT, 1961 (THE ACT, HEREINAFTER), A PROVISION INDEPENDENT OF SEC. 194C( 1). THE LD. BROTHER-JM HAS CONFIRMED THE NON-APPLICABILITY OF THE PROVISIONS O F SEC. 194C(2) IN-SO-FAR AS IT RELATES TO `INDIVIDUAL AND `HINDU UNDIVIDED FAMILY (HUF) SUB-CONTRACTORS ON THE BASIS THAT THE PROVISO CANNOT OVERRIDE THE MAIN SECTION (S. 194C(2)). HO WEVER, THE PROVISO CONCERNS `INDIVIDUAL AND `HUF CONTRACTORS AND NOT SUB-CONTRACTORS. FURTHER, AS WOULD BE APPARENT FROM THE READING OF THE PROVISION , THE PROVISO ONLY OPERATES TO DEFINE THE CATEGORIES OF PERSONS TO WHICH IT (THE P ROVISION) WOULD APPLY, SO THAT IT IS EITHER APPLICABLE OR NOT APPLICABLE IN THE FACTS AN D CIRCUMSTANCES OF A PARTICULAR CASE, AND THERE IS NO QUESTION OF A PARTIAL APPLICATION W ITH REFERENCE TO THE STATUS OF THE PAYEES. AS SUCH, THERE IS NO EXTENSION OF THE SCOP E OF THE PROVISION, OBLIGING THE CONTRACTOR TO DEDUCT TAX AT SOURCE, OR THE SUBJECT MATTER THEREOF, AND THE PROVISO ONLY CONCERNS ITS OBJECT MATTER. THE LANGUAGE OF THE PRO VISION IS CLEAR AND UNAMBIGUOUS, EXPLICITLY CONVEYING THE LEGISLATIVE INTENT, SO THA T THERE IS NO SURPLUSAGE. ACCORDINGLY, I AM RESPECTFULLY NOT IN AGREEMENT WIT H THE QUESTION PROPOSED BY THE LD. BROTHER AS CORRECTLY PROJECTING THE DIFFERENCE OF O PINION BETWEEN OUR RESPECTIVE ORDERS, AND PROPOSE THE FOLLOWING QUESTIONS TO THE HONBLE PRESIDENT U/S. 255(4) OF THE ACT: 1. WHETHER THE PROVISION OF SEC. 194C(2) OF THE ACT IS APPLICABLE TO THE ASSESSEE- CONTRACTOR FOR THE RELEVANT YEAR; THE SATISFACTION OF THE FINANCIAL CRITERIA SPECIFIED IN THE PROVISION BEING AN UNDISPUTED FACT? 2. IF SO, WHETHER, THEREFORE, THE AO IS RIGHT IN I NVOKING THE PROVISION OF SEC. 40(A)(IA) OF THE ACT QUA THE ASSESSEES ADMITTED FAILURE TO DEDUCT TAX AT S OURCE U/S. 194C(2) IN RESPECT OF THE CREDITS/PAYMENTS TO THE INDIVIDUAL A ND HUF SUB-CONTRACTORS? 2 3. WHETHER THE BINDING DECISIONS BY THE HONBLE J URISDICTIONAL HIGH COURT INTER ALIA IN THE CASE OF CIT VS. SOUTH INDIA CORPORATION LTD . 242 ITR 114 (KER.) AND CIT VS. ASPINWALL & CO . LTD ., 98 ITR 291 (KER.) HAVE A DIRECT AND CLEAR BEARIN G ON THE ISSUE/S ARISING FOR ADJUDICATION IN THE INSTANT APPEAL? . SD/- (SANJAY ARORA) AM , COCHIN BENCH DATE: NOVEMBER 22, 2011, ERNAKULAM/GJ