I.T.O.(T.D.S.) WARD 2(3), Chandrapur V. ULTRATECH CEMENT LTD UNIT AWARPUR CEMENT WORKS,

ITA 345/NAG/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7581 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHAITANYA D JOSHI
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.345/NAG./2015 ( ASSESSMENT YEAR : 201112 ) INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 APPELLANT V/S ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A .... RESPONDENT C.O. NO.13/NAG./2016 (ARISING OUT OF ITA NO.345/NAG./2015 ) ( ASSESSMENT YEAR : 201112 ) ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 .... RESPONDENT (ORIGINAL APPELLANT) ITA NO.347/NAG./2015 ( ASSESSMENT YEAR : 201213 ) INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 APPELLANT V/S ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A RESPONDENT 2 ULTRATECH CEMENT LTD. ITA NO.346/NAG./2015 ( ASSESSMENT YEAR : 201314 ) INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 APPELLANT V/S ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A RESPONDENT C.O. NO.14/MUM./2016 (ARISING OUT OF ITA NO.346/NAG./2015 ) ( ASSESSMENT YEAR : 201314 ) ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A CROSS OBJECTOR (ORIGINAL RESPONDENT) V/S INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 RESPONDENT (ORIGINAL APPELLANT) ITA NO.348/NAG./2015 ( ASSESSMENT YEAR : 201415 ) INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 APPELLANT V/S ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A RESPONDENT 3 ULTRATECH CEMENT LTD. ITA NO.349/NAG./2015 ( ASSESSMENT YEAR : 201516 ) INCOME TAX OFFICER (TDS) WARD2(3), CHANDRAPUR 442 401 APPELLANT V/S ULTRATECH CEMENT LTD. UNIT AWARPUR CEMENT WORKS AWARPUR, TAL KOPARNA DIST: CHANDRAPUR 442 917 TAN NGPUO1449A RESPONDENT REVENUE BY : SHRI GITESH KUMAR ASSESSEE BY : SHRI CHAITANYA D. JOSHI DATE OF HEARING 08.05.2018 DATE OF ORDER 09.05 .2018 O R D E R PER BENCH THE AFORESAID FIVE APPEALS BY THE REVENUE AND TWO C ROSS OBJECTIONS BY THE ASSESSEE ARE AGAINST THE IMPUGNED SEPARATE ORDERS OF EVEN DATED 9 TH OCTOBER 2015, PASSED BY THE LEARNED CIT(A)II, NAGPUR, PERTAINING TO THE ASSESSMENT YEARS 201112, 201213, 2013 14, 201415 AND 201516. 2. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT THE ISSUES INVOLVED IN THESE APPEALS BEING COMMON, ARE COVERED IN FAVOUR OF THE ASSESSEE BY SEVERAL DECISI ONS OF THE TRIBUNAL WHICH ARE GIVEN BELOW: 4 ULTRATECH CEMENT LTD. I) ITO (TDS) V/S MANIKGARH CEMENT (DIVISION OF CENTURY TEXTILES & INDUSTRIES), ITA NO.316319/NAG./2015, DATED 23.1 1.2016 (TRIB.) (NAG.); II) ITO (TDS) V/S RAYMOND UCO DENIM PVT. LTD., ITA NO.3 51 352/NAG./2015, DATED 30.09.2016 (TRIB.) (NAG.); III) SOMA RANI GHOSH V/S DCIT, 74 TAXMANN.COM 90, (TRIB. ) (KOL.) IV) ACIT (TDS) V/S ACC LTD., ITA NO.651652/CHD./2015, DATED 29.10.2015 (TRIB.) (CHD.). 3. INSOFAR AS ASSESSEES CROSS OBJECTIONS ARE CONCERNE D, THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT SINCE THE ISSUE INVOLVED IN THESE CROSS OBJECTIONS IS COVERED IN FAVOUR OF THE ASSESS EE ON MERITS, HENCE, HE SHALL NOT BE PRESSING THE GROUNDS RAISED IN THES E CROSS OBJECTIONS WHICH RELATES TO THE LEARNED CIT(A) NOT ADJUDICATIN G GROUND NO.1 BEFORE HIM FOR THE REASON THAT THE PROCEEDINGS WERE TIME BARRED. 4. THE COMMON GROUNDS IN REVENUES APPEAL READ AS UNDE R: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS JUSTIFIED IN DELETING THE DEMAND OF RS . 61,78,095/- FOR A.Y. 2011-12 & RS.57,84,468/- FOR A.Y. 2012-13 RAISED U/S 201/201(1A) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) IS JUSTIFIED IN NOT APPRECIATING THA T THE PHRASE IN SECTION 194C (6) DURING THE COURSE OF PLYING, HI RING AND LEASING OF GOODS CARRIAGES' DOES NOT APPLY TO CONTR ACTOR ONLY BUT TO BOTH THE PARTIES I.E. PRINCIPAL AS WELL AS CONTR ACTOR. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT ONLY CONTRAC TOR SHOULD BE IN THE LINE OF BUSINESS OF PLYING, HIRING AND LEASI NG OF GOODS CARRIAGES WHEREAS THE SECTION 194C(6) NOWHERE MENTI ON THAT ONLY CONTRACTOR SHOULD BE IN THE BUSINESS OF PLYING , HIRING AND LEASING OF GOODS CARRIAGES. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS JUSTIFIED IN IGNORING THE TRUE SPIRIT IN WHICH 5 ULTRATECH CEMENT LTD. SECTION 194C(6) WAS BROUGHT TO THE STATUTE W.E.F. 1 -10-2009 PARTICULARLY WHEN PRIOR TO INTRODUCTION OF THIS SEC TION TDS WAS BEING MADE ON IDENTICAL PAYMENTS TO TRANSPORTERS. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS JUSTIFIED IN NOT APPRECIATING THAT BY VIRTUE OF AMENDMENT TO SECTION 194C(6) W.E.F. 16-2015 AN EXEM PTION HAS BEEN PROVIDED TO TRANSPORTERS OWNING UP TO 10 G OODS CARRIAGES AND PRIOR TO THAT DATE, THERE WAS NO EXEM PTION PROVIDED U/S 194C(6) OF THE ACT FROM TDS TO ANY PERSON. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CFT(A) IS JUSTIFIED IN NOT APPRECIATING THE FACT THAT THE CIRCULAR NO.5/2010 DATED-3.06.2010 IS IRRELEVANT IN ASSESSEE'S CASE AS ALMOST ALL THE PAYMENTS WERE MADE TO BIG TR ANSPORTERS WHO ARE OUT OF THE PURVIEW OF SECTION 44AE. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE ID CIT (A) IS JUSTIFIED IN ADMITTING FRESH GROUNDS REGARDI NG DOUBLE TAXATION WITHOUT GIVING AN OPPORTUNITY TO THE AO., SINCE THE SAID GROUNDS WERE NOT RAISED BEFORE THE A.O. DURING PROCEEDINGS U/S 201/201A. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ID CIT(A) IS JUSTIFIED IN NOT APPRECIATING THE RULING OF 1 ST PROVISO TO SECTION 201(1) AND HOLDING THAT ONUS IS ON REVENUE TO DEMONSTRATE THAT TAXES HAVE NOT BEEN RECOVERED FROM THE PERSON WHO HAD PRIMARY LIABILITY TO PAY TAX I.E. CO NTRACTOR. 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT (A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S PLEA THAT THE ORDER U/S 201/201A PASSED IS BEYOND TIME LIMIT EVEN THOUGH THE SAID ORDER IS PASSED WITHIN THE TIME LIMIT, PRE SCRIBED AS PER LAW. 5. BRIEF FACTS OF THE CASE ARE THAT, DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAD NOT DEDUCTED TDS UNDER SECTION 194C OF THE ACT IN RESPE CT OF FREIGHT CHARGES PAID BY IT TO TRANSPORT CONTRACTORS. A SURV EY UNDER SECTION 133A(2A) WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 10 TH OCTOBER 2014 AND DURING THE COURSE OF SURVEY, IT W AS FOUND THAT 6 ULTRATECH CEMENT LTD. NO TDS HAD BEEN DEDUCTED ON FREIGHT PAYMENT MADE IN RESPECT OF TRANSPORTATION CHARGES. IT WAS EXPLAINED BY THE ASS ESSEE THAT AS PER THE PROVISIONS OF SECTION 194C(6) OF THE ACT AND AS PER CLEAR EXPLANATION PROVIDED IN CIRCULAR NO.5/2010 DATED 3 RD JUNE 2010, ISSUED BY CBDT WITH REGARD TO EXPLANATORY NOTES TO T HE PROVISIONS OF FINANCE ACT, 2009, THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY TDS IF THE TRANSPORTER PAN IS QUOTED. THE ASSESSING OFFICE R CONSIDERED THE VARIOUS SUBMISSIONS OF THE ASSESSEE AND HAS ALSO CO NSIDERED THE PROVISIONS OF THE RELEVANT SECTION OF THE ACT AND C AME TO THE CONCLUSION THAT THE PAYMENTS MADE BY A PERSON WHO I S IN THE BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES TO CON TRACTOR ARE EXEMPT FROM THE PURVIEW OF TDS IF THE CONTRACTOR FURNISHED HIS PAN TO THE DEDUCTOR. THUS, IT WAS THE CONTENTION OF THE ASSESS ING OFFICER THAT THE DEDUCTOR SHOULD BE IN THE BUSINESS OF PLYING, HIRIN G OR LEASING GOODS CARRIAGES TO AVAIL THE BENEFIT OF SECTION 194C(6) O F THE ACT. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE IS REQUIRED TO BE TREATED AS ASSESSEE IN D EFAULT FOR NON- DEDUCTION OF TDS UNDER SECTION 194C OF THE ACT AND WAS, THEREFORE, DIRECTED TO PAY THE TAX AMOUNTING TO ` 61,78,095, ` 57,84,468, ` 69,27,997, ` 2,43,03,965 AND ` 34,30,645 UNDER SECTION 201(1) OF THE ACT FOR THE ASSESSMENT YEAR 201112, 201213, 2013 14, 201415 AND 201516 RESPECTIVELY. 7 ULTRATECH CEMENT LTD. 6. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) DELETED T HE DISALLOWANCE / ADDITIONS BY HOLDING AS UNDER: 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBM ISSIONS OF THE APPELLANT. THERE IS SUBSTANTIAL FORCE IN THE SUBMIS SIONS MADE. THE LEGISLATIVE HISTORY OF SECTION 194C OF THE INCOME T AX ACT, 1961 MAKES IT VERY CLEAR THAT THE ACTION OF THE ID. AO I S BASED ON AN ERRONEOUS INTERPRETATION OF THE SAID SECTION. IN TH IS REGARD, IT IS VITAL TO GO THROUGH THE LEGISLATIVE HISTORY OF THE SAID SECTION 194C. CONSIDERING THE HARDSHIPS FACED BY SMALL TRUCK OWNE RS IN GETTING CREDIT OF TDS DEDUCTED IN VIEW OF THE AMENDMENTS IN TRODUCED IN SECTION 194C(3) OF THE INCOME TAX ACT, 1961 VIDE FI NANCE (NO 2) ACT, 2004, A PROVISO WAS INSERTED IN SECTION 194C(3 ) BY FINANCE ACT, 2005 TO THE EFFECT THAT NO DEDUCTION OF TDS SH ALL BE MADE FROM ANY PAYMENT TO A SUB-CONTRACTOR DURING THE COU RSE OF BUSINESS OF PLYING, HIRING AND LEASING OF GOODS CAR RIAGE, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED M ORE THAN TWO GOODS CARRIAGE AT ANY TIME DURING THE PREVIOUS YEAR . THE PROVISO READS AS FOLLOWS: 'PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE U NDER SUB-SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS Y EAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODU CTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDI TING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIB ED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB- CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CA RRIAGES AT ANY TIME DURING THE PREVIOUS YEAR' 6.1 THUS THE EXPLANATORY MEMORANDUM TO FINANCE BIL L, 2005 CLEARLY EXPLAINED THAT THE PROVISION HAS BEEN INTRO DUCED TO GIVE RELIEF TO SMALL INDIVIDUAL SUB-CONTRACTOR TRANSPORT ERS WHO DO NOT OWN MORE THAN TWO TRUCKS. SUBSEQUENTLY THE EXISTING SECTION 194C OF THE ACT WAS COMPLETELY REPLACED WITH A NEW SECTION 194C BY FINANCE (NO. 2) ACT, 2009 AND A SPECIFIC SUBSECT ION (6) CONTAINED THEREIN PROVIDED IN RESPECT OF PAYMENTS T O TRANSPORTERS AS FOLLOWS: '(6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDIT ED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOU S YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINE SS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING S UCH SUM.' 6.2 IT IS ABUNDANTLY CLEAR FROM THE AFORESAID AMEND ED SECTION 8 ULTRATECH CEMENT LTD. 194C(6) SUBSTITUTED BY THE FINANCE (NO. 2) ACT, 200 9 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 TH E SAID CONTRACTOR FURNISHES HIS PAN. THE EXPLANATORY MEMORANDUM OF FI NANCE (NO 2) BILL, 2009 EXPLAINS THE LEGISLATIVE INTENT BEHIN D THE PROVISIONS AS FOLLOWS: B. PROVISIONS FOR PAYMENTS AND TAX DEDUCTED AT SOUR CE TO TRANSPORTERS: UNDER SECTION 194C, TAX IS REQUIRED TO BE DEDUCTED ON PAYMENT 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, TAX IS NOT TO BE DEDUCTED AT SOURCE. TRANSPORT OPERATORS REPOR T PROBLEM IN OBTAINING TDS CERTIFICATES AS THESE ARE NOT ISSUED IMMEDIATELY BY CLIENTS AND THEY ARE NOT ABLE TO APPROACH THE CLIEN T AGAIN AS THEY MAY HAVE TO MOVE ACROSS THE COUNTRY FOR THEIR BUSIN ESS. IT IS, THEREFORE, PROPOSED TO EXEMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PURVIEW OF TD S. HOWEVER, THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR F URNISHES HIS PERMANENT ACCOUNT NUMBER (PAN) TO THE DEDUCTOR. DED UCTORS WHO MAKE PAYMENTS TO TRANSPORTERS WITHOUT DEDUCTING TD.S (AS THEY HAVE QUOTED PAN) WILL BE REQUIRED TO INTIMATE THESE PAN DETAILS TO THE INCOME TAX DEPARTMENT IN THE PRESCRI BED FORMAT. THESE AMENDMENTS WILL TAKE EFFECT FROM THE 1ST DAY OF OCTOBER, 2009 AND WILL ACCORDINGLY APPLY TO TRANSACTION ON O R AFTER SUCH DATE.' 6.3 IT IS PERTINENT TO NOTE THAT THE AMENDED PROVIS IONS OF ACT IN THIS REGARD HAVE BEEN EXPLAINED BY CBDT VIDE CIRCUL AR NO 05 OF 2010 DATED 03-06-2010 BEING EXPLANATORY NOTES TO TH E PROVISIONS OF THE FINANCE (NO. 2) ACT, 2009. THE RELEVANT CLAU SES OF CIRCULAR ARE REPRODUCED BELOW: '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 BU SINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES. HOWEVER IF THEY FURNISH A STATEMENT THAT THEY DO NOT OWN MORE THAN TWO GOODS CARRIAGES, TAX IS NOT TO BE DEDUCTED AT SOURCE. TRANSPORT OPER ATORS 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 TH E COUNTRY FOR THEIR BUSINESS. 9 ULTRATECH CEMENT LTD. A. IT IS, THEREFORE, THE ACT HAS BEEN AMENDED TO EX EMPT PAYMENTS TO TRANSPORT OPERATORS (AS DEFINED IN SECTION 44AE) FROM THE PURVIEW OF TDS. HOWEVER, THIS WOULD ONLY APPLY IN C ASES WHERE THE OPERATOR FURNISHES HIS PERMANENT ACCOUNT NUMBER (PA N) TO THE DEDUCTOR. DEDUCTORS WHO MAKE PAYMENTS TO TRANSPORTE RS WITHOUT DEDUCTING TDS (AS THEY HAVE QUOTED PAN) WILL BE REQ UIRED TO INTIMATE THESE PAN DETAILS TO THE INCOME TAX DEPART MENT 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 SUBCONTRACTOR AND CONTRACTOR IN TRANSPORT BUSINESS AS NIL IF THE TRANSPORTER 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 TRANSP ORTERS UP TO 31-3-2010.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 P AYMENT MADE TO A TRANSPORTER (CONTRACTOR) IS EXEMPT FROM TDS IF SUCH TRANSPORTER (CONTRACTOR) PROVIDES HIS PAN TO THE DEDUCTOR AND T HE 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 BE EN PRESCRIBED IN RULE 31A (4)(VI) OF INCOME TAX RULES HAS BEEN DU LY COMPLIED BY THE APPELLANT. IN FACE OF SUCH CLEAR PROVISIONS OF SECTION 194C(6) AS EXPLAINED BY CIRCULAR ISSUED BY CBDT AS ABOVE, T HE LD. ITO HAD NO REASON TO HOLD THAT THE PAYMENT MADE BY TRANSPOR T OPERATORS TO OTHER CONTRACTORS ARE EXEMPT FROM TDS AND NOT TH E PAYMENT MADE TO TRANSPORT OPERATORS. 6.5 FURTHER CLARITY ON THIS ISSUE HAS BEEN MADE AVA ILABLE AS IT HAS BEEN FURTHER REITERATED BY GOVERNMENT WHILE PLACING FINANCE BILL 2015 IN THE LOK SABHA VIDE EXPLANATORY MEMORANDUM F OR PROVISIONS RELATING TO DIRECT TAXES. IT HAS BEEN CL ARIFIED IN CLAUSE 43 THAT THOUGH THE INTENTION WAS TO REDUCE THE COMP LIANCE BURDEN ON THE SMALL TRANSPORTERS WHILE MAKING AMENDMENT IN 2009, HOWEVER, THE EXISTING LANGUAGE OF SUB SECTION (6) O F SECTION 194C OF THE ACT DOES NOT CONVEY THE DESIRED INTENTION AN D AS A RESULT ALL THE TRANSPORTERS, IRRESPECTIVE OF THEIR SIZE, ARE C LAIMING EXEMPTION FROM TDS UNDER THE EXISTING PROVISIONS OF SUB SECTI ON (6) OF SECTION 194C 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 RELAXAT ION UNDER SUB SECTION (6) OF SECTION 194C OF THE ACT FROM NON-DED UCTION OF TAX SHALL ONLY BE APPLICABLE TO THE PAYMENT IN THE NATU RE OF TRANSPORT CHARGES (WHETHER PAID BY A PERSON ENGAGED IN THE BU SINESS OF TRANSPORT OR OTHERWISE) MADE TO A CONTRACTOR WHO IS ENGAGED IN THE BUSINESS OF TRANSPORT AND WHO IS ELIGIBLE TO CO MPUTE INCOME AS 10 ULTRATECH CEMENT LTD. PER THE PROVISIONS OF SECTION 44AE OF THE ACT AND W HO 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 FURNI SHING OF' BY 'WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRI AGE AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECLA RATION TO THAT EFFECT ALONG WITH'. THE AMENDMENT DOES NOT ALTER AN Y POSITION WITH REGARDS TO STATUS OF TRANSPORT OPERATOR AS A R ECIPIENT OF TRANSPORT CHARGES FOR EXEMPTION FROM TDS IF THEY FU RNISH PAN TO THE DEDUCTOR. 6.8 WITH THIS AMENDMENT AND CLARIFICATION IT IS ABU NDANTLY CLEAR THAT NON- DEDUCTION OF TAX WHILE MAKING PAYMENT TO TRANSPORT OPERATORS FOR TRANSPORT CHARGES W.E.F. 1-10-2009 IS ABSOLUTELY AS PER THE PROVISIONS OF SECTION 194C(6) AND THERE CAN NOT BE ANY DEFAULT IN THIS REGARD IF THE PAN OF TRANSPORTER HA S 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 DEDUCTIO N OF TAX WHILE MAKING FREIGHT PAYMENT TO TRANSPORT OPERATORS IS NO T AS PER LAW TO THE EXTENT IT NOT ONLY INTERPRETS THE PROVISION AN ERRONEOUS MANNER BUT ALSO CONTRARY TO LEGISLATIVE INTENT AND BINDING CBDT CIRCULARS. IN VIEW OF THE ABOVE, THE ORDER PASSED B Y ID. AO U/S 201(L) AND 201(1A) OF THE ACT, HOLDING THE APPELLAN T AS 'ASSESSEE IN DEFAULT' IN RESPECT OF TRANSPORT CHARGES PAID TO TRANSPORT OPERATORS WITHOUT DEDUCTION OF TDS IN COMPLIANCE WI TH PROVISIONS OF SECTION 194C(6) IS REQUIRED TO BE CANCELLED. IN SUCH FACTS, TNE ACTION OR THE ID. AO OF RAISING THE DEMAND FOR TAX OF RS. 61,78,095/-, RS. 57,84,468/-, RS. 69,27,997/-, RS. 2,43,03,965/- & RS. 34,30,645/- U/S 201(1) OF THE ACT FOR AY 2011 12, 2012-13 1 AY 2013-14, AY 2014-15 & AY 2015-16 RESPECTIVELY IS HELD TO BE ERRONEOUS AND IS THEREFORE DIRECTED TO BE DELETED. 7. FURTHER, IT HAS TO BE NOTED THAT THE APPELLANT H AD PROVIDED COMPLETE DETAILS IN RESPECT OF EACH OF THE TRANSPOR T 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 THAT THE DETAILS OF ALL THE PERSONS FROM WHOM TAX 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 TR ANSPORT CONTRACTORS DIRECTLY FROM THE RECIPIENT OF SUCH INC OME. RELIANCE IN THIS REGARD IS PLACED ON HINDUSTAN COCA COLA BEVERA GES PVT. LTD VS CIT 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 TO 454/ AGRA /2011. 11 ULTRATECH CEMENT LTD. 7.1 THE HON'BLE ITAT, AGRA BENCH, AGRA IN ITA NOS. 448 TO 454/AGRA/2011 VIDE RECENT ORDER DATED 20/06/2014 IN THE CASE OF ALLAHABAD BANK HAS HELD AS UNDER: IN OUR CONSIDERED VIEW, IT IS IMPORTANT TO BEAR IN MIND THE SETTLED LEGAL POSITION THAT A SHORT DEDUCTION OF TA X AT SOURCE, BY ITSELF DOES NOT RESULT IN A LEGALLY SUSTAINABLE DEM AND U/S 201(1) AND U/S 201(1A). AS HELD BY HON'BLE SUPREME COURT I N THE CASE OF HINDUSTAN COCO COLA BEVERAGE PVT. LTD. VS. CIT (293 ITR 226), THE TAXES CANNOT BE RECOVERED ONCE AGAIN FROM THE ASSES SEE IN A SITUATION IN WHICH THE RECIPIENT OF INCOME HAS PAID DUE TAXES ON INCOME EMBEDDED IN THE PAYMENTS FROM WHICH TAX WITH HOLDING REQUIREMENTS WERE NOT FULLY OR PARTLY, COMPLIED WIT H. HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF .JAGRAN P RAKASHAN LTD. VS. DCIT (2012) 21 TAXMANN.COM 489 ALL ALSO HAS, INTER ALIA, OBSERVED AS FOLLOWS: IT IS CLEAR THAT DEDUCTOR CANNOT BE TREATED AN ASSESSEE IN DEFAULT TILL IT IS FOUND THAT ASSESSEE HAS ALSO FAI LED TO PAY SUCH TAX DIRECTLY. IN THE PRESENT CASE, THE INCOME TAX AUTHO RITIES HAD NOT ADVERTED TO THE EXPLANATION TO SECTION 191 NOR HAD APPLIED THEIR MIND AS TO WHETHER THE ASSESSEE HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY. THUS, TO DECLARE A DEDUCTOR, WHO FAILED T O DEDUCT THE TAX AT SOURCE AS AN ASSESSEE IN DEFAULT, CONDITION PREC EDENT IS THAT ASSESSEE HAS ALSO FAILED TO PAY TAX DIRECTLY. THE F ACT THAT ASSESSEE HAS FAILED TO PAY TAX DIRECTLY IS THUS, FOUNDATIONA L AND JURISDICTIONAL FACT AND ONLY AFTER FINDING THAT ASSESSEE HAS FAILE D TO PAY TAX DIRECT, DEDUCTOR CAN BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT TO SUCH TAX ...... IT IS THUS CLEAR THAT THE ONUS IS ON THE REVENUE TO DEMONSTRATE THAT THE TAXES HAVE NOT BEEN RECOVERED FROM THE PER SON WHO HAD THE PRIMARILY LIABILITY TO PAY TAX, AND IT IS ONLY WHEN THE PRIMARY LIABILITY IS NOT DISCHARGED THAT VICARIOUS RECOVERY LIABILITY CAN BE INVOKED. ONCE ALL THE DETAILS OF THE PERSONS TO WHO M PAYMENTS HAVE BEEN MADE ARE ON RECORD, IT IS FOR THE ASSESSI NG OFFICER, WHO HAS ALL THE POWERS TO REQUISITION THE INFORMATION F ROM SUCH PAYERS AND FROM THE INCOME TAX AUTHORITIES, TO ASCERTAIN W HETHER OR NOT TAXES HAVE BEEN PAID BY THE PERSONS IN RECEIPT OF T HE AMOUNTS FROM WHICH TAXES HAVE NOT BEEN WITHHELD. AS A RESUL T OF THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN JAGRAN PRAKASHAN'S CASE (SUPRA), THERE IS A PARADIGM SHIFT IN THE MANN ER IN WHICH RECOVERY PROVISIONS UNDER SECTION 201(1) CAN BE INV OKED. AS OBSERVED BY THEIR LORDSHIPS, THE PROVISIONS OF SECT ION 201(1) CANNOT BE INVOKED AND THE 'TAX DEDUCTOR CANNOT BE T REATED AN ASSESSEE IN DEFAULT TILL IT IS FOUND THAT ASSESSEE HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY'. ONCE THIS FINDING ABOUT THE NON-PAYMENT OF TAXES BY THE RECIPIENT IS HELD TO A CONDITION PRECE DENT TO INVOKING SECTION 201(1), THE ONUS IS ON THE ASSESSING OFFICE R TO 12 ULTRATECH CEMENT LTD. DEMONSTRATE THAT THE CONDITION IS SATISFIED. IT GOI NG WITHOUT SAYING THAT THE ASSESSEE IS DUTY BOUND TO SUBMIT ALL SUCH INFORMATION ABOUT THE RECIPIENTS AS HE IS OBLIGED TO MAINTAIN U NDER THE LAW. BUT ONCE THIS INFORMATION IS SUBMITTED, IT IS FOR T HE ASSESSING OFFICER TO ASCERTAIN WHETHER OR NOT THE TAXES HAVE BEEN PAID BY THE RECIPIENT OF INCOME. THIS APPROACH, IN OUR HUMB LE UNDERSTANDING, IS IN CONSONANCE WITH THE LAW LAID D OWN BY HON'BLE ALLAHABAD HIGH COURT. IT IS ALSO IMPORTANT TO BEAR IN MIND THAT THE LAPSE ON ACCOUNT OF NON- DEDUCTION OF TAX AT SOURCE IS TO BE VISITED WI TH THREE DIFFERENT CONSEQUENCES - PENAL PROVISIONS, INTEREST PROVISION S AND RECOVERY PROVISIONS. THE PENAL PROVISIONS IN RESPECT OF SUCH A LAPSE ARE SET OUT IN SECTION 271C. SO FAR AS PENAL PROVISIONS ARE CONCERNED, THE PENALTY IS FOR LAPSE ON THE PART OF THE ASSESSEE AN D IT HAS NOTHING TO DO WITH WHETHER OR NOT THE TAXES WERE ULTIMATELY RECOVERED THROUGH OTHER MEANS. THE PROVISIONS REGARDING INTER EST IN DELAY IN DEPOSITING THE TAXES ARE SET OUT IN SECTION 201(1A) . THESE PROVISIONS PROVIDE THAT FOR ANY DELAY IN RECOVERY O F SUCH TAXES IS TO BE COMPENSATED BY THE LEVY OF INTEREST. AS FAR A S RECOVERY PROVISIONS ARE CONCERNED, THESE PROVISIONS ARE SET OUT IN SECTION 201(1) WHICH SEEKS TO MAKE GOOD ANY LOSS TO REVENUE ON ACCOUNT OF LAPSE BY THE ASSESSEE TAX DEDUCTOR. HOWEVER, THE QUESTION OF MAKING GOOD THE LOSS OF REVENUE ARISES ONLY WHEN TH ERE IS INDEED A LOSS OF REVENUE AND THE LOSS OF REVENUE CAN BE TH ERE ONLY WHEN RECIPIENT HAD A LIABILITY TO PAY THE TAX AND HE HAS NOT PAID THE TAX. THEREFORE, RECOVERY PROVISIONS UNDER SECTION 201(1) CAN BE INVOKED ONLY WHEN LOSS TO REVENUE IS ESTABLISHED, A ND THAT CAN ONLY BE ESTABLISHED WHEN IT IS DEMONSTRATED THAT TH E RECIPIENT OF INCOME HAS NOT PAID DUE TAXES THEREOF AND THE RECIP IENT OF THE AMOUNTS HAD THE LIABILITY TO TAX. IN THE ABSENCE OF THE STATUTORY POWERS TO REQUISITION ANY INFORMATION FROM THE RECI PIENT OF INCOME, THE ASSESSEE IS INDEED NOT ALWAYS ABLE TO OBTAIN TH E SAME. THE PROVISIONS TO MAKE GOOD THE SHORT FALL IN COLLECTIO N OF TAXES MAY THUS END UP BEING INVOKED EVEN WHEN THERE IS NO SHO RTFALL IN FACT. ON THE OTHER HAND, ONCE ASSESSEE FURNISHES THE REQU ISITE BASIC INFORMATION, THE ASSESSING OFFICER CAN VERY WELL AS CERTAIN THE RELATED FACTS ABOUT PAYMENT OF TAXES ON INCOME OF T HE RECIPIENT DIRECTLY FROM THE RECIPIENTS OF INCOME. IT IS NOT T HE REVENUE'S CASE BEFORE US THAT, ON THE FACTS OF THIS CASE, SUCH AN EXERCISE BY THE ASSESSING OFFICER IS NOT POSSIBLE. IT DOES PUT AN A DDITIONAL BURDEN ON THE ASSESSING OFFICER BEFORE HE CAN INVOKE SECTI ON 201(1) BUT THAT'S HOW HON'BLE HIGH COURT HAS VISUALIZED THE SC HEME OF ACT AND THAT'S HOW, THEREFORE, IT MEETS THE ENDS OF JUS TICE. AS FAR AS LEVY OF INTEREST UNDER SECTION 201(1A) IS CONCERNED, THIS INTEREST IS ADMITTEDLY A COMPENSATORY INTEREST IN N ATURE AND IT SEEKS TO COMPENSATE THE REVENUE FOR DELAY IN REALIZ ATION OF TAXES. HON'BLE BOMBAY HIGH COURT, IN THE CASE OF BENNETT C OLEMAN & CO. 13 ULTRATECH CEMENT LTD. LTD. VS. ITO (157 ITR 812) HAS HELD SO. THEREFORE, LEVY OF INTEREST UNDER SECTION 201(1A) IS APPLICABLE WHETHER OR NOT THE ASSESSEE WAS AT FAULT. HOWEVER, SINCE IT IS ONLY COMPENSATORY IN NATURE IT IS APPLICABLE FOR THE PERIOD OF THE DATE ON WHICH TAX WAS REQUIRED TO BE DEDUCTED TILL THE DATE WHEN TAX WAS EVENTUALLY PAID. HOWEVER , IN A CASE IN WHICH THE RECIPIENT OF INCOME HAD NO TAX LIABILITY EMBEDDED IN SUCH PAYMENTS, THERE WILL OBVIOUSLY HE NO QUESTION OF DE1A, IN REALIZATION OF TAXES AND THE OROVISIONS OF SECTION 201(1A) WILL NOT COME INTO PLAY AT ALL. THE COMPUTATION OF INTEREST IS TO BE REDONE IN THE LIGHT OF THIS LEGAL POSITION. THE MATTER THUS STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW A ND IN THE LIGHT OF OUR OBSERVATIONS ABOVE. WHILE DOING SO, THE ASSESSI NG OFFICER WILL GIVE A DUE AND FAIR OPPORTUNITY OF HEARING TO THE A SSESSEE AND DISPOSE OF THE MATTER BY WAY OF A SPEAKING ORDER. W E DIRECT SO. AS REGARDS ALL OTHER ISSUES, ON FACTS AND IN LAW, THES E ISSUES WILL BE REQUIRED TO BE DEALT WITH ONLY IN THE EVENT OF THER E BEING A TAX DEMAND UNDER SECTION 201(1) AND 201(1A) AFTER IMPLE MENTING THE ABOVE DIRECTIONS. THESE ISSUES ARE LEFT OPEN FOR TH E TIME BEING AS THESE ISSUES ARE IN FRUCTUOUS AT THIS STAGE...' 7.2 THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S. SHREE MANJUNATH WINES IN ITA NO.333/07 IN JUDGEMENT DATED 13/9/2011 WHILE CONSIDERING PROVISIONS OF SECTION 206C OF I.T . ACT 1961 HAS ALSO HELD AS UNDER: ..SECTION 206C OF THE ACT WHICH SPECIFICALLY DEAL S WITH ONLY SIX TYPES OF TRANSACTIONS PROVIDES THAT EVERY PERSON, B EING A SELLER, SHALL AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY THE BUYER TO THE ACCOUNT OF THE BUYER OR AT THE TIME OF RECEIPT OF SUCH AMOUNT FROM THE SAID BUYER IN CASH OR BY THE ISSUE OF A CH EQUE OR DRAFT OR ANY OTHER MODE, WHICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE SPECIFIED IN COLUMN NO. (2) OF THE TABLE BELOW, A SUM EQUAL TO THE PERCENTAGE, SPECIFIED IN THE CORRESPONDING ENTRY IN COLUMN (3) OF THE SAID TABLE , OF SUCH AMOUNT AS INCOME TAX AND REMIT THE AMOUNTS SO COLLE CTED TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DI RECT. FROM THE AFORESAID PROVISION, IT IS CLEAR THAT THOU GH ASSESSEE COLLECTS THE TAX AND REMIT THE MONEY TO THE GOVERNM ENT, THE SAID AMOUNT REMITTED WILL BE TO THE ACCOUNT OF THE BUYER . IN OTHER WORDS, THE SAID AMOUNT WILL BE GIVEN DEDUCTIONS TOW ARDS THE TAX PAYABLE BY THE BUYER. IF IN A GIVEN CASE THE ASSESS EE HAS NOT COLLECTED THE TAX FROM THE BUYER AND IF THE BUYER H AS PAID TAX TO THE REVENUE, THE REVENUE IS NOT DEPRIVED OF THE TAX WHICH IS LEGITIMATELY DUE TO THEM. IT IS IN THAT CONTEXT, BE FORE PROCEEDING 14 ULTRATECH CEMENT LTD. AGAINST THE ASSESSEE, IT IS NECESSARY TO FIND OUT W HETHER THE BUYER HAS PAID TAX IN ACCORDANCE WITH THE PROVISIONS OF T HE ACT AND ONLY IN THE EVENT THE BUYER HAS NOT PAID THE TAX THEN TH E AUTHORITIES CAN PROCEED AGAINST THE ASSESSEE WHO WAS UNDER THE OBLIGATION TO COLLECT TAX AND REMIT TO THE GOVERNMENT...... 7.3 ON CAREFUL OBSERVATION, IT IS CLEARLY SEEN THAT THE RATIO LAID DOWN BY THE HON'BLE ITAT, AGRA BENCH, AGRA AND HON' BLE KARNATAKA HIGH COURT 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 ALSO AVAILABLE BEFORE THE ID. AO. RESPE CTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT, AGRA BENCH, AGRA AS W ELL AS HON'BLE KARNATAKA HIGH COURT, RELIEF HAS TO BE GRANTED TO T HE APPELLANT AND THE DEMANDS RAISED U/S.201(1) AND U/S.201(1A) HAVE TO BE DELETED. 8. HOWEVER A CLEAR FINDING HAS ALREADY BEEN GIVEN I N PARA 6.9 ON THE BASIS OF THE SUBSTANTIVE PROVISIONS OF THE S ECTION 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 FACTS, THE ACTION OF THE ID. AO OF RAISING THE DEMAND FOR TAX OF RS.,1,78,095/-, RS.57,84,468/-, RS.69,27,997/ RS.2, 43,03,965/- & RS.34,30,645/- U/S 201(1) OF THE ACT FOR AY 2011-12 , 2012-13, AY 2013-14, AY 2014-15 & A.Y. 201516 RESPECTIVELY IS HELD TO BE ERRONEOUS AND IS THEREFORE DIRECTED TO BE DELETED. THESE GROUNDS ARE THEREFORE ALLOWED. 7. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFOR E US. 8. UPON CONSIDERING THE SUBMISSIONS OF BOTH THE LEARNED COUNSEL AND PERUSING THE RECORD, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL AS REFER RED TO ABOVE. FURTHER, THE LEARNED COMMISSIONER (APPEALS) HAS PAS SED AN ELABORATE ORDER AND WE DO NOT FEEL TO INTERFERE ON OUR PART. IN THIS REGARD, WE MAY REFER TO THE DECISION OF THE TRIBUNAL IN MANIKG ARH CEMENT (SUPRA), WHEREIN THE TRIBUNAL HELD AS UNDER: 15 ULTRATECH CEMENT LTD. 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS A ND 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 GAINFUL LY REFER TO THE TRIBUNAL'S DECISION IN THESE CASES AS UNDER: M/S RAYMOND UCO DENIM PVT. LTD.: '7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. IN THIS REGARD I MAY GAINFULLY REFER TO SECTION 194C(6 ) AS UNDER: 'NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED O R PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOU S YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINE SS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, [WHERE SUCH CONT RACTORS OWN TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISH A DECLARATION TO THAT EFFECT ALONG WITH ] HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING S UCH 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 INTERPRETED THAT THIS PROVISION IS APPLICABLE TO TAX DEDUCTED BY ASSESSEE WHO ARE ENGA GED IN TRANSPORT BUSINESS. THIS IN MY CONSIDERED OPINION I S AN ERRONEOUS INTERPRETATION NOT SUSTAINABLE IN LAW. IN MY CONSID ERED OPINION LEARNED CIT(APPEALS) HAS CORRECTLY APPRECIATED THE LAW AND THE FACTS OF THE CASE AND THE SAME DOES NOT NEED ANY IN TERFERENCE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT(APPEA LS). 9. IN THE RESULT, THESE APPEALS BY THE REVENUE STAN D 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/S HELD BY THE H ON'BLE GUJARAT HIGH COURT AT AHMEDABAD THAT:- SECTION 194C, AS ALREADY NOTICED, MAKES PROVISION W HERE FOR CERTAIN PAYMENTS, LIABILITY OF THE PAYEE TO DEDUCT TAX AT SOURCE ARISES. THEREFORE, IF THERE IS ANY BREACH OF SUCH R EQUIREMENT, QUESTION OF APPLICABILITY OF SECTION 40(A)(IA) WOUL D ARISE. THEREFORE, THE TRIBUNAL WAS PERFECTLY JUSTIFIED IN TAKING THE VIEW IN THE IMPUGNED JUDGMENT. IT MAY BE THAT FAILURE TO CO MPLY 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 DECLARATIO N OF TAX AT SOURCE. ANY SUCH FAILURE THEREFORE CANNOT BE VISUAL IZED BY ADVERSE 16 ULTRATECH CEMENT LTD. CONSEQUENCES PROVIDED UNDER SECTION 40(A)(IA) OF TH E ACT. (PARA 29) IN CIT VS. SRI MARIKAMBA TRANSPORT CO. IN ITA NO. 5 53 OF 2013 REPORTED IN 379 ITR 129 (KAM.), HON'BLE KARNATAKA H IGH COURT HAS FORMULATED A QUESTION AS TO WHETHER NON-FILING OF FORM NO. 151/J WITHIN THE PRESCRIBED TIME IS ONLY A TECHNICA L DEFAULT OR THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE ATTR ACTED AND PROCEEDED TO ANSWER THE SAME. THE COMBINED READING OF THESE TWO PROVISIONS MAKE IT CLEAR THAT IF THERE IS ANY B REACH OF REQUIREMENTS OF SECTION 19,9C(3), THE QUESTION OF A PPLICABILITY OF SECTION 40(A)(IA) ARISES. THE EXCLUSION PROVIDED IN SUB-SECTION (3) OF SECTION 194C FROM THE LIABILITY TO DEDUCT TA X AT SOURCE UNDER SUB-SECTION(2) WOULD BE COMPLETE, THE MOMENT 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 JUDGMEN T HAS BEEN UPHELD BY THE HIGH COURT OF GUJARAT REPORTED IN (20 13) 216 TAXMAN 18 (GUI) WHEREIN IT IS HELD THAT ONCE THE CO NDITIONS OF SECTION 194C(3) WERE SATISFIED, THE LIABILITY OF TH E PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE AND ACCORDINGLY, APPLICAT ION OF SECTION 40(A)(IA) WOULD ALSO NOT ARISE. (PARA 30) IT IS WORTH NOTICING THAT IN ACIT -VS.- MR. MOHAMME D SUHAIL, KURNOOL IN 'ITA NO. 1536.HYD/2014, ORDER DATED 13.0 2.2015, THE COORDINATE BENCH OF THIS TRIBUNAL SPECIFICALLY HELD THAT THE PROVISIONS OF SECTION 194C(6) ARE INDEPENDENT OF SE CTION 194C(7), AND JUST BECAUSE THERE IS VIOLATION OF PROVISIONS O F SECTION 194C(7), DISALLOWANCE UNDER SECTION 40(A)(IA) DOES- NOT-ARISE IF.THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SEC TION 194C(6). (PARA 33) IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE JUDICIAL REASONING DELINEATED IN THE ABOVE JUDGMENTS IF THE ASSESSEE COMPLIES WITH THE PROVISIONS OF SECTION 194C(61, DI SALLOWANCE UNDER SECTION 40(A) (IA) DOES NOT ARISE JUST BECAUS E THERE IS VIOLATION OF PROVISIONS OF SECTION 194C(6) OF THE A CT. (PARA 33) CONSEQUENT TO FINDINGS IN THE PRECEDING PARAGRAPHS, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING THE EXPENSES INCURRED BY THE ASSESSEE FOR CARRIAGE INWARD AND CA RRIAGE OUTWARD AS DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT, AND ADDING BACK RS.1,63,78,648/- CLAIMED AS EXPENSE TOWARDS CA RRIAGE INWARD AND RS.1,13,00,980/- CLAIMED AS EXPENSE TOWA RDS CARRIAGE OUTWARD AND SUCH ADDITIONS SHALL STAND DEL ETED.(PARA 35). IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. (PARA 36). 17 ULTRATECH CEMENT LTD. CONCLUSION WHEN THE ASSESSEE HAS SATISFIED THE CONDITIONS OF S ECTION 194C(3), LIABILITY OF PAYEE TO DEDUCT TAX AT SOURCE WOULD CEASE AND ACCORDINGLY, APPLICATION OF SECTION 40(A)(IA) W OULD ALSO NOT ARISE.' 13. FROM THE ABOVE IT IS EVIDENT THAT IDENTICAL ISS UE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. NO CONTRARY DECI SION HAS BEEN BROUGHT TO OUR NOTICE. IT IS ALSO NOT THE CASE THAT THE ABOVE DECISIONS HAVE BEEN SET ASIDE BY THE HON'BLE HIGH C OURTS. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENTS A S ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT( APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 9. RESPECTFULLY FOLLOWING THE PRECEDENT AS AFORESAID, WE UPHOL THE ORDER OF THE LEARNED CIT(A) BY DISMISSING THE GROUN DS RAISED BY THE REVENUE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDER ATION. 10. INSOFAR AS THE CROSS OBJECTION FILED BY THE ASSESSE E ARE CONCERNED, THE LEARNED COUNSEL FOR ASSESSEE DID NOT WISH TO PRESS THESE CROSS OBJECTIONS, HENCE, THESE ARE LIABLE TO BE DISMISSED. 11. IN THE RESULT, REVENUES APPEALS AND ASSESSEES CRO SS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.05.2018 SD / - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 09.05.2018 18 ULTRATECH CEMENT LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. P.S./P.S.) ITAT, NAGPUR