CEE PEE MARBLE & GRANITES,MALAPPURAM vs. ITO, TIRUR

आदेश / O R D E R आदेश आदेश आदेश PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER Both these appeals were remitted back to this Tribunal by Hon’ble Jurisdictional High Court through its judgment dated 14.09.2012 in ITA No.77/2013.

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the assessee for the impugned assessment years since assessee had

failed to deduct tax at source. When the matter reached this Tribunal,

it was held by the Tribunal in the first t round of proceedings that Sec.

40(a)(ia) of the Income Tax Act, 1961 (in short ‘’the Act’’) was not

applicable since payments were effected during the currency of the

relevant previous years and were not amounts payable which were

outstanding at the end of the year. This Tribunal had followed the

decision of Special Bench in the case of Merilyn Shipping & Transport

(2012) 70 DTR 81. The Revenue thereupon moved the Hon’ble

Jurisdictional High Court in further appeal. Their Lordship, in such

appeal held that the view taken by the Tribunal was incorrect. As per

Hon’ble Jurisdictional High Court, the Tribunal had placed reliance

entirely on the decision of Special Bench in the case of Shipping &

Transport (supra) which stood reversed by its own judgment in the

case of Sri Thomas George Muthoot vs. CIT (2016) 137 DTR 76.

However, assessee had raised a plea before Hon’ble Jurisdictional High

Court that it was not obliged to deduct tax at source by virtue of Sec.

194C (3) of the Act as it stood prior to its substitution by Finance Act,

2009. Considering this as a fresh contention, never raised by the

assessee before the Tribunal, Hon’ble Jurisdictional High Court has

remitted this issue back to this Tribunal for adjudicating the

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applicability of Sec. 194C (3) of the Act. Relevant paragraphs 7 & 8 of

the judgment are reproduced hereunder:-

‘’7. According to us, having regard to the judgment of the Gujarat High Court in Merilyn Shipping & Transport case (supra) and the judgment of this Court in ITA No.278/14, the orders of the Tribunal has to be set aside and the matter has to be remitted to the Tribunal for fresh consideration. It is also clarified that if the assessee so desire, it would be open to them to claim the benefit of Section 194(C) (3) as it stood prior to its substitution by Finance Act, 2009 before the Tribunal, if necessary by producing additional materials also. It is also ordered that on consideration of the said contention, if the Tribunal finds that factual adjudication is necessary, it would be open to the Tribunal to remit the matter to the Assessing Officer for reconsideration.

by virtue of second proviso to sub section 3 of Sec. 194C of the Act as

it stood at relevant point of time, the subcontractors to whom

assessee had paid freight charges were individuals who owned not

more than two goods carriages. According to him, assessee was not

required to deduct tax at source on payments effected to such

persons.

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satisfied the conditions set out in the provisos to Section 194C(3) of

the Act was never verified by any of the lower authorities.

orders of the authorities below. Section 194C(3) of the Act is

reproduced hereunder:-

‘’(3) No deduction shall be made under sub-section(1) or sub-section (2) from-- (i) the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor or sub-contractor, if such sum does not exceed twenty thousand rupees : Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, sub- section (2) shall be liable to deduct income-tax under this section : Provided further that no deduction shall be made under sub-section (2), from the amount of any sum credited or paid or likely to be credited or paid during the previous year to the 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 and verified in the prescribed manner and within such time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year :

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Provided also that the person responsible for paying any sum as aforesaid to the sub- contractor referred to in the second proviso shall furnish to the prescribed income-tax authority or the person authorised by it such particulars as may be prescribed in such form and within such time as may be prescribed ; or (ii) any sum credited or paid before the 1st day of June, 1972 ; or (iii) any sum credited or paid before the 1st day of June, 1973, in pursuance of a contract between the contractor and a co-operative society or in pursuance of a contract between such contractor and the sub-contractor in relation to any work (including supply of labour for carrying out any work) undertaken by the contractor for the co- operative society. Explanation For the purposes of clause (i), goods carriage shall have the same meaning as in the Explanation to sub-section (7) of section 44AE’’.

Contention of the assessee is that it had paid freight charges to

individuals who owned not more than two goods carriages at any time

during the relevant previous years. However a reading of the above

section would clearly show that the person liable for paying such

freight charges has to furnish particulars in the prescribed form within

prescribed time to the prescribed authority. The payee is also required

to produce a declaration to the assessee in the prescribed form within

the prescribed time. Rule 29D of the Income Tax Rules, 1962 gives

the method and forms in which such reporting has to be done. The

said Rule is reproduced hereunder:-

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‘’(1) The declaration under the second proviso to clause (i) of sub-section (3) of section 194C by a sub-contractor shall be in Form No. 15-I and shall be verified in the manner indicated therein by such sub-contractor. (2) The declaration referred to in sub-rule (1) may be furnished to the contractor responsible for paying or crediting any sum to the account of the sub-contractor before the event of such sum being credited or paid to such sub-contractor. (3) The particulars under the third proviso to clause (i) of sub-section (3) of section 194C to be furnished by a contractor responsible for paying any sum to such sub-contractor shall be in Form No. 15J. (4) The particulars referred to in sub-rule (3) shall be furnished,- (i) to the Commissioner of Income-tax, so designated by the Chief Commissioner of Income-tax, within whose area of jurisdiction, the office of the contractor referred to in sub-rule (3) is situated ;

(ii) on or before the 30th June following the financial year’’.

Whether the assessee had obtained form No.15-I from the payees

and whether assessee had filed form No. 15J, within the time allowed

to the competent authority, so as to enable it to claim the benefit of

third proviso to Section 194C(3) of the Act, has not been verified by

any of the lower authorities. We are of the opinion that considering

the facts and circumstances, these are aspects are to be verified by

the ld. Assessing Officer. We therefore, remit the issue of disallowance

u/s.40(a)(ia) of the Act and applicability of Sec. 194C(3)

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of the Act back to the file of the ld. Assessing Officer for limited purpose of verifying compliance of the assessee with Rule 29D of the Income Tax Rules, 1962. Ordered accordingly.

Order pronounced in the open court on 17-03-2017.

Sd/- Sd/- (ABRAHAM P. GEORGE) (GEORGE GEORGE. K) लेखा सदःय सदःय/ACCOUNTANT MEMBER लेखा लेखा लेखा सदःय सदःय �याियक सदःय सदःय/JUDICIAL MEMBER �याियक �याियक �याियक सदःय सदःय

Cochin �दनांक/Dated: 17th March, 2017 KV आदेश क� ूितिल�प अमे�षत/Copy to: 1. M/s. Cee Pee Granites Pvt. Ltd, V/221B, Velimukku South (Post) Malapurram 676 317. 2. M/s. Cee Pee Marbles & Granites, 278/5, Velimukku South (Post), Malapurram 676 317. 3. The Assistant Commissioner of Income Tax, Circle 2(2), Tirur. 4. The Commissioner of Income Tax (Appeals)-II, Kozhikode. 5. The Principal Commissioner of Income Tax (Appeals) Kozhikode. 6. D.R. I.T.A.T., Cochin Bench, Cochin. 7. Guard File By Order

(ASSISTANT REGISTRAR I.T.A.T., Cochin.