2013 (7) TMI 538

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....ection 40(a)(ia) of the Income-tax Act for non deduction of tax at source? (B) Whether section 40(a)(ia) of the Income-tax Act can be invoked only to disallow expenditure of the nature referred to therein, which is shown as 'payable' as on the date of the balance sheet or it can be invoked also to disallow such expenditure which became payable at any time during the relevant previous year and was actually paid within the previous year?" 2. The Tribunal in the impugned judgment relied on the decision in case of Prashant H. Shah to come to the conclusion that the provisions of section 194C of the Income-tax Act, 1961 were made applicable in respect of individuals with effect from 1.6.2007. Present case concerns the assessment year 2005-....

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....at vide an amendment with effect from 1.6.2007 an individual or HUF have also been inducted vide sub-clause(k) in section 194C(1) of the IT Act. At this juncture, it is worth to hold that as far as the AY in hand in concerned, i.e., AY 2007-08, this latest amendment of section 194C(1)(k) of the Act being introduced with effect from 01/06/2007 has no applicability. We therefore, hold that if the Revenue Department had made an endeavour to invoke the provisions of section 40(a)(ia) for the infringement of the provisions of section 194C of the Act by holding that the assessee being an individual got covered by sub-section (1), then according to us, it was an incorrect application of law. We therefore hold that for the Asstt. Year under conside....

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....ection 194C requires that any person, that is, a contractor responsible for paying any sum to any resident sub-contractor in pursuance of a contract with the sub-contractor for carrying out or for supply of labour for carrying out the whole or any part of the work undertaken by the contractor or for supplying any labour, which the contractor had undertaken to supply has to, at the time of credited such sum to the account of sub-contractor, or at the time of payment in cash or in any other manner, deduct TDS at the specified rate. (9) For application of sub-section (2) of section 194C, the requirement is that there is a contractor who has undertaken to carry out any work or supply of labour, a part of such work or supply of labour is exec....