I.T.O.(T.D.S.) WARD 1(1), Nagpur V. JSW STEEL COATED PRODUCT LTD, Nagpur

ITA 314/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1309 (ITAT-NAGPUR)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 04-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A R NINAWE
• Section: 133A; 194C; 201(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NOS. 316 TO 319/NAG/2015 ASSESSMENT YEARS : 2 0 12 - 13 TO 2015 - 16. THE INCOME - TAX OFFICER (TDS), MANIKGARH CEMENT (DIVISION OF WARD - 2(3), CHANDRAPUR. VS. CENTURY TEXTILES & INDUSTRIES), GADCHANDUR TQ. KORPANA, DIST. CHANDRAPUR. TAN - NGPM00675D. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY: SHRI RAJESH LOYA.. I.T.A. NOS. 324 TO 327/NAG/2015 ASSESSMENT YEARS : 2 011 - 12 TO 20 014 - 15. DY. COMMISSIONER OF INCOME - TAX, M/S JSW ISPAT STEEL LTD., (TDS), CIRCLE - 1, NAGPUR. VS. MIDC INDUSTRIAL AREA, KALMESHWAR, NAGPUR. TAN NGPIO0786C. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY: SHRI RA KESH JOSHI. I.T.A. NOS. 320 TO 323/NAG/2015 ASSESSMENT YEARS : 2011 - 12 TO 20014 - 15. DY. COMMISSIONER OF I NCOME - TAX, M/S INDORAMA SYNTHETIC (INDIA) (TDS), CIRCLE - 1, NAGPUR. VS. LTD., BUTIBORI, NAGPUR. TAN NGPIOO758C . APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY: SHRI K.P. DEWANI. 2 I.T.A. NOS. 314 & 315/NAG/2015 ASSESSMENT YEARS : 2014 - 15 & 2015 - 16. THE INCOME - TAX OFFICER (TDS), JSW STEEL COATED PRODUCT LTD., WARD - 1(1), NAGPUR. VS. KALMESHWAR. TAN NGP JO 2188E. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SHRI RAKESH JOSHI. DATE OF HEARING : 21 - 11 - 2016 DATE OF PRONOUNCEMENT : 23 RD NOV.., 2016 O R D E R. 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 ORD ER. 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 ABO VE ISSUE, FOR THE SAKE OF REFERENCE WE ARE REPRODUCING THE GROUNDS OF APPEAL RAISED IN ITA NO. 316/NAG/2015: 1. WH E THER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) IS JUSTIFIED IN DELETING THE DEMAND OF RS. 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 L D . C I T( A ) IS JU STIFIED I N NOT APPRECIATING THAT THE PHRASE IN SECT I ON 194C(6) 'D U R I NG T H E COU RSE OF PLYING , HIRING AND LEASING OF GOODS CARRIAGES' DOES N O T APPL Y TO C O N TRACTOR O N LY BUT TO BOTH THE PARTIES I .E. PRINCIPAL AS WELL AS CONTRACTOR? ' 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CI T( A) IS JUSTIFIED I N HOLDING THAT ONLY CONTRACTOR SHOULD BE IN THE LINE OF BUSINESS OF PLYING, HI RI NG AND LEASING OF GOODS CARRIAGES WHEREAS THE SECTION 194C( 6) NOWHERE 3 MENTION THAT ONLY CONTRACTOR SHOULD BE IN THE BUSINESS OF PLYING, HIRING AND L E ASING OF GOODS CARRIAGES? 4. W HETHER ON THE FACTS AND CIRCUMSTANCES 01: THE CASE THE LD . CIT (A) IS JUSTIFIED I N IGNORING THE TRUE SPIRIT IN WHICH SECTION 194C(6) W AS BROUGHT TO THE STATUTE W.E.F . 1 - 10 - 2009 PARTICULARLY WHEN PRIOR TO I NTRODUCT I ON OF T HIS SECTION TDS WAS BEING MADE ON IDENTICA L PAYMENTS TO TRANSPORTERS? 5. WHETHER ON THE FACTS AND CIR CUMSTANCES OF THE CASE THE LD.CIT(A) IS JUST I FIED IN NOT APPRECIATING THAT BY VIRTUE OF AMENDMENT TO SECTION 194C (6 ) W.E . F. 1 - 6 - 2015 AN EXEMPTION HAS BEEN PROVIDED TO TRANSPORTERS OWNIN9 UP TO 1 0 GOODS CARR I AGES AND PRIOR TO THAT DATE, THERE WAS NO EXEMPTION PROVIDE D U/S 194C (6) OF THE ACT FROM TDS TO ANY PERSON ? 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS JUST I FIED IN NOT APPRECIATING THE FACT THAT THE CIRCULA R NO.5/2010 DATED - 3.06.2010 I S I RRELEV A NT IN ASSESSEE'S CASE AS ALMOST ALL THE PAYMEN T S WERE MADE TO BIG TRANSPORTERS WHO ARE OUT OF THE PURVIEW OF SECTION 44AE? 7. . 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD . CIT(A) IS JUST I FIED IN ADMITTING FRESH GROUNDS REGARD I NG DOUBLE TAXATION WITHOUT GIVING AN OPPORTUN I TY TO THE A.O., SINCE THE SA I D GROUNDS WERE NOT RA I SED BEFORE THE A . O. DUR I NG P R OCEEDINGS U/S 201 /2 01A? 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE T H E LD. C IT (A) IS JUSTIFIED IN NOT APPRECIATING THE RUL I NG OF 1 ST PROVISO TO SECT I O N 2 01( 1 ) A N D H OLD I NG THAT O N US IS ON R EVENUE TO DEMONSTRATE THAT TAXES HAVE NOT BEEN RECOVERED FROM THE PERSON WHO HAD PRIMARY LIABILITY TO PAY TAX I . E. CONTRACTOR? 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD .C IT ( A ) IS JUSTIFIED IN A L LOWING THE ASSESSEE'S PLEA THAT TH E ORDER U / S 201 /201 A PASSED I S BEY O ND TIME LIMIT EVENTHO U GH THE SAID ORDER I S PASSE D W ITH I N T H E TI ME LIM I T , 3. SINCE THE ORDERS IN THESE CASES ARE SIMILAR, FOR THE SAKE OF REFERENCE, WE ARE 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 TH E ASSESSEE THAT AS PER THE PROVISIONS OF SECTION 194C(6) AND AS PER CLEAR 4 EXPLANATION PROVIDED IN CIRCULAR NO. 5/2010 DATED 03 - 06 - 2010 ISSUED BY CBDT WITH REGARD TO EXPLANATORY NOTES TO THE PROVISIONS OF FINA NCE ACT, 2009, THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY TDS IF THE TR ANSPORTER PAN IS QUOTED. 5. THE AO CONSIDERED THE VARIOUS SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERED THE PROVISIONS OF THE RELEVANT SECTION OF THE AC T 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 CONTENT ION OF THE AO THAT DEDUCTOR SHOULD BE IN THE BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES TO AVAIL THE BENEFIT OF SECTION 194C(6). IN VIEW OF THE ABOVE FACTS THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE IS REQUIRED TO BE TREATED TO BE IN DEFAUL T FOR NON - DEDUCTION OF TDS U/S 194C OF THE ACT AND WAS, THEREFORE, DIRECTED TO PAY THE TAX AMOUNTING TO RS.1,70,89,532/ - , RS.2,06,05,896/ - , RS.1,71,95,647/ - AND RS.93,87,054/ - U/S 201(1) OF THE ACT FOR ASSESSMENT YEARS 2012 - 13 TO 2015 - 16 RESPECTIVELY. 6. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) ELABORATELY CONSIDERED THE ISSUE AND DELETED THE ADDITION HOLDING AS UNDER : 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT . THERE IS SUBSTANTIAL FORCE IN THE SUBMISSIONS MADE. THE LEGISLATIVE HISTORY OF SECTION 194C OF THE INCOME TAX ACT, 1961 MAKES IT VERY CLEAR THAT THE ACTION OF THE LD. AO IS BASED ON AN ERRONEOUS INTERPRETATION OF THE SAID SECTION. IN THIS REGARD, IT IS VITAL TO GO THROUGH THE LEGISLATIVE HISTORY OF THE SAID S ECTION 194C. CONSIDERING THE HARDSHIP FACED BY SMALL TRUCK OWNERS IN GETTING CREDIT OF TDS DEDUCTED IN VIEW OF THE AMENDMENTS INTRODUCED IN SECTION 194C(3) OF THE INCOME TAX ACT, 1961 VIDE FINANCE (NO.2) ACT, 2004, A PROVISO WAS INSERTED IN SECTION 194C(3) BY FINANCE ACT, 2005 TO THE EFFECT THAT NO DEDUCTION OF TDS SHALL BE MADE FROM ANY PAYMENT TO A SUB - CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING AND LEASING OF GOODS CARRIAGE, IF SUCH SUB - CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE T HAN TWO GOODS CARRIAGE AT ANY TIME DURING THE PREVIOUS YEAR. THE PROVISO READS AS FOLLOWS: 5 PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (2), TEEM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO T HE 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 A ND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED , IF SUCH SUB - CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MO~ THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR ' 6.1 THUS THE EXPLANATORY MEMORANDUM TO FINANCE BILL, 2005 CLEARLY EXPLAINED THAT THE PROVISION HAS BEEN INTRODUCED TO GIVE RELIEF TO SMALL INDIVIDUAL 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 SE CTION 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 , TA X IS REQUIRED TO BE DEDUCTED ON PAYMENTS TO TRANSPORT CONTRACTORS ENGAGED IN THE BUSINESS OF PLYING , HIRING OR LEASING GOODS CARRIAGES . HOWEVER IF THEY FURNISH A STATEMENT THAT THEY DO NOT OWN MORE THAN TWO GOODS CARRIAGES , TA X IS NOT TO BE DEDUCTED AT SOURCE. TRANSPORT OPERATORS REPORT 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. IT IS, THEREFORE, PROPOSED TO EXEMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PURVIEW OF TDS. HOWEVER, THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR FURNISHES HIS PERMANENT ACCOUNT NUMBER (PAN) TO THE DEDUCTOR. DEDUCTORS WHO MAKE PAYMENTS TO TRANSPORTERS WITHOUT DEDUCTING TDS (AS THEY HAVE QUOTED 6 PAN) WILL BE REQUIRED TO INTIMATE THESE PAN DETAILS TO THE INCOME TAX DEPARTMENT IN THE PRESCRIBED FORMAT . THESE AMENDMENTS WILL TAKE EFFECT FROM THE 1 ST DAY OF OCTOBER, 2009 AND WILL ACCORDINGLY APPLY TO TRAN SACTION ON OR AFTER SUCH DATE. 6.3 IT IS PERTINENT TO NOTE THAT THE AMENDED PROVISIONS OF ACT IN THIS REGARD HAVE BEEN EXPLAINED BY CBDT VIDE CIRCULAR NO. 05 OF 2010 DATED 03 - 06 - 2010 BEING EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE (NO. 2) ACT, 2009. THE RELEVANT CLAUSE OF CIRCULAR ARE REPRODUCED BELOW : '49 . 3 PROVISIONS FOR PAYMENTS AND TAX DEDUCTED AT SOURCE TO TRANSPORTERS: A) UNDER SECTION 194C, TAX IS REQUIRED TO BE DEDUCTED ON PAYMENTS TO TRANSPORT CONTRACTORS ENGAGED IN THE BUSINESS OF PL YING, HIRING OR LEASING GOODS CARRIAGES. HOWEVER IF THEY FURNISH A ST A TEMENT THAT THEY DO NOT OWN MORE THAN TWO GOODS CARRIAGES, TAX IS NOT TO BE DEDUCTED AT SOURCE. TRANSPORT OPERATORS ARE REPORTING PROBLEM IN OBTAINING TDS CERTIFICATES AS THESE ARE N OT ISSUED IMMEDIATELY BY C L IENTS AND THEY ARE NOT ABLE TO APPROACH THE CLIENT AGAIN AS THEY MAY H A VE TO MOVE ACROSS THE COUNTRY FOR THEIR BUSINESS. A. IT IS, THEREFORE, THE ACT HAS BEEN AMENDED TO EXEMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PURVIEW OF TDS. HOWEVER, THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR FURNISHES HIS PERMANENT ACCOUNT NUMBER (PAN) TO THE DEDUCTOR. DEDUCTORS WHO MAKE PAYMENTS TO TRANSPORTERS WITHOUT DEDUCTING TDS (AS THEY HAVE QUOTED PAN) WILL BE REQUIRED TO INTIMATE THESE PAN DETAILS TO THE INCOME TAX DEPARTMENT IN THE PRESCRIBED FORMAT. 6.4. THUS IT IS EVIDENT 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 PAYMENT MADE TO TRANSPORT OPERATORS. 6.5 FURTHER CLARITY ON THIS ISSUE HAS BEEN MADE AVAILABLE AS IT HAS BEEN FURTHER REITERATED BY GOVERNMENT WHILE PLACING FINANCE BILL 2015 IN THE LOK SABHA VIDE EXPLANATORY MEMORANDUM FOR PROVISIONS RELATING TO DIRECT TAXES . IT HAS BEEN CLARIFIED IN CL A USE 43 THAT THOUGH THE INTENTION WAS TO REDUCE THE COMPLIANCE BURDEN ON THE SMALL TRANSPORTERS WHILE MAKING AMENDMENT IN 2009, HOWEVER, THE EXISTING LANGUAGE OF SUB SECTION (6) OF SECTION 194C OF THE ACT DOES NOT CONVEY THE DESIRED 7 INTENTION AND AS A RESULT ALL THE TRANSPORTERS, IRRESPECTIVE OF THEIR SIZE, ARE CLAIMING EXEMPTION FROM TDS UNDER THE EXISTING PROVISIONS OF SUB SECTION (6) OF SECTION 194 C OF THE ACT ON FURNISHING OF PAN. 6.6 THEREFORE, THE SECTION HAS BEEN PROPOSED TO BE AMENDED W.E.F 1ST JUNE 2015 TO EXPRESSLY PROVIDE THAT THE RELAXATION UNDER SUB SECTION (6) OF SECTION 194C OF THE ACT FROM NON - DEDUCTION OF TAX SHALL ONLY BE APPLICAB LE TO THE PAYMENT IN THE NATURE OF TRANSPORT CHARGES (WHETHER PAID BY A PERSON ENGAGED IN THE BUSINESS OF TRANSPORT OR OTHERWISE) MADE TO A CONTRACTOR WHO IS ENGAGED IN THE BUSINESS OF TRANSPORT AN D WHO IS ELIGIBLE TO COMPUTE INCOME AS PER THE PROVISION S OF SECTION 44AE OF THE ACT AND WHO SHALL ALSO FURNISH A DECLARATION TO THIS EFFECT ALONG WITH HIS PAN . 6.7 IT MAY BE NOTED THAT ONLY AMENDMENT PROPOSED IN SECTION 194C(6) IS SUBSTITUTION OF EXISTING WORDS 'ON FURNISHING OF ' BY 'WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGE AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECLARATION TO THAT EFFECT ALONG WITH'. THE AMENDMENT DOES NOT ALTER ANY POSITION WITH REGARDS TO STATUS OF TRANSPORT OPERATOR AS A RECIPIENT OF TRANSPORT CHARGES FOR EXEMPTION FROM TDS IF THEY FURNISH PAN TO THE DEDUCTOR. 6.8 WITH THIS AMENDMENT AND CLARIFICATION IT IS ABUNDANTLY CLEAR THAT NON - DEDUCTION OF TAX WHILE MA KING PAYMENT TO TRANSPORT OPERATORS FOR TRANSPORT CHARGES W.E.F. 1 - 10 - 2009 IS ABSOLUTELY AS PER T HE PROVISIONS OF SECTION 194C(6) AND THERE CANNOT BE ANY DEFAULT IN THIS REGARD IF THE PAN OF TRANSPORTER HAS BEEN COLLECTED AND REPORTED BY THE DEDUCTOR. 6 . 9 THEREFORE, THE INTERPRETATION OF LD. ITO WHILE TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' FOR NON DEDUCTION OF TAX WHILE MAKING FREIGHT PAYMENT TO TRANSPORT O PERATORS IS NOT AS PER LAW TO THE EXTENT IT NOT ONLY INTERPRETS THE PROVISION IN AN ERRONEOUS MANNER BUT ALSO CONTRARY TO LEGI SLATIVE INTENT AND BINDING CBDT CIRCU LARS. 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 T O 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 RS.1,70,89,532/ - , RS.2,06,05,896/ - , RS.1,71,95,647/ - AND RS.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 THA T THE DETAILS OF ALL THE PERSONS FROM WHOM T A X WAS REQUIRED TO BE DEDUCTED WAS AVAILABLE ON RECORD BEFORE THE LD. A.O. AND THE ONUS WAS ON THE A.O. TO ASCERTAIN THE FACTS RELATED TO PAYMENT OF TAX ON INCOME OF THE TRANSPORT CONTRACTORS DIRECTLY FROM THE RE CIPIENT OF SUCH INCOME. RELIANCE IN THIS REGARD NIS PLACED ON HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT 8 293 ITR 226, JAGRAN PRAKASHAN LTD. VS. DCIT 21 TAXMANN.COM 489 AND AGRA ITAT JUDGMENT IN THE CASE OF ALLAHABAD BANK VS. ITO BEARING ITA NOS. 448 T O 454/AGRA/2011. 8. MAKING A REFERENCE TO THE ABOVE CASE LAWS, LEARNED CIT(APPEALS) FURTHER OBSERVED AS UNDER : 7.3 ON CAREFUL OBSERVATION, IT IS CLEARLY SEEN THAT THE RATIO LAID DOWN BY THE HONBLE ITAT, AGRA BENCH, AGRA AND HONBLE KARNATAKA HIGH CO URT SQUARELY APPLIES TO THE FACTS IN THE CASE OF THE APPELLANT. THE DETAILS OF ALL THE PERSONS FROM WHOM TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE ARE AVAILABLE ON RECORD AND WITH THE LD. AO. THE PERMANENT ACCOUNT NUMBERS (PANS) OF SUCH PARTIES ARE ALSOS A VAILABLE BEFORE THE LD. AO. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITAT, AGRA BENCH, AGRA AS WELL AS HONBLE KARNATAKA HIGH COURT, RELIED HAS TO BE GRANTED TO THE APPELLANT AND THE DEMANDS RAISED U/S 201(1) HAVE TO BE DELETED. 8. HOWEVER A CLEAR F INDING HAS ALREADY BEEN GIVEN IN PARA 6.9 ON THE BASIS OF THE SUBSTANTIVE PROVISIONS OF THE SECTION 194C ITSELF. IT HAS ALREADY BEEN HELD THAT THE APPELLANT WAS NEVER REQUIRED TO DEDUCT ANY TDS AS PER 194C OF THE ACT. IN SUCH FCTS, THE ACTION OF THE LD. AO OF RAISING THE DEMAND FOR TAX OF RS.1,70,89,532/ - , RS.2,06,05,896/ - , RS.1,71,95,647/ - AND RS.93,87,054/ - U/S 201(1) OF THE ACT FOR AY 2012 - 13, AY 2013 - 14, AY 2014 - 15 & AY 2015 - 16 RESPECTIVELY IS HELD TO BE ERRONEOUS AND IS THEREFORE DIRECTED TO BE DELETED . THESE GROUNDS ARE THEREFORE ALLOWED. 9. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. RELIED UPON THE ORDERS OF THE AO. HE PLEADED THAT THE AO HA S RIGHTLY INTERPRETED THE PROVISIONS OF SECTION 194C THAT TO AVAIL THE BENEFIT EXTENDED BY THE ABOVE SAID PROVISION, P RINCIPAL AS WELL AS DEDUCTEE BOTH HAVE TO BE ENGAGED IN PLYING, HIRING AND LEASING OF GOODS CARRIAGE S. 11. PER CONTRA LEARNED COUNSEL OF THE ASSESSEES RELIED UPON THE ORDERS OF THE LEARNED CIT(APPEALS). THEY ALSO SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN 9 FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S RAYMOND UCO DENIM PVT. LTD . IN ITA NOS. 351 & 352/NAG/2015 VIDE ORDER DATED 30 TH 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 SUBMI TTE D 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 ORD ER 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 TRIBUNALS 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 REFER TO SECTION 194C(6) AS UNDER : 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, [WHERE SUCH CONTRACTORS OWN TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISH A DECLARATION TO T HAT EFFECT ALONG WITH] HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. 8. FROM THE ABOVE IT IS CLEAR THAT TDS IS NOT TO BE DEDUCTED FROM THE PAYMENT MADE TO TRANSPORTERS WHO FURNISHED PAN. THE ASSESSING OFFICER HAS WRONGLY INTERP RETED THAT THIS PROVISION IS APPLICABLE TO TAX DEDUCTED BY ASSESSEE WHO ARE ENGAGED IN TRANSPORT BUSINESS. THIS IN MY CONSIDERED 10 OPINION IS AN ERRONEOUS INTERPRETATION NOT SUSTAINABLE IN LAW. IN MY CONSIDERED OPINION LEARNED CIT(APPEALS) HAS CORRECTLY APPR ECIATED THE LAW AND THE FACTS OF THE CASE AND THE SAME DOES NOT NEED ANY INTERFERENCE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 9. IN THE RESULT, THESE APPEALS BY THE REVENUE STAND DISMISSED. SOMA RANI GHOSH. (HEAD NOTES ONLY). IN CIT VS. VALIBHAI KHANBHAI MANKAD (TAX APPEAL NO. 1182 OF 2011, ORDER DATED 01.10.2012), IT IS HELD BY THE HON'BLE GUJARAT HIGH COURT AT AHMEDABAD THAT : - SECTION 194C, AS ALREADY NOTICED, MAKES PROVISION WHERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARISES. THEREFORE, IF THERE IS ANY BREACH OF SUCH - REQUIREMENT, QUESTION OF APPLICABILITY OF SECTION 40(A)(IA) WOULD ARISE. THEREFORE, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT . IT MAY BE THAT F AILURE 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 SOURCE. ANY SUCH FAILURE THEREFORE CANNOT BE VISUALIZED BY ADVERSE CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT . (PARA 29) IN CIT VS. SRI MARIKAMBA TRANSPORT CO. IN ITA NO. 553 OF 2013 REPORTED IN 379 ITR 129 (KARN.), HON'BLE KARNATAKA HIGH COURT HAS FORMULATED A QUESTION AS TO WHETHER N ON - 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 ATTRACTED AND PROCEEDED TO ANSWER THE SAME. THE 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 MOM ENT 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 T AXMAN 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 NOTI CING THAT IN ACIT - VS. - MR . MOHAMMED SUHAIL, KURNOOL IN'ITA NO. 1536.HYD/2014, ORD ER DATED 13.02. 2015, THE COORDINATE BENCH OF THIS TRIBUNAL SPECIFICALLY HELD THAT THE PROVISIONS OF SECTIO N 194C (6 ) ARE INDEPENDENT OF SECTION 194C(7), AND JUST BECAUSE THERE IS VIOLATION OF PROVISIONS OF SECTION 194C(7), DISALLOWANCE UN DER SECTION 40(A)(IA) DOES NOT ARISE IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194 C (6) . (PARA 33) < IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE JUDICIA L REASONIN G DELINEATED IN THE ABOVE JUDGMENTS, IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C (61, DISALLOWANCE UNDER SECTION 40(A)(IA) DOES NOT ARISE JUST BECAUSE THERE IS VIOLATION OF PROVISIONS OF SECTION 194C( 6 ) OF THE ACT . (PARA 33) CONSEQUENT TO FINDINGS IN THE PRECEDING PARAGRAPHS, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING THE EXPENSE INCURRED BY THE ASSESSEE FOR CARRIAGE INWARD AND 11 CARRIAGE OUTWARD AS DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT, AND ADDING BACK RS.L,63,78,648/ - CLAIMED AS EXPENSE TOWARDS CARRIAGE INWARD AND RS.1,13,00,980/ - CLAIMED AS EXPENSE TOWARDS CARRIAGE OUTWARD, AND SUCH ADDITIONS SHALL STAND DELETED. ( PARA 35) IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. (PARA 36). CONCLUSION WHEN THE ASSESSEE HAS SATISFIED THE CONDITIONS OF SECTION 194C(3), LIABILITY OF PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE AND ACCORDINGLY, APPLICATION OF SECTION 40(A)(IA) WOULD ALSO NOT ARISE. 13. FROM THE ABOVE IT IS EVIDENT THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE. IT IS ALSO NOT TH E CASE THAT THE ABOVE DECISIONS HAVE BEEN SET ASIDE BY THE HONBLE HIGH COURTS. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENTS AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 14. IN THE RESULT, THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOV., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 23 RD NOV. , 2016. 12 COPY FORWARDED TO : 1. APPELLANT : 2. RESPONDENT : 3. C.I.T. - , NAGPUR. 4. CIT(APPEALS), - , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTR AR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.