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Income Tax Appellate Tribunal, ‘’C’ BENCH : CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
Revenue in this appeal assails an order dated 29.02.2016
of ld. Commissioner of Income Tax (Appeals)-1, Madurai. The appeal
has been filed with a delay of seven days. Revenue has filed a
condonation petition. Reason shown for the delay seems to be
justified. Ld. Authorised Representative did not raise any serious
objection. Delay is condoned. Appeal is admitted.
ITA No. 1364/2016. :- 2 -:
Revenue has altogether raised four grounds of which
grounds 1 & 4 are general in nature needing no specific adjudication.
Vide its ground No.2, grievance of the Revenue is that ld. 3.
Commissioner of Income Tax (Appeals) deleted a disallowance made
by the ld. Assessing Officer u/s.14A of the Income Tax Act, 1961 (in
short ‘’the Act’’) r.w.Rule 8D of the Income Tax Rules, 1962 (herein
after referred to as ‘the Rules’), taking a view that assessee having not
earned any dividend income, no disallowance could be made. Ld.
Assessing Officer had applied Rule 8D and disallowed a sum of
�28,90,419/- considering investments made by the assessee which
could yield exempt income. However, ld. Commissioner of Income
Tax (Appeals) taking note that assessee had not claimed any exempt
income, deleted such disallowance, relying on the decision of Delhi
Bench of the Tribunal in the case of DCM Ltd vs DCIT (in ITA
4467/2012, dated 01.09.2015).
We find that the view taken by the ld. Commissioner of
Income Tax (Appeals) is in sync with the judgment of Hon‘ble
Jurisdictional High Court in the case of Redington India Ltd vs. Addl.
CIT (2016) 97 CCH 0219. Accordingly, we are not inclined to interfere
with the order of the ld. Commissioner of Income Tax (Appeals) on
this issue. Ground No.2 of the Revenue stands dismissed.
ITA No. 1364/2016. :- 3 -:
Vide its ground No.3, grievance of the Revenue is that ld.
Commissioner of Income Tax (Appeals) deleted a disallowance of
�1,70,84,271/- made by the ld. Assessing Officer u/s.40(a)(ia) of the
Act.
Facts apropos are that assessee engaged in the business of 6.
textiles and power looms had paid freight charges of �1,70,84,271/-
on which no deduction of tax required u/s.194C of the Act was made.
This was put to the assessee. Its answer was that, the payments were
made to transport contractors. Ld. Assessing Officer took a view that
assessee had not complied to sub Section (6) of Section 194C of the
Act nor filed form No.26Q within the date prescribed under Rule 31A of
the Rules. He disallowed the claim of �1,70,84,271/- invoking Section
40(a)(ia) of the Act.
Aggrieved, assessee moved in appeal before the ld.
Commissioner of Income Tax (Appeals). Argument of the assessee
was that it had obtained PAN of the deductees while making
payments and therefore complied with Section 194C(6) of the Act.
Further, as per the assessee, it had also furnished particulars as
prescribed u/s.194C(7) of the Act by filing form No.26Q, though
belatedly. Reliance was placed on the decision of Hyderabad Bench of
the Tribunal in the case of ACIT Vs. Mohamed Suhail (ITA
No.1536/Hyd/2014, dated 13.2.2015).
ITA No. 1364/2016. :- 4 -:
Ld. Commissioner of Income Tax (Appeals) after considering
the contention of the assessee held that assessee having complied
with Section 194(6) of the Act, non- compliance with Section 194(7) of
the Act was not fatal. According to him, assessee could not be visited
with the consequence of Section 40(a)(ia) of the Act. In other words,
as per the ld. Commissioner of Income Tax (Appeals) failure to file
quarterly return in form 26Q would not lead to a disallowance
u/s.40(a)(ia) of the Act. He deleted the disallowance made by the ld.
Assessing Officer.
Now before us, the ld. Departmental Representative 9.
strongly assailing the order of the ld. Commissioner of Income Tax
(Appeals) submitted that Sub Sections 6 & 7 to Section 194C of the Act
were not independent and had to be read together. As per the ld.
DR, partial compliance of collecting PAN of the payees would not be
sufficient. As per the ld. DR, ld. Commissioner of Income Tax
(Appeals) fell in error in deleting the disallowance made by the ld.
Assessing Officer u/s.40(a)(ia) of the Act.
Per contra, ld. Authorised Representative strongly 10.
supporting the orders of the authorities below submitted that assessee
had filed form No.26Q though belatedly. According to the ld.
Authorised Representative, there was compliance of Sub Section (7) of
Section 194C of the Act and mere delay in filing the return in form
ITA No. 1364/2016. :- 5 -: No.26Q, would not entitle the Revenue to apply Section 40(a)(ia) of
the Act.
We have considered the rival contentions and perused the 11.
orders of the authorities below. Ld. Commissioner of Income Tax
(Appeals) had held that non compliance with Sub Section (7) of
Section 194C of the Act was not fatal and disallowance u/s.40(a)(ia) of
the Act could not be made for such non compliance since assessee
had complied with Sub Section (6) of Section 194C of the Act. For
taking this view he had relied on a decision of Hyderabad Bench of
the Tribunal in the case of Mohamed Suhail (supra). Be that as it
may, one of the submission of the assessee is that it had filed form
No.26Q as prescribed under Rule 31A, though belatedly. It is true that
quarterly returns specified in Rule 31A have to be filed on or before 15th of the first month of the succeeding the quarter. However, in our
opinion, this time limit cannot be construed so strictly to mean belated
filing will automatically result in a disallowance under Section 40(a)(ia)
of the Act. Sub Section (6) of Section 194C of the Act clearly say that
there is no need to deduct tax on sums credited or paid to a contractor
engaged in plying, hiring or lease charges, if the payer, who is the
assessee here, gets a declaration that former was owning ten or less
goods carriages and also gave their PAN numbers. In our opinion,
considering the facts and circumstances of the case, the issue requires
ITA No. 1364/2016. :- 6 -: a fresh look by the ld. Assessing Officer. Ld. Assessing Officer has to verify whether assessee had complied with Sub Section (6) of Section 194C of the Act. He also needs to verify whether the assessee had filed form No.26Q, though belatedly. If assessee has complied with these there can be no disallowance u/s.40(a)(ia) of the Act. Ordered accordingly.
In the result, the appeal of the Revenue is partly allowed for 12. statistical purpose. Order pronounced in the open court at the time of hearing on 20th day of February, 2018, at Chennai.
Sd/- Sd/- (जॉज� माथन) (अ�ाहम पी. जॉज�) (GEORGE MATHAN) (ABRAHAM P. GEORGE) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated: 20th February, 2018 KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF