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Income Tax Appellate Tribunal, DELHI BENCHES ‘G’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
ORDER Per Bench: The appeals are time barred by a period of 11 days. It was submitted that the order of the ld. CIT(A) dated 31.05.2016 has been received on 13.06.2016 and appeals have been filed on 23.08.2016. The assessee has filed rectification application u/s 154 before the ITO for correction of the amount of tax demanded. It was submitted that the assessee was under bonafide belief that the appeal to Tribunal does not lie at the stage and hence the delay. We find that the delay is due to bonafide reasons and the assessee has not derived or sought to derived new benefit by filing belated appeal by 11 days. Hence, the delay is hereby condoned.
The common grounds are raised in all these appeals are as under: “That on the facts and in the circumstances of the case and in law the learned CIT(A) erred in- (i) confirming the order passed by the Assessing Officer u/s 201(1) and 201(1A) of the Income-tax Act, 1961 read with section 194C of the Act; (ii) denying the benefit of section 194C(6) of the Income-tax Act, 1961 by wrongly invoking Section 194C(7) of the Act without providing due and adequate opportunity of the Appellant.”
The issue revolves around examining the provisions of Section 194C, 194C (6), 194C(7) and 201(1A) read with provisions of Section 44AE of the Act.
The deductor assessed is a partnership concern engaged in the business of trading in chemicals and indenting on commission basis. The Assessing Officer observed that the deductor had made following payments to the transporters which are liable to deduct the tax: Financial Year Amount paid to the 2009-10 6645923 2010-11 7832963 2011-12 7754312 2012-13 7414348 2010-14 11979813 2014-15 10601416
Before the Assessing Officer, it was submitted that the deductor is not deducting TDS on payments made to the transporters on the grounds that the provisions of section 194C (6) are applicable to these payments and therefore TDS on these payments are not made once the transporter submits his PAN to the deductor.
The Assessing Officer held that sub section (6) of Section 194C relates to only small transport operators who do not own more than 2 goods carriages. He further held that the intention of the legislature was to keep small transport operator outside the scope of T.D.S. and hence to apply the same on Medium and large transport operators was not intention of the legislature, hence any payment made to such transport operators is still within the ambit of section 194C(6) and any assessee making payment to such transport operators is liable to deduct tax at source in accordance with the provisions of section 194C(6) of the Income Tax Act.
The ld. CIT(A) relying on the Circular No. 5 of 2010 dated 03/06/2010 and on the Finance Act, 2015 amended the provision of sub- section 6 of section 194C w.e.f. 01/06/2015 and held that the stand taken by the Id. A.O. is not sustainable in the eyes of the law.
However, ld. CIT(A) held that the assessee failed to comply with the provisions of sub section 7 of section 194C which were brought on the statue by the Finance Act No.2 of 2009 and hence assessee is not eligible for the benefit of Section 194C(6) of the Act.
Before us, the ld. AR argued relying on the Circular No. 5 of 2010 dated 03.06.2010 para no. 49.3 which states “(A) Under section 194C, tax 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, tax is not 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 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. (C) Applicability – This amendment has been made applicable with effect from 1st October, 2009 and will accordingly, apply in relation to the assessment year 2010-11 and subsequent assessment years.”
Further, we find that Section 44AE prescribes that this Section is applicable to an assessee who owns not more than 10 goods carriages at any time during the previous year and is engaged in the business of plying, hiring or leasing of such goods carriages.
The ld. DR, without disputing the provisions of the Act argued that the factum of the matter whether the amounts paid by the assessee to various transporters without deducting the TDS are covered under the provisions of Section 44AE of the Act or not need to be examined.
Hence, keeping in view, provisions of the Act, we hereby remand the matter back to the file of the Assessing Officer for the limited purpose of examining whether the payments have been made to transport contractors covered under the provisions of Section 44AE of the Act are not. The Assessing Officer directed to take a decision as per the provisions mentioned above after due examination. Regarding the applicability of 194C(7) of the Act since the matter is being referred back to the file of the Assessing Officer no separate adjudication on this issue is required.
In the result, the appeals of the assessee are allowed for statistical purpose. (Order Pronounced in the Open Court on 20/08/2019).