AGARWAL MARBLE ,PASCHIM MEDINIPUR vs. I.T.O.,WARD-1(1), MIDNAPORE

The assessee in the present case is a partnership firm which is engaged in the business of marble stones and sanitary tiles. The return of income for the year under consideration was filed by it on 28.09.2010 declaring a total income of Rs. 15,230/-. During the course of assessment proceedings, it was noticed by the AO that the assessee has made various payments towards freight charges exceeding Rs. 20,000/- without deducting tax at source as required by the provisions of section 194C of the Act. According to him, the said payments aggregating to Rs. 8,42,479/- were liable to be disallowed

Assessment Year: 2010-11 Agarwal Marble u/s 40(a)(ia) of the Act. In this regard, it was submitted on behalf of the assessee before the AO that the parties to whom the said payments were made had furnished their respective PAN details to the assessee and therefore tax at source was not deducted from the payments made to them in view of the provisions of section 194(C)(6). This submission of the assessee was not found acceptable by the AO. According to him, the PAN details furnished by the concerned transporters were required to be intimated by the assessee to the Income Tax Department in the prescribed form within the specified period and since the assessee had failed to comply with these requirements, the freight charges of Rs. 8,42,479/- were disallowed by him by invoking the provisions of section 40(a)(ia) of the Act. On appeal, the Ld. CIT(A) confirmed the said disallowance made by the AO for the same reasons as given by the AO. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

I have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has submitted that all the payments in question towards freight charges were made by the assessee prior to the amendment made in the provisions of sub-section (6) of section 194C with effect from 01.06.2015 and the only requirement prior to the said amendment was that the transport contractor should have furnished his Permanent Account Number to the person paying or crediting such sum towards freight or transport charges. In support of this contention, he has cited the decision of coordinate bench of this Assessment Year: 2010-11 Agarwal Marble Tribunal in the case of Soma Rani Ghosh vs DCIT rendered vide an order dated September 9, 2016 in wherein it was held that in order to get immunity from the obligation of TDS u/s 194C(6) as it is stood prior to the amendment in 2015, filing of PAN of the payee-transporters along was sufficient and there was no requirement of intimating the PAN details of the transporters to the Income Tax Department in the prescribed format within the prescribed period. Keeping in view the ratio of this decision of coordinate bench of this Tribunal and having regard to the facts of the case, I am of the view that the assessee having obtained the PAN of the concerned transport contractor was eligible for immunity provided u/s 194C(6) of the Act as it is stood prior to the amendment in 2015 and he was, therefore, not liable to deduct tax at source from the impugned payments made to the transport contractor. The disallowance made by the AO u/s 40(a)(ia) and confirmed by the Ld. CIT(A) for the alleged failure of the assessee to deduct tax at source thus is not sustainable and deleting the same, I allow this appeal of the assessee.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 26th February, 2020.