TaxTMI 
TaxTMI 
2011 (4) TMI 167
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.... provision of section 194C prior to 01.06.2007 relevant to A.Y. 2008-09." 3. At the outset, the assessee contended that disallowance under section 40(a)(ia) of the Act which has been made on the premise that the assessee was liable to deduction of tax at source in respect of the Transport Charges paid to the Transport operators against the transport of petroleum product from the site of Bharat Petroleum to the petrol Pump. The provision of section 194C(1) of the Act, as it stood prior to its amendment w.e.f. 01.06.2007, do not apply in the case of an individual and therefore, there being no liability for deduction of tax at source by the assessee during the relevant assessment year, both the A.O. and CIT(A) has wrongly assumed failure on the part of the assessee to deduct tax at source on the payment to the Contractor. An additional ground has been raised which being legal in nature requiring no investigation of fresh fact should be admitted in the light of the Hon'ble Supreme Court Judgment in the case of National Thermal Co. Ltd. vs. CIT reported in 229 ITR 383 (SC). 4. On the other hand, the Ld. Sr. DR has not objected to the admission of additional ground ra....
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....c) any corporation established by or under a Central, State or Provincial Act; or (d) any company; or (e) any co-operative society; or (f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or (j) any firm, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to:- (i) one per cent. in case of advertising, (ii) in any other case two per cent.....
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....ndment takes effect from 1st day of June, 2007 and is applicable for and from assessment year 2008-09. In Section 194C(1) with effect from 01.06.2007, by the Finance Act, 2007, clause as inserted, reads as under:- "(k) any individual or a Hindu Undivided Family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of Section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to:- (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein:- Provided that no individual or a Hindu Undivided Family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes ....
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....lude in its ambit such individual or a Hindu undivided whose total sales, gross receipts or turnover from the business or profession carried on exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding financial year in which sum is credited or paid to the account of the contractor. This amendment shall not apply in respect of payments made to a contractor by any individual or a member of a Hindu undivided family exclusively for their personal purposes. 54.6 Applicability - This amendment will take effect from the 1st day of June, 2007." 8. In view of the above clear provisions of Section 194(1) as existing in assessment years 2006-07 and 2007-08, i.e. relevant assessment years in the present appeals, it is clear that the assessee is under no obligation to deduct TDS on the expenditure of advertisement, as the assessee being an individual, and the claim of the assessee is as per provisions of law. Once the assessee is not liable to deduct TDS under the provision of Section 194C(1), the provisions of Section 40a(ia) for making disallowance of expenditure for non-deduction of TDS will not ap....