Soma Rani Ghosh, Kolkata V. DCIT, CIR-49, KOLKATA, Kolkata

ITA 1420/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4438 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 23-08-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 27-11-2015
• Court: TRIBUNAL
• Assessee Lawyers: I BAN ERJEE
• Keywords: Non-deduction of tax; Non compliance
• Section: 194C

Judgement Text

I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 1 OF 19 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 1420 /KOL/ 2015 ASSESSMENT YEAR: 2012-2013 SOMA RANI GHOSH,................................... .................................APPELLANT 274, CANAL STREET, SREEBHUMI, LAKE TOWN, KOLKATA-700 048 [PAN: AFMPG 0109 B] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .....................RESPONDENT CIRCLE-49, KOLKATA, UTTARAPAN BUILDING, MANIKTALA CIVIC CENTRE, KOLKATA-700 054 APPEARANCES BY: SHRI I. BANERJEE, FCA, FOR THE ASSESSEE SHRI ALOKE NAG, ADDITIONAL CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 23, 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 9 TH , 2016 O R D E R PER SHRI K. NARASIMHA CHARY, J.M .: THIS IS AN APPEAL BY THE ASSESSEE CHALLENGING THE O RDER DATED 15.10.2015 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-15 , KOLKATA (HEREINAFTER REFERRED TO AS LEARNED CIT) FOR THE ASSESSMENT YEAR 2012-13. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED HERSELF IN EXPORT BUSINESS UNDER THE NAME AND STYLE M/S MEDIIMPEX OF EXPORT OF CHEMICAL, SURGICAL AND CLINICAL GOODS. ACCORDING TO HER SHE NEEDS TO INCU R TRANSPORT CHARGES BY WAY OF LORRY HIRE I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 2 OF 19 CHARGES, BOTH IN RELATION TO PURCHASES, REFERRED TO AS CARRIAGE INWARD, AND EXPORTS TO BANGLADESH REFERRED TO AS CARRIAGE OUTWARD. ON 29.0 9.2012 SHE FILED HER RETURN OF INCOME FOR THE AY 2010-11, DECLARING A TOTAL INCOME OF RS. 15,27,440/-. AFTER SCRUTINY, THE LEARNED AO OPINED THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE EXPENSES INCURRED UNDER THE HEAD TRANSPORT CHARGES UNDER THE PROVISIO NS OF SECTION 194C OF THE ACT AND SINCE THE ASSESSEE FAILED TO DEDUCT THE SAME, TREATED SUC H EXPENSE INCURRED FOR CARRIAGE INWARD AND CARRIAGE OUTWARD AS DISALLOWABLE UNDER SECTION 40(A )(IA) OF THE ACT, ADDED BACK RS.1,63,78,648/- CLAIMED AS EXPENSE TOWARDS CARRIAG E INWARD AND RS.1,13,00,980/- CLAIMED AS EXPENSE TOWARDS CARRIAGE OUTWARD, TO THE INCOME OF THE ASSESSEE. 3. APPEAL CARRIED TO THE LEARNED CIT ENDED UP IN CO NFIRMATION OF THE ADDITIONS MADE BY THE LEARNED AO. LEARNED CIT HELD THAT THE BENEFIT U NDER SECTION 194C (6) IS AVAILABLE ONLY WHEN THE ASSESSEE FULFILS THE CONDITIONS LAID DOWN IN SUB-SECTION 194C(7) OF THE ACT, AND SINCE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN 194C(7), AND THUS COMMITTED THE DEFAULT OF NON-DEDUCTION OF TDS IN THE CASE OF THE TRANSPORTERS FOR BOTH CARRIAGE INWARD AND CARRIAGE OUTWARD, THE LEARNED AO WAS JUSTIFIED IN DISALLOWING THE SAID SUMS U/S 40(A)(IA) OF THE ACT. 4. AGGRIEVED BY THE IMPUGNED ORDER OF THE LEARNED C IT, THE ASSESSEE PREFERRED THIS APPEAL ON THE FOLLOWING GROUNDS: 1. FOR THAT UNDER THE FACTS AND CIRCUMSTANCES THE L D. APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACTS AND DETAILS OF EXPEN SES IN SUPPORT OF CARRIAGE INWARD CHARGES FOR AN AMOUNT OF RS.1,63,12 ,648/- WHICH WERE PAID TO DIFFERENT GOODS TRANSPORT AGENCIES DURING T HE COURSE OF PURCHASE OF GOODS FOR THE PURPOSE OF EXPORT. ALL OF THE SAID TRANSPORT AGENCIES SINCE HAD FURNIS HED THEIR PAN AND YOUR PETITIONER HAS NOT DEDUCTED ANY TDS IN TERMS O F PROVISION OF SECTION 194C( 6) OF THE ACT AND THE ENTIRE DISALLOWANCE AND ADDITION IS UNCALLED FOR AND LIABLE TO BE DELETED. 2. FOR THAT THE LD. APPELLATE AUTHORITY FAILED TO A PPRECIATE THE DETAILS AND DOCUMENTS AS WERE FIELD DURING THE COURSE OF AP PEAL HEARING IN SUPPORT OF CARRIAGE OUTWARD FOR AN AMOUNT OF RS.65, 17,325/- WHICH WERE PAID TO DIFFERENT GOODS TRANSPORT AGENCIES AND THE SAID TRANSPORT AGENCIES SINCE HAD FURNISHED THEIR PAN AND ISSUED A DECLARATION CONFIRMING THEIR PAN AND YOUR PETITIONER HAS NOT DE DUCTED ANY TDS IN TERMS OF PROVISION OF SECTION 194C( 6) OF THE ACT A ND THE ENTIRE DISALLOWANCE AND ADDITION IS UNCALLED FOR AND LIABL E TO BE DELETED. I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 3 OF 19 3. FOR THAT THE LD. APPELLATE AUTHORITY WAS ABSOLUT ELY WRONG IN HIS OBSERVATION THAT THE INDIVIDUAL DECLARATION SO ISSU ED BY THE TRANSPORTERS CONFIRMING THEIR PAN DO NOT PROVE ABOUT NON APPLICA BILITY OF SECTION 40(A)(I)(A) IN THE INSTANT CASE. 4. FOR THAT THE LD. APPELLATE AUTHORITY FAILED TO C ONSIDER THE OBSERVATION OF THE HON'BLE ITAT IN THE CASE OF ACIT, CIRCLE-I V S MR. MOHAMMED SUHAIL IN ITA NO: 1536/HYD/2014, WHEREIN IT HAS BEE N CATEGORICALLY OBSERVED BY THE HON'BLE ITAT 'THAT THE LIABILITY TO DEDUCT TAX CEASES THE MOMENT THE APPELLANTS OBTAINS PAN OF THE CONTRACTOR S. THAT LIABILITY CANNOT BE CONSIDERED TO BE REINSTATED ON A SUBSEQUE NT NON COMPLIANCE WITH THE PROVISION OF SECTION 194C(7).' 5. BEFORE US, THE LEARNED AR CONFINED, IN HIS ARGUM ENTS, TO THE PLEA OF IMMUNITY OF PAYMENTS MADE BY THE ASSESSEE TOWARDS CARRIAGE INWA RD AND CARRIAGE OUTWARD FROM TDS BY VIRTUE OF SEC. 194C(6) AND ITS DUE FULFILMENT. HE HAS NOT CANVASSED THE OTHER CONTENTIONS ADDRESSED BEFORE THE LEARNED CIT. ON THIS ASPECT, H E CONTENDS THAT DESPITE PRODUCTION OF PERMANENT ACCOUNT NUMBERS/PAN DECLARATION FROM EACH OF THE PAYEE TRANSPORTER FOR BOTH CARRIAGE INWARD AND CARRIAGE OUTWARD, THE AUTHORITI ES BELOW FAILED TO NOTICE THAT NO TDS WOULD BE DEDUCTIBLE FROM THE PAYMENTS TO THE PAYEE- TRANSPORTERS, CONSEQUENT UPON DUE FURNISHING AND CORRESPONDING AVAILABILITY OF THEIR RESPECTIVE PAN COPIES WITH THEM, BY VIRTUE OF SEC. 194C(6) OF THE INCOME TAX ACT, 1961 PROVIDI NG FOR MANDATORY NON-DEDUCTION OF TAX AT THE TIME OF CREDITING/MAKING PAYMENT TO ACCOUNT OF A CONTRACTOR UNDERTAKING CARRIAGE OF GOODS. HE FURTHER SUBMITS THAT BY VIRTUE OF SEC. 19 4C(6) ON FURNISHING THE PAN, THE CARRIAGE INWARD AMOUNT OF RS.16312648.00 AND THE CARRIAGE OU TWARD AMOUNT OF RS.6517325.00 HAD BECOME IMMUNE FROM DEDUCTION OF TAX AT SOURCE, AS S UCH, THE RIGOUR AND ADVERSITY OF ITS DISALLOWANCE UNDER SEC. 40(A) (IA) COULD NOT BE INV OKED. ON THE OTHER SIDE, LEARNED DR VEHEMENTLY RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 6. BASING ON THE ABOVE RIVAL CONTENTIONS, THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE AUTHORITIES BELOW ARE JUSTIFIED IN DISA LLOWING U/S 40(A)(IA) OF THE ACT AN AMOUNT OF RS.1,63,78,648/- CLAIMED AS EXPENSE TOWARDS CARR IAGE INWARD AND RS.1,13,00,980/- CLAIMED AS EXPENSE TOWARDS CARRIAGE OUTWARD? I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 4 OF 19 7. FACTS ARE SIMPLE AND MOSTLY ADMITTED. ASSESSEE CARRYING ON PROPRIETARY EXPORT BUSINESS IN EXPORT OF CHEMICAL, SURGICAL AND CLINIC AL GOODS HAD TO INCUR TRANSPORT CHARGES BY WAY OF LORRY HIRE CHARGES, BOTH IN RELATION TO P URCHASES, REFERRED TO AS CARRIAGE INWARD, AND EXPORTS TO BANGLADESH REFERRED TO AS CARRIAGE O UTWARD. ON THE PREMISE THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE EXPENSE S INCURRED UNDER THE HEAD TRANSPORT CHARGES UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND SINCE THE ASSESSEE FAILED TO DEDUCT THE SAME, LEARNED AO DISALLOWED THE EXPENSES OF RS.1,63,78,648/- CLAIMED AS EXPENSE TOWARDS CARRIAGE INWARD AND RS.1,13,00,980/- CLAIME D AS EXPENSE TOWARDS CARRIAGE OUTWARD, TREATING SUCH EXPENSE DISALLOWABLE UNDER S ECTION 40(A)(IA) OF THE ACT. 8. ASSESSEE CONTENDED BEFORE THE LEARNED CIT THAT B ECAUSE OF THE PROVISION OF SECTION 194C(6), SHE WAS NOT LIABLE TO DEDUCT TDS ON PAYMEN TS TO TRANSPORTERS WHO HAD SUBMITTED THEIR PAN, AND THOSE DETAILS OF PAN AND ADDRESSEES OF THE TRANSPORTERS WERE FILED DURING THE COURSE OF SCRUTINY ASSESSMENT BEFORE THE AO. RELEV ANT PORTION OF THE APPELLATE ORDER IS AS FOLLOWS: TO DECIDE THE ISSUE, WE NEED TO READ THE ENTIRE SE CTION 194C TOGETHER TO UNDERSTAND ITS TRUE INTERPRETATION. 194C( 1) READS AS UNDER: (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO AN Y RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CAR RYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURS UANCE OF A CONTRACTOR BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL , AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO - (I) ONE PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II) TWO PER CENT WHERE THE PAYMENT IS BEING MADE O R CREDITED IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HIN DU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME- TAX ON INCOME COMPRISED THER EIN. THE WORD 'CONTRACTOR' ABOVE MEANS THE PERSON WHO IS MAKING THE PAYMENT, ANOTHER PERSON FOR CARRYING OUT ANY 'WORK'. EXPLN. (IV) BELOW THE SUB-SECTION 194C(7) READS AS UNDER: 'WORK 'SHALL INCLUDE (A)............ (B) ............... I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 5 OF 19 (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. (D).............. . (E)................ . IT MEANS THAT TRANSPORTATION OF GOODS IS INCLUDED I N THE DEFINITION OF 'WORK' AND THUS TRANSPORTATION CHARGES IS LIABLE FOR TDS. IN T HE PRESENT CASE, THE ASSESSEE BECOMES 'CONTRACTOR' WHO IS MAKING THE PAYMENT TO T HE TRANSPORTER FOR CARRYING OF GOODS AND WAS THUS LIABLE TO DEDUCT TDS ON SUCH PAYMENT. SECTION 194C( 6) READS AS UNDER: '(6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDIT ED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS Y EAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PL YING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMA NENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. ' IT THUS, MEANS THAT IF A TRANSPORTER IS MAKING ANY FURTHER PAYMENT FOR HIRING/LEASING OF VEHICLES DURING THE COURSE OF HIS BUSINESS THEN IT WOULD NOT DEDUCT TDS IF THE SUB-CONTRACTORS HAVE SUPPLIED THE IR PAN TO IT. THUS 194C( 6) IS APPLICABLE TO A TRANSPORTER WHO DU RING THE COURSE OF HIS BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAG ES, MAKES PAYMENT TO ANOTHER CONTRACTOR FOR HIRING OF VEHICLES, THEN HE IS NOT S UPPOSED TO DEDUCT THE TDS. THIS SUB-SECTION WILL NOT APPLY TO PAYMENTS MADE BY A PE RSON WHO HIMSELF IS NOT A TRANSPORT, TO ANOTHER SUB-CONTRACTOR FOR PLYING, HI RING OR LEASING GOODS CARRIAGES. ANY OTHER INTERPRETATION GIVEN TO THE WORDINGS OF S UB-SECTION 194C(6) WILL BECOME CONTRADICTORY TO THE WORDINGS AND SPIRIT OF THE WORDINGS OF SUB-SECTION 194C(1). THE INTENT OF LEGISLATURE CANNOT BE CONTRA DICTORY. IT CANNOT SAY IN SUB- SECTION 194C( 1) THAT IF THE PERSON IS MAKING PAYME NT FOR TRANSPORTATION CHARGES, THEN IT SHOULD DEDUCT TDS AND IN SUB-SECTION 194C(6 ), IT WOULD SAY THAT NO TDS DEDUCTION WOULD BE MADE IF THE PAYMENT IS GIVEN TO A CONTRACTOR IN THE BUSINESS OF TRANSPORTATION ON FURNISHING OF HIS PAN. FURTHER, THE PROVISIONS OF SECTION 194C( 6) AND 194 C(7) HAVE TO BE READ TOGETHER. SUB-SECTION 194C(7) READ AS UNDER: (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6) SHALL FURNISH , TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT , SUCH PARTICULARS, IN SUCH FROM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED .. THUS, THE BENEFITS OF SUB-SECTION 194C( 6) CAN BE A VAILED ONLY THEN THE ASSESSEE FULFILS THE CONDITIONS LAID DOWN IN SUB-SECTION 194 C(7). HOWEVER, IN THIS CASE, THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS AS SHE HA S NOT FURNISHED THE REQUISITE PARTICULARS IN SUCH FORM TO THE PRESCRIBED INCOME-T AX AUTHORITY WITHIN THE STIPULATED TIME PERIOD. THIS LOGIC IS ALSO INDIRECTLY CONFIRMED BY THE ORDE R OF ITAT HYDERABAD IN ITA NO.1536/HYD/2014 IN THE CASE OF MR. MUHAMMAD SUHAIL , ON WHICH THE ASSESSEE HAD RELIED DURING THE APPELLATE PROCEEDINGS. IN THI S CASE, THE RELEVANT A.Y. IS 2010-11 & THE HON'BLE ITAT HAVE HELD THAT PROVISION S OF SECTION 194C(7) ARE NOT APPLICABLE IN THIS A.Y. BUT THEY ARE CERTAINLY APPL ICABLE TO SUBSEQUENT ASSESSMENT YEARS. THE RELEVANT PORTION OF THE JUDGEMENT READS AS UNDER: I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 6 OF 19 'AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSI NG THE SUBMISSIONS AND NOTIFICATIONS ISSUED IN THIS REGARD, WE ARE OF THE OPINION THAT THERE IS NO NEED TO DEVIATE FROM THE ORDER OF LD. CIT(A). EVEN THOUGH NEW PROVISIONS WERE INTRODUCED AND ASSESSEES WERE MADE LIABLE TO DEDUCT TAX ON THE PAYMENTS MADE TO TRANSPORTERS, PROVISION S OF SECTION 194C(6) GIVES EXEMPTION TO THE PERSON NOT TO DEDUCT THE AMOUNT, IN CASE THEY OBTAIN/FURNISH THE PAN. ASSESSEE HAS COMP LIED WITH THESE PROVISIONS. THEREFORE, THERE IS NO NEED TO DEDUCT A NY LAX AND DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE . EVEN THOUGH IT WAS STATED IN SUB-SECTION 7 THAT PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6 ) SHALL FURNISH, TO THE PRESCRIBED INCOME TAX AUTHORITY OR THE PERSON AUTHO RISED BY IT, SUCH PARTICULARS IN SUCH FORM WITHIN SUCH TIME AS MAY BE PRESCRIBED, THIS PROVISION WAS NOT MADE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR AS THE RELEVANT NOTIFICATION WAS NOT ISSUED IMMEDIA TELY. IN FACT, THE BOARD HAS GIVEN NOTIFICATION ON 15.10.2010, WHICH W AS MADE EFFECTIVE FOR THE FORTHCOMING SECOND QUARTER STATEMENT DUE ON 15TH OCTOBER, 2010. SINCE CBDT ITSELF HAS ISSUED NOTIFICATION IN A LATER YEAR, ASSESSEE'S CONTENTION THAT IN THE IMPUGNED ASSESSME NT YEAR, NO SUCH PRESCRIBED AUTHORITY WAS STATED HAS TO BE ACCEPTED. ' THE SECOND JUDGEMENT RELIED UPON BY THE ASSESSEE IN THE CASE OF VIJAY SIDDHARAJ BASHTE (49 TAXMANN.COM 334, PUNE), IS NOT APPLICABLE IN THIS CASE. THERE HAS BEEN NO FINDING PERTAINING TO THE A PPLICABILITY OF SECTION 194C(7). IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT TH E ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN SUB-SECTION 194C(7) AND THUS COMMITTED THE DEFAULT OF NON-DEDUCTION OF TDS IN THE CASE OF THE TRANSPORTER S FOR BOTH CARRIAGE INWARD AND CARRIAGE OUTWARD. HENCE, THE AO HAD RIGHTLY DISALLO WED THE SUMS U/S 40(A)(IA). THE ACTION OF THE AO IS CONFIRMED. 9. A READING OF THE APPELLATE ORDER SHOWS THAT THE LEARNED CIT DISMISSED THE APPEAL OF THE ASSESSEE ON THE PREMISE, FIRSTLY, THAT U/S 194C (1) ) R/W CLAUSE (C) TO EXPLANATION GIVEN BELOW SEC. 194C(7) THE ASSESSEE IS A CONTRACTOR MAK ING PAYMENTS TO THE TRANSPORTER FOR CARRYING OF GOODS AND WAS THUS LIABLE TO DEDUCT TDS ON SUCH PAYMENT. ACCORDING TO HIM, ACCORDING TO SECTION 194C(6), IF A TRANSPORTER IS M AKING ANY FURTHER PAYMENT FOR HIRING/LEASING OF VEHICLES DURING THE COURSE OF HIS BUSINESS THEN HE WOULD NOT DEDUCT TDS IF THE SUB-CONTRACTORS HAVE SUPPLIED THEIR PAN DETAILS TO THE PRINCIPAL TRANSPORTER. HE FURTHER OBSERVED THAT SECTION 194C(6) WILL NOT APPLY TO PAY MENTS MADE BY A PERSON WHO HIMSELF IS NOT A TRANSPORTER, TO ANOTHER SUB-CONTRACTOR FOR PL YING, HIRING OR LEASING GOODS CARRIAGE. SECONDLY, HE STATED THAT PROVISIONS OF SECTION 194C (6) AND 194C(7) HAVE TO BE READ TOGETHER AND THE BENEFIT UNDER SECTION 194C (6) IS AVAILABLE ONLY WHEN THE ASSESSEE FULFILS THE CONDITIONS LAID DOWN IN SUB-SECTION 194C(7) OF THE ACT. ON THIS ASPECT, HE DERIVES STRENGTH I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 7 OF 19 FROM THE DECISION IN THE CASE OF MUHAMMAD SUHAIL. NOW, WE SHALL PROCEED TO APPRECIATE THE RIVAL CONTENTIONS IN THE LIGHT OF THE PROVISIONS OF THE ACT AND THE DECISIONS RENDERED BY DIFFERENT HIGH COURTS AND TRIBUNAL. 10. FOR PROPER APPRECIATION OF THE FINDING OF THE L EARNED CIT THAT THE ASSESSEE IS A CONTRACTOR MAKING PAYMENTS TO THE TRANSPORTER FOR C ARRYING OF GOODS AND WAS THUS LIABLE TO DEDUCT TDS ON SUCH PAYMENT, IT IS NECESSARY TO LOOK AT THE PROVISIONS OF SECTION 194C)1) OF THE ACT. THE SAID PROVISION READS AS FOLLOWS: 194C. PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS. [(1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SU PPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CO NTRACTOR AND (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; OR (B) SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR 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 THERE IN: PROVIDED THAT NO INDIVIDUAL OR A HINDU UNDIVIDED FA MILY SHALL BE LIABLE TO DEDUCT INCOME-TAX ON THE SUM CREDITED OR PAID TO THE ACCOU NT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PU RPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY.] 11. THE EXPRESSIONS ANY PERSON RESPONSIBLE FOR PAY ING ANY SUM AND TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTR ACTOR), USED IN THIS SECTION PLAINLY MAKES IT CLEAR THAT THE RECEIVER OF THE PAYMENT IS THE CONTR ACTOR, AND THE PERSON MAKING SUCH PAYMENT IS THE CONTRACTEE. IT GOES WITHOUT SAYING THAT THE PERSON WHO IN PURSUANCE OF A CONTRACT, IS RESPONSIBLE FOR PAYMENT IS THE CONTRACTEE AND THE P ERSON CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IS A CO NTRACTOR. AS A MATTER OF FACT, THESE EXPRESSIONS IN THE CONTEXT OF SECTION DO NOT ADMIT OF ANY OTHER INTERPRETATION. I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 8 OF 19 12. OUR UNDERSTANDING OF THE TERMS CONTRACTEE AND CONTRACTOR IS FORTIFIED BY THE JUDGEMENT OF ALLAHABAD HIGH COURT IN MORADBAD CHART ERED ACCOUNTANTS VS CENTRAL BOARD OF DIRECT TAXES AND ANR. - 264 ITR 374 (ALL), WHEREIN IT IS CLEARLY HELD THAT A BARE PERUSAL OF S. 194C SHOWS THAT THE SAID PROVISION REALLY DEALS WIT H CONTRACTORS WHO ARE BUSINESSMEN, E.G., BUILDING CONTRACTOR, OR CONTRACTOR WHO DOES WORK OF TRANSPORTATION OR LOADING OF GOODS, OR FOR SUPPLY OF MATERIALS. FURTHER IT WAS HELD IN KIRLOSK AR BROTHERS LIMITED VS. DCIT (IT AT PUNE)- 167 TTJ 102, THAT IN COMMON PARLANCE, A CONT RACTOR IS UNDERSTOOD AS A PERSON WHO CARRIES OUT THE ASSIGNED WORK AS PER THE DIRECTIONS GIVEN BY THE CONTRACTEE. 13. LD. CIT(A) MISTOOK THE EXPRESSIONS ANY PERSON RESPONSIBLE FOR PAYING ANY SUM AND ANY RESIDENT (HEREAFTER IN THIS SECTION REFERR ED TO AS THE CONTRACTOR), APPEARING IN SEC. 194C(1) AND CATEGORIZED THE ASSESSEE AS THE CONTRAC TOR. HAVING CATEGORIZED THE ASSESSEE AS A CONTRACTOR, THE LD. CIT(A) OBSERVED THAT THE IMMUNI TY FROM MAKING TDS FROM THE PAYMENT UNDER SECTION 194C(6) IS AVAILABLE ONLY TO A TRANSP ORTER THAT PROCURED THE PAN OF THE SUB- CONTRACT TRANSPORTERS. 14. THE NEXT QUESTION, THEREFORE, THAT ARISES IS WH ETHER THE DIFFERENCE BETWEEN CONTRACTOR AND SUB CONTRACTORHAS ANY IMPACT ON THE LIABILITY TO MAKE TDS UNDER SECTION 194C(1) OF THE ACT. TO UNDERSTAND THIS, IT IS NECE SSARY TO REFER TO THE POSITION OF LAW PRIOR TO AND AFTER AMENDMENT TO SECTION 194C OF THE ACT. 15. IT IS WORTH NOTICING THAT BY MEANS OF FINANCE A CT (NO.2), 2009, RATHER THAN INTRODUCING A FEW CHANGES, THE ENTIRE SECTION OF 19 4C HAD BEEN SUBSTITUTED. BEFORE AMENDMENT IT WAS READING LIKE (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREINAFTER 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 I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 9 OF 19 SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR 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 (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY), RESPONSIBLE FOR PAYING ANY SUM TO ANY RESI DENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR C ARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLY ING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPL Y SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN AFTER AMENDMENT BY FINANCE ACT (NO.2), 2009 IT IS R EADING LIKE, (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO AN Y 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 SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6) SHALL FURNISH, TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS, IN SUCH FORM AN D WITHIN SUCH TIME AS MAY BE PRESCRIBED. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, (I) 'SPECIFIED PERSON' SHALL MEAN, (II) (III) 'CONTRACT' SHALL INCLUDE SUB-CONTRACT; (IV 16. THOUGH THE ENTIRE SECTION 194C IS SUBS. BY FINA NCE (NO. 2) ACT, 2009, S. 61 (W.E.F. 1- 10-2009), IN SO FAR AS THE OBLIGATION OF THE PERSON RESPONSIBLE FOR MAKING PAYMENT/CREDITING I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 10 OF 19 THE ACCOUNT OF THE PAYEE TO DEDUCT TDS WHEN PAYMENT /CREDIT IS MADE PURSUANT TO A CONTRACT BETWEEN IS CONCERNED, EVEN AFTER AMENDMENT, SEC. 19 4C(1) HAD REMAINED SUBSTANTIALLY THE SAME. HOWEVER, EARLIER CONTRACT AND SUB-CONTRACT WERE COVERED BY TWO DIFFERENT SUBSECTIONS, NAMELY, SEC. 194C(1) AND SEC. 194C(2) RESPECTIVELY. BUT, THE AMENDMENT, VIDE FINANCE ACT, 2009 BROUGHT IN THE MOST SIGNIFICANT C HANGE BY OBLITERATING THE DIFFERENCE BETWEEN CONTRACT AND SUB-CONTRACT, BY REPEALING SEC . 194C(2) WHICH WAS DEALING WITH SUB- CONTRACTORS AND SIMULTANEOUSLY INTRODUCING SUB SECT ION (7) WITH EXPLANATION, CLAUSE NO. (III) OF WHICH CLARIFIES THAT 'CONTRACT SHALL INCLUDE SUB -CONTRACT'. NOW AS THE THINGS STAND, THERE REMAINS NO DISTINCTION BETWEEN A CONTRACT AND SUB-C ONTRACT. UNLIKE PRE-AMENDMENT SCENARIO, THE ENTIRE PROVISION OF SEC. 194C NOW APP LIES ALIKE TO BOTH THE SITUATIONS, NAMELY, IN RELATION TO JOBS ASSIGNED BY A PERSON TO A CONTR ACTOR AND THE JOBS ASSIGNED BY A CONTRACTOR TO A SUB-CONTRACTORS IN A SIMILAR MANNER. A PLAIN R EADING OF SEC. 194C(2), AS IT STANDS NOW, CLEARLY STATES THAT A CONTRACTOR ENTRUSTED WITH ANY WORK UNDER SEC. 194C(1) WHILE MAKING PAYMENT TO A SUB-CONTRACTOR IS STILL UNDER OBLIGATI ON TO EFFECT TDS AS WELL. 17. REFERENCE TO CONTRACTOR AND SUB-CONTRACTOR BY T HE LD. CIT(A) INDICATES THAT HE BEEN STILL LABOURING UNDER THE IMPRESSION THAT, AS PROVI DED BY THE PRE-AMENDED PROVISIONS, SUCH IMMUNITY WOULD BE AVAILABLE IN THE HANDS OF THE CON TRACTOR- TRANSPORTER MAKING PAYMENT TO THE SUB CONTRACTORS-TRANSPORTERS. IT SHOWS THAT HE HAD FAILED TO TAKE NOTE OF THE FACT THAT BY VIRTUE OF THE AMENDMENT INTRODUCED BY FINANCE ACT ( NO.2) 2009, THE DISTINCTION BETWEEN A CONTRACTOR AND A SUB-CONTRACTOR HAS BEEN DONE AWAY WITH. LD CIT SHOULD HAVE NOTICED THE SIGNIFICANCE OF THE AMENDMENTS MADE BY FINANCE (NO. 2) ACT, 2009 AND MAKE OUT THE DIFFERENCE BETWEEN THE PREVIOUS AND PREVAILING PROV ISION 18. ON THIS ASPECT, WE ARE FORTIFIED IN OUR CONCLUS ION BY THE DECISION OF A COORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF HCC-L&T PURULIA JOINT VENTURE V JCIT (ITA NOS. 1644, 3041/MUM/2010), WHEREIN IT WAS HELD AS F OLLOWS: THE PROVISIONS OF SECTION 194 C AS SUBSTITUTED BY THE FINANCE ACT 2 OF 2009 W.E.F. 1/10/2009 HAS NOW NOT MADE ANY DISTINCTION B ETWEEN A PAYMENT TO A CONTRACTOR OR SUB-CONTRACTOR AND ALL PAYMENTS FOR C ARRYING OUT ANY WORK IN PURSUANCE OF CONTRACT ARE COVERED WITHIN THE FOLD O F SECTION 194C (1) OF THE ACT. FURTHER EXPLANATION (III) ALSO PROVIDES THAT A CONT RACT INCLUDE SUB- CONTRACT. THUS ON AND FROM 1/10/2009 PAYMENTS MADE BY SUB-CONTRACT OR TO A SUB SUB-CONTRACTOR WOULD ALSO BE COVERED UNDER SECTION 194C OF THE AC T. I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 11 OF 19 19. FURTHER, CBDT CIRCULAR NO. 05/2010 F.NO.L42/13/ 2010- SO (TPL), DATED 3TD JUNE, 2010, IN THE CONTEXT OF THE EXPLANATORY NOTES ON FI NANCE ACT (NO.2) 2009, CLEARLY DELINEATES REASON FOR REMOVAL OF DIVIDING LINE BETWEEN A CONTR ACTOR AND A SUB-CONTRACTOR BY THE FINANCE ACT, (NO.2) , 2009 IN THE FOLLOWING TERMS: 'UNDER THE EXISTING PROVISIONS OF SECTION 194C OF T HE INCOME-TAX ACT, TDS AT THE RATE OF 2% IS DEDUCTED ON PAYMENT FOR A CONTRACT. HOWEVE R, IN THE CASE OF A SUB-CONTRACT, TDS IS DEDUCTED AT THE RATE OF 1 %. FURTHER, IN THE CASE OF PAYMENT FOR AN ADVERTISING CONTRACT, TDS IS REQUIRED TO BE DEDUCTED AT THE RAT E OF 1 %. IN ORDER TO REDUCE THE SCOPE FOR DISPUTES REGARDING CLASSIFICATION OF CONT RACT AS SUB CONTRACT, THE ACT HAS BEEN AMENDED TO SPECIFY THE SAME RATE OF TDS FOR PA YMENTS TO BOTH CONTRACTORS AS WELL AS SUB- CONTRACTORS.' 20. IT, THEREFORE, FLOWS FROM OUR ABOVE DISCUSSION THAT BY VIRTUE OF THE AMENDMENT INTRODUCED BY FINANCE ACT (NO.2) 2009, THE DISTINCT ION BETWEEN A CONTRACTOR AND A SUB- CONTRACTOR HAS BEEN DONE AWAY WITH, AND CL. (III) O F EXPLANATION UNDER 194C(7) NOW CLARIFIES THAT 'CONTRACT' SHALL INCLUDE SUB-CONTRACT. 21. NOW COMING TO THE CONTENTION THAT UNDER SEC. 19 4C(6) AS IT STANDS NOW, PROVIDING FOR IMMUNITY FROM TDS UNDER SEC. 194C(1) IN RELATION TO PAYMENTS TO TRANSPORTERS, APPLIES ONLY TO A TRANSPORTER MAKING PAYMENT TO ANOTHER SUB-CONT RACTOR SUBMITTING HIS PAN TO THE FORMER, SECTION 194C(6) DOES NOT GIVE ANY SUCH INDICATION. SECTION 194C(6) READS AS FOLLOWS: (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITE D 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 CARRIAG ES, WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREV IOUS YEAR AND FURNISHES A DECLARATION TO THAT EFFECT ALONG WITH, HIS PERMANEN T ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. 22. PRIOR TO THE AMENDMENT BY FINANACE ACT, 2015 (W .E.F. 1-06-2015, IT WAS READING AS FOLLOWS: (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 12 OF 19 BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAG ES, ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING S UCH SUM. 23. A PLAIN READING OF THE ABOVE SUB-SECTION MAKES IT AMPLY CLEAR THAT ON THE CONTRACTOR UNDERTAKING TRANSPORT OF GOODS IN COURSE OF HIS TRA NSPORT BUSINESS, FURNISHING PAN TO THE PERSON MAKING SUCH PAYMENT/CREDIT, THE PAYEE SHALL NOT BE REQUIRED TO EFFECT TDS FROM SUCH PAYMENT TO THE TRANSPORTER. ON FURNISHING THE PAN NO. FROM THE RECIPIENT TRANSPORTER- CONTRACTOR, THE IMMUNITY FROM MAKING TDS UNDER SEC. 194C(1) SHALL BE AVAILABLE TO ALL PAYERS BY VIRTUE OF 194C(6), IN RELATION TO ALL GOO DS TRANSPORT CHARGES IRRESPECTIVE OF THE FACT, WHETHER IT WAS UNDER A CONTRACT OR A SUB-CONT RACT. 24. WE WISH TO REFER PROFITABLY TO PARA NO. 49.3 OF CBDT CIRCULAR NO. 05 12010 F.NO.142/13/2010-S0 (TPL), DATED 3RD JUNE, 2010 (EX PLANATORY NOTES ON FINANCE ACT (NO.2) 2009), WHERE UNDER THE PAN BASED IMMUNITY AND EXEMP TION FROM MAKING TDS TO TRANSPORTERS WAS EXTENDED IN ALL TRANSPORT CONTRACT S. '49.3 PROVISIONS FOR PAYMENTS AND TAX DEDUCTED AT S OURCE TO TRANSPORTERS A) UNDER SECTION 194C, TAX IS REQUIRED TO BE DEDUCT ED ON PAYMENTS TO TRANSPORT CONTRACTORS ENGAGED IN THE BUSINESS OF PLYING, HIRI NG OR LEASING GOODS CARRIAGES. HOWEVER IF THEY FURNISH A STATEMENT THAT THEY DO NO T OWN MORE THAN TWO GOODS CARRIAGES, TAX IS NOT 63 TO BE DEDUCTED AT SOURCE. TRANSPORT OPERATORS ARE REPORTING, PROBLEM IN OBTAINING TDS CERTIFICATES AS THESE ARE NOT ISSUED IMMEDIATELY BY CLIENTS AND THEY ARE NOT ABLE TO APPROACH THE CLIENT AGAIN AS THEY MAY HAVE TO MOVE ACROSS THE COUNTRY FOR THEIR BUSINESS. B) IT IS, THEREFORE, THE ACT HAS BEEN AMENDED TO EX EMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PUR VIEW OF TDS. HOWEVER, THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR FURNISHES HI S PERMANENT ACCOUNT NUMBER (PAN) TO THE DEDUCTOR. DEDUCTORS WHO MAKE PAYMENTS TO TRANSPORTERS WITHOUT DEDUCTING TDS (AS THEY HAVE QUOTED PAN) WILL BE REQ UIRED TO INTIMATE THESE PAN DETAILS TO THE INCOME TAX DEPARTMENT IN THE PRESCRI BED FORMAT. C) APPLICABILITY - THIS AMENDMENT HAS BEEN MADE APP LICABLE WITH EFFECT FROM 1ST OCTOBER, 2009 AND WILL ACCORDINGLY APPLY IN RELATIO N TO THE ASSESSMENT YEAR 2010- 2011 AND SUBSEQUENT ASSESSMENT YEARS. THE CIRCULAR, WHILE REFERRING TO THE AMENDMENT IN S EC. 194C(6) MADE IT PLAINLY CLEAR THAT FROM THE A.Y. 2010-11 ONWARDS, BY VIRTUE THEREOF WH EN TRANSPORT OPERATORS FURNISH THEIR I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 13 OF 19 PAN TO THE PERSON RESPONSIBLE FOR MAKING PAYMENTS T O THEM, THE TRANSPORT OPERATORS WOULD BE OUTSIDE THE PURVIEW OF TDS U/S 194C. NEEDLESS TO SAY THAT SUBJECT TO COMPLIANCE WITH THE PROVISIONS OF SECTION 194C(6), IMMUNITY FROM TDS UN DER SEC. 194C(1) IN RELATION TO PAYMENTS TO TRANSPORTERS, APPLIES TRANSPORTER AND N ON-TRANSPORTER CONTRACTEES ALIKE. 25. NEXT GROUND OF DISALLOWANCE STATED BY THE LEARNED C IT IS THAT SEC. 194C(6) AND 194C(7) ARE TO BE READ TOGETHER, AND IF AFTER OBTAI NING PAN FROM THE TRANSPORTERS, THE REQUISITE PARTICULARS SO OBTAINED FROM THE TRANSPOR TERS ARE NOT FURNISHED TO THE PRESCRIBED AUTHORITY AS PROVIDED U/S 194C(7), DEDUCTION AND FO R THAT MATTER DISALLOWANCE, U/S 194C AND 40(A)(IA) WOULD GET ATTRACTED. ON THIS ASPECT, AS INDICATED ABOVE A READING OF PROVISIONS OF SECTION 194C (6), PRIOR TO THE AMENDMENT OF BY F INANCE ACT, 2015 (W.E.F. 1-06-2015), MAKES IT CLEAR THAT THAT DURING THE RELEVANT ASSESS MENT YEAR, IF THE SUB-CONTRACTORS HAVE SUPPLIED THEIR PAN TO THE PERSON MAKING PAYMENTS IN RESPECT OF HIRING /LEASING/OF VEHICLES DURING THE COURSE OF HIS BUSINESS, THEN SUCH PERSON MAKING SUCH PAYMENT SHALL NOT DEDUCT ANY TDS. IT IS ONLY BY WAY OF SUBSEQUENT AMENDMENT BY F INANCE ACT, 2015 (W.E.F. 1-06-2015), THE EXPRESSION 'WHERE SUCH CONTRACTOR OWNS TEN OR L ESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECLARATION TO THAT E FFECT ALONG WITH' WAS SUBSTITUTED IN THE PLACE OF ON FURNISHING OF THEREBY INTRODUCING THE REQUIREMENT OF THE DECLARATION TO T HE EFFECT INDICATED BY THE AMENDMENT. THEREFORE, UNDE R SEC. 194C(6), AS IT STOOD PRIOR TO THE AMENDMENT IN 2015 IN ORDER TO GET IMMUNITY FROM THE OBLIGATION OF TDS, FILING OF PAN OF THE PAYEE-TRANSPORTER ALONE IS SUFFICIENT AND NO C ONFIRMATION LETTER AS REQUIRED BY THE LEARNED CIT IS REQUIRED. 26. ON THE ASPECT OF OBSERVATION OF THE LEARNED CIT THAT SECTIONS 194C(6) AND SECTION 194C(7) HAVE TO BE READ TOGETHER TO EXTEND THE IMMU NITY FROM TDS, OUR ATTENTION IS DRAWN TO THE FACT THAT THOUGH THE FINANCE ACT, (N0.2) 2009 I NTRODUCED, INTER ALIA, SEC. 194C(6) AND 194C(7), SIMILAR AND ANALOGOUS PROVISION HAD BEEN V ERY MUCH IN EXISTENCE UNDER PROVISO 2 AND 3 TO SECTION 194C(3) OF THE ACT. PLACING SUCH PROVISIONS IN JUXTAPOSITION IN THE FOLLOWING CHART MAKES IT CLEAR THAT THEY ARE VERY M UCH ANALOGOUS AND THE DIFFERENCE IS THAT ONLY IN RESPECT OF REQUIREMENT OF A DECLARATION AND FURNISHING THE PARTICULARS TO THE TO THE PRESCRIBED INCOME-TAX AUTHORITIES UNDER THE PROVISO S 2 AND 3 OF PRE-AMENDED SECTION 194C(3) I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 14 OF 19 IS BEING REPLACED BY THE PERMANENT ACCOUNT NUMBER U NDER PRESENT SECTIONS 194C(6) AND (7) RESPECTIVELY. 194C PRIOR TO AMENDMENT BY FINANCE ACT, (N0.2) 2009 ) 194C AS AMENDED BY FINANCE ACT, (N0.2) 2009 194C(3) NO DEDUCTION SHALL BE MADE UNDER SUB- SECTION (1) OR SUB-SECTION (2) FROM PROVIDED THAT . PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB- CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR] (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, 1 ['WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECLARATION TO THAT EFFECT ALONG WITH'], HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6) SHALL FURNISH, TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. 27. FROM THE ABOVE, IT COULD BE OBSERVED THAT ONLY SLIGHT MODIFICATION HAD BEEN INTRODUCED AS TO THE PROCEDURE BY REPLACING DECLAR ATION WITH THE WORDS PERMANENT ACCOUNT NUMBER AS THE THING TO BE OBTAINED FROM TH E TRANSPORTER. WE ARE, THEREFORE, INCLINED TO HOLD THAT THE PROVISIONS OF SECTION 194 C(6) AND 194C(7) ARE SIMILAR TO THE PROVISO (2) AND (3) OF THE PRE-AMENDED SECTION 194C(3), AND ON THIS PREMISE WE SHALL PROCEED TO I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 15 OF 19 EXAMINE WHETHER SECTION 194C(6) AND 194C(7) ARE TO BE READ TOGETHER TO INVOKE PROVISIONS UNDER SECTION 40(A)(IA) OF THE ACT. 28. AFTER DRAWING AN ANALOGY BETWEEN THE PRE-AMENDE D PROVISO BETWEEN CLAUSE (2) AND CLAUSE (3) OF SECTION 194C(3) AND THE PRESENT AMEND ED SECTION 194C(6) AND 194C(7), LEARNED AR SUBMITTED THAT EVEN ON EARLIER OCCASIONS WHEN THE DECLARATION OBTAINED IN FORM 15I ( REQUIREMENT SIMILAR TO THE PAN PARTICULARS UN DER SEC. 194C(6)) OBTAINED FROM THE TRANSPORTER UNDER SECOND PROVISO IS NOT SUBMITTED I N FORM 15J TO THE COMMISSIONER OF INCOME TAX IN FORM 15J (REQUIREMENT SIMILAR AS IS P ROVIDED UNDER THE THIRD PROVISO AND EQUIVALENT TO THE REQUIREMENT SEC. 194C(7), THE DEP ARTMENT MADE ATTEMPTS TO MAKE ADDITIONS, BUT SUCH ADDITIONS HAVE BEEN DELETED AND RENDERED INVALID. HE SUBMITTED THAT THE COURTS AND TRIBUNALS CONSISTENTLY HELD THAT ON OBTA INING OF EITHER THE DECLARATION CONTEMPLATED UNDER SECOND PROVISO TO THE PRE-AMENDE D SECTION 194C(3) OR THE PAN DETAILS UNDER THE PRESENT SECTION 194C(6), THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY DEDUCTION AT SOURCE ON THE PAYMENTS MADE TO THE CONTRACTOR OR SU B-CONTRACTOR, IRRESPECTIVE OF THE FACT WHETHER OR NOT SUCH INFORMATION WAS FURNISHED TO TH E AUTHORITIES AS PRESCRIBED UNDER THIRD PROVISO TO THE AMENDED SECTION 194C(3) OR THE PRESE NT SECTION 194C(7). 29. IN CIT VS.- VALIBHAI KHANBHAI MANKAD (TAX APPE AL NO. 1182 OF 2011, ORDER DATED 01.10.2012), IT IS HELD BY THE HONBLE GUJARAT HIGH COURT AT AHMEDABAD THAT :- (6) SECTION 194C, AS ALREADY NOTICED, MAKES PROVIS ION WHERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARIS ES. THEREFORE, IF THERE IS ANY BREACH OF SUCH REQUIREMENT, QUESTION OF APPLICABILITY OF S ECTION 40(A)(IA) WOULD ARISE. DESPITE SUCH CIRCUMSTANCES EXISTING, SUB-SECTION (3 ) MAKES EXCLUSION IN CASES WHERE SUCH LIABILITY WOULD NOT ARISE. WE ARE CONCERNED WI TH THE FURTHER PROVISO TO SUB- SECTION (3), WHICH PROVIDES THAT NO DEDUCTION UNDER SUB-SECTION (2) SHALL BE MADE FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKE LY TO BE CREDITED OR PAID TO THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLY ING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PE RSON CONCERNED PAYING OR CREDITING SUCH SUM IN THE PRESCRIBED FORM AND VERIFIED IT IN THE PRESCRIBED MANNER WITHIN THE TIME AS MAY BE PRESCRIBED, IF SUCH SUB-CONTRACTOR I S AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING TH E PREVIOUS YEAR. 7) THE EXCLUSION PROVIDED IN SUB-SECTION (3) OF SEC TION 194C FROM THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SUB-SECTION (2) WOULD TH US BE COMPLETE THE MOMENT THE REQUIREMENTS CONTAINED THEREIN ARE SATISFIED. SUCH REQUIREMENTS, PRINCIPALLY, ARE THAT THE SUB-CONTRACTOR, RECIPIENT OF THE PAYMENT PRODUC ES A NECESSARY DECLARATION IN THE PRESCRIBED FORMAT AND FURTHER THAT SUCH SUB-CONTRAC TOR DOES NOT OWN MORE THAN TWO I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 16 OF 19 GOODS CARRIAGES DURING THE ENTIRE PREVIOUS YEAR. TH E MOMENT, SUCH REQUIREMENTS ARE FULFILLED, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE OR TO BE MADE TO SUCH SUB-CONTRACTORS WOULD CEASE. IN FACT H E WOULD HAVE NO AUTHORITY TO MAKE ANY SUCH DEDUCTION. 8) THE LATER PORTION OF SUB-SECTION (3) WHICH FOLLO W THE FURTHER PROVISO IS A REQUIREMENT WHICH WOULD ARISE AT A MUCH LATER POINT OF TIME. SUCH REQUIREMENT IS THAT THE PERSON RESPONSIBLE FOR PAYING SUCH SUM TO THE S UB-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 TH E NEXT ACCOUNTING YEAR IN QUESTION. 9) IN OUR VIEW, THEREFORE, ONCE THE CONDITIONS OF F URTHER 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 DEDUC TION 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 IMPUG NED 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, FULFILMENT OF SUCH REQUIREMENT CANNOT BE LINKED TO THE DECLARATION OF TAX AT SOURC E. ANY SUCH FAILURE THEREFORE CANNOT BE VISUALIZED BY ADVERSE CONSEQUENCES PROVIDED UNDE R SECTION 40(A)(IA) OF THE ACT. 10) WHEN ON THE BASIS OF THE RECORD IT IS NOT DISPU TED THAT THE REQUIREMENTS OF FURTHER PROVISO WERE FULFILLED, THE ASSESSEE WAS NOT REQUIR ED TO MAKE ANY DEDUCTION AT SOURCE ON THE PAYMENTS MADE TO THE SUB-CONTRACTORS. IF THA T BE OUR CONCLUSION, APPLICATION OF SECTION 40(A)(IA) WOULD NOT ARISE SINCE, AS ALREADY NOTICED, SECTION 40(A)(IA) WOULD APPLY WHEN THERE IS A REQUIREMENT OF DEDUCTION OF T AX AT SOURCE AND SUCH REQUIREMENT IS EITHER NOT FULFILLED OR HAVING DEDUCTED TAX AT S OURCE IS NOT DEPOSITED WITHIN PRESCRIBED TIME. 30. IN CIT VS.- SRI MARIKAMBA TRANSPORT CO. IN ITA NO. 553 OF 2013 REPORTED IN 379 ITR 129 (KARN.), HONBLE KARNATAKA HIGH COURT HAS F ORMULATED A QUESTION AS TO WHETHER NON-FILING OF FORM NO. 15I/J WITHIN THE PRESCRIBED TIME IS ONLY A TECHNICAL DEFAULT OR THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE ATTR ACTED? AND PROCEEDED TO ANSWER THE SAME AS UNDER:- SECTION 40 (A)(IA) AND SECTION 194C(3) OF THE ACT READS THUS: 'SECTION 40(A)(IA) : ANY INTEREST, COMMISSION OR BR OKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RE SIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XII-B AND SUCH TAX HAS NOT BEE N DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFI ED IN SUB- SECTION(I) OF SECTION 139'. SECTION 194C/3): NO DEDUCTION SHALL BE MADE UNDER S UB-SECTION (1) OR SUB- SECTION(2) FROM - I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 17 OF 19 (I) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKEL Y TO BE CREDITED OR PAID TO THE ACCOUNT OF OR TO THE CONTRACTOR OR SUB-CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRE D TO IN SUB-S.(L) OR AS THE CASE MAY BE SUB-S.(2) SHALL BE LIABLE TO DEDUCT INCOME-TAX U NDER THIS SECTION: PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UN DER SUBS. (2) FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED O R PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARA TION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, I F SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CA RRIAGES AT ANY TIME DURING THE PREVIOUS YEAR. PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYIN G ANY SUM AS AFORESAID TO THE SUB- CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED IT AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH PARTI CULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED: OR (II) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1972; OR (III) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY O F JUNE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO-OPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB-CONTRA CTOR IN RELATION TO ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK) UNDERTAKEN BY THE CONTRACTOR FOR THE CO-OPERATIVE SOCIETY. ' 4. THE COMBINED READING OF THESE TWO PROVISIONS MA KE IT CLEAR THAT IF THERE IS ANY BREACH OF REQUIREMENTS OF SECTION 194C(3), THE QUES TION OF APPLICABILITY OF SECTION 40(A)(IA) ARISES. THE EXCLUSION PROVIDED IN SUB-SEC TION(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. O NCE, THE DECLARATION FORMS ARE FILED BY THE SUBCONTRACTOR, THE LIABILITY OF THE ASSESSEE TO DEDUCT TAX ON THE PAYMENTS MADE TO THE SUB-CONTRACTOR WOULD NOT ARISE. AS WE HAVE E XAMINED, THE SUB-CONTRACTORS HAVE FILED FORM NO. 1SL BEFORE THE ASSESSEE. SUCH BEING THE CASE, THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX UNDER SECTION 194C(3) OF THE ACT AND TO FILE FORM NO.15]. IT IS ONLY A TECHNICAL DEFECT AS POINTED OUT BY THE TRIBU NAL IN NOT FILING FORM NO.15J BY THE ASSESSEE. THIS MATTER WAS EXTENSIVELY CONSIDERED BY THE ITAT, AHMEDABAD BENCH IN VALIBHAI KHANBHAI MANKAD'S CASE (SUPRA) AND THE SAI D JUDGMENT HAS BEEN UPHELD BY THE HIGH COURT OF GUJARAT REPORTED IN (2013) 216 TA XMAN 18 (GUJ) WHEREIN IT IS HELD THAT ONCE THE CONDITIONS OF SECTION 194C(3) WERE SA TISFIED, THE LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE AND ACCORDINGLY, A PPLICATION OF SECTION 40(A)(IA) WOULD ALSO NOT ARISE. THE TRIBUNAL, PLACING RELIANC E ON THE JUDGMENT OF THE ITAT, AHMEDABAD BENCH, HAS DISMISSED THE APPEAL FILED BY THE REVENUE. WE AGREE WITH DIE SAID PROPOSITIONS AND HOLD THAT FILING OF FORM NO.1 5I/J IS ONLY DIRECTORY AND NOT MANDATORY. I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 18 OF 19 31. A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 86/VIZ/2013 IN THE CASE OF ITO VS.- KOLLI BROTHERS, ORDER DATED 11.12.2013 FOLLOWED THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF VALIBHAI KHANBHAI MANKAD (SU PRA). IN THE CASE OF M/S. MAHALAXMI CARGO MOVERS VS.- ITO IN ITA NO. 6191/MUM/2013, OR DER DATED 09.12.2015, ANOTHER COORDINATE BENCH OF THIS TRIBUNAL REACHED THE SAME CONCLUSION WHILE FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF CIT VS.- VA LIBHAI KHANBHAI MANKAD (SUPRA) AND CIT VS.- SRI MARIKAMBA TRANSPORT CO. IN ITA NO. 553 OF 2013 REPORTED IN 379 ITR 129 (KARN.). 32. IT IS WORTH NOTICING THAT IN ACIT VS.- MR. MOH AMMED SUHAIL, KURNOOL IN ITA NO. 1536.HYD/2014, ORDER DATED 13.02.2015, THE COORDINA TE BENCH OF THIS TRIBUNAL SPECIFICALLY HELD THAT THE PROVISIONS OF SECTION 194C(6) ARE IND EPENDENT OF SECTION 194C(7), AND JUST BECAUSE THERE IS VIOLATION OF PROVISIONS OF SECTION 194C(7), DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE IF THE ASSESSEE COMPLIES W ITH THE PROVISIONS OF SECTION 194C(6). 33. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE JUDICIAL REASONING DELINEATED IN THE ABOVE JUDGMENTS, WE FIND THAT IF THE ASSESSEE C OMPLIES WITH THE PROVISIONS OF SECTION 194C(6), DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE JUST BECAUSE THERE IS VIOLATION OF PROVISIONS OF SECTION 194C(7) OF THE ACT. 34. FROM OUR ABOVE DISCUSSION IT FOLLOWS THAT,- I) IN THE CONTEXT OF SECTION 194C(1), PERSON UNDERTAKI NG TO DO THE WORK IS THE CONTRACTOR AND THE PERSON SO ENGAGING THE CONTRACTO R IS THE CONTRACTEE; II) THAT BY VIRTUE OF THE AMENDMENT INTRODUCED BY FINAN CE ACT (NO.2) 2009, THE DISTINCTION BETWEEN A CONTRACTOR AND A SUB-CONTRACT OR HAS BEEN DONE AWAY WITH AND CL. (III) OF EXPLANATION UNDER 194C(7) NOW CLAR IFIES THAT 'CONTRACT' SHALL INCLUDE SUB-CONTRACT; III) SUBJECT TO COMPLIANCE WITH THE PROVISIONS OF SECTIO N 194C(6), IMMUNITY FROM TDS UNDER SEC. 194C(1) IN RELATION TO PAYMENTS TO T RANSPORTERS, APPLIES TRANSPORTER AND NON-TRANSPORTER CONTRACTEES ALIKE; IV) UNDER SEC. 194C(6), AS IT STOOD PRIOR TO THE AMENDM ENT IN 2015, IN ORDER TO GET IMMUNITY FROM THE OBLIGATION OF TDS, FILING OF PAN OF THE PAYEE-TRANSPORTER ALONE IS SUFFICIENT AND NO CONFIRMATION LETTER AS REQUIRED BY THE LEARNED CIT IS REQUIRED; I.T.A. NO. 1420/KOL./2015 ASSESSMENT YEAR: 2012-2013 PAGE 19 OF 19 V) SECTIONS 194C(6) AND SECTION 194C(7) ARE INDEPENDEN T OF EACH OTHER, AND CANNOT BE READ TOGETHER TO ATTRACT DISALLOWANCE U/S 40(A)(IA) READ WITH SECTION 194C OF THE ACT; AND VI) IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SEC TION 194C(6), NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS PERMISSIBL E, EVEN THERE IS VIOLATION OF THE PROVISIONS OF SECTION 194C(7) OF THE ACT. 35. CONSEQUENT TO OUR FINDINGS IN THE PRECEDING PAR AGRAPHS, WE REACH A CONCLUSION THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING THE EXPENSE INCURRED BY THE ASSESSEE FOR CARRIAGE INWARD AND CARRIAGE OUTWARD AS DISALLOWABL E UNDER SECTION 40(A)(IA) OF THE ACT, AND ADDING BACK RS.1,63,78,648/- CLAIMED AS EXPENSE TOW ARDS CARRIAGE INWARD AND RS.1,13,00,980/- CLAIMED AS EXPENSE TOWARDS CARRIAG E OUTWARD, AND SUCH ADDITIONS SHALL STAND DELETED. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 9 TH , 2016. SD/- SD/- (WASEEM AHMED) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 9 TH DAY OF SEPTEMBER, 2016 COPIES TO : (1) SMT. SOMA RANI GHOSH, 274, CANAL STREET, SREEBHUMI, LAKE TOWN, KOLKATA-700 048 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-49, KOLKATA, UTTARAPAN BUILDING, MANIKTALA CIVIC CENTRE, KOLKATA-700 054 (3) COMMISSIONER OF INCOME TAX, KOLKATA-15, KOLKAT A; (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.