TaxTMI 
TaxTMI 
2016 (12) TMI 244
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.... for the sake of reference we are reproducing the grounds of appeal raised in ITA No. 316/Nag/2015: 1. Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in deleting the demand of Rs. 1,70,89,532/- for A.Y 2012-13 raised u/s 201/201(lA) of the Act? 2. Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in not appreciating that the phrase in section 194C(6) "during the course Of plying, hiring and leasing of goods carriages" does not apply to contractor only but to both the parties i.e. Principal as well as contractor?' 3. Whether on the facts and circumstances of the case, the Ld.CIT(A) is justified in holding that only contractor should be in the line of business of plying, hiring and leasing of goods carriages whereas the section 194C( 6) nowhere mention that only contractor should be in the business of plying, hiring and leasing of goods carriages? 4. Whether on the facts and circumstances 01: the case the Ld.CIT(A) is justified in ignoring the true spirit in which section 194C(6) was brought to the statute w.e.f. 1-10-2009 particularly when prior to introduction of this section TDS was being made on identica....
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....ons of the assessee and also considered the provisions of the relevant section of the Act and came to the conclusion that the payments made by a person who is in the business of plying, hiring or leasing goods carriages to contractor are exempt from the purview of TDS if the contractor furnished his PAN to the deductor. Thus it was the contention of the AO that deductor should be in the business of plying, hiring or leasing goods carriages to avail the benefit of section 194C(6). In view of the above facts the AO came to the conclusion that the assessee is required to be treated to be in default for non-deduction of TDS u/s 194C of the Act and was, therefore, directed to pay the tax amounting to Rs. 1,70,89,532/-, Rs. 2,06,05,896/-, Rs. 1,71,95,647/- and Rs. 93,87,054/- u/s 201(1) of the Act for Assessment Years 2012-13 to 2015-16 respectively. 6. Upon assessee's appeal, learned CIT(Appeals) elaborately considered the issue and deleted the addition holding as under : "6. I have considered the facts of the case and submissions of the appellant. There is substantial force in the submissions made. The legislative history of Section 194C of the Income Tax Act, 1961 makes it very ....
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....erator, if the said contractor furnishes his PAN. The explanatory memorandum of Finance (No.2) Bill, 2009 explains the legislative intent behind the provisions as follows : "b. Provisions for payments and tax deducted at source to transporters: Under Section 194C, tax is required to be deducted on payments to transport contractors engaged in the business of plying, hiring or leasing goods carriages. However if they furnish a statement that they do not own more than two goods carriages, tax is not to be deducted at source. Transport operators report problem in obtaining TDS certificates as these are not issued immediately by clients and they are not able to approach the client again as they may have to move across the country for their business. It is, therefore, proposed to exempt payments to transport operators (as defined in section 44AE) from the purview of TDS. However, this would only apply in cases where the operator furnishes his Permanent Account Number (PAN) to the deductor. Deductors who make payments to transporters without deducting TDS (as they have quoted PAN) will be required to intimate these PAN details to the Income Tax Department in the prescribed for....
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....escribed in Rule 31A(4)(vi) of Income Tax Rules has been duly complied by the appellant. In face of such clear provisions of section 194C(6) as explained by circular issued by CBDT as above, the Ld. ITO had no reason to hold that the payment made by transport operators to other contractors are exempt from TDS and not the payment made to transport operators. 6.5 Further clarity on this issue has been made available as it has been further reiterated by Government while placing Finance bill 2015 in the Lok Sabha vide explanatory memorandum for Provisions relating to direct taxes. It has been clarified in Clause 43 that though the intention was to reduce the compliance burden on the small transporters while making amendment in 2009, however, the existing language of sub section (6) of section 194C of the Act does not convey the desired intention and as a result all the transporters, irrespective of their size, are claiming exemption from TDS under the existing provisions of sub section (6) of section 194C of the Act on furnishing of PAN. 6.6 Therefore, the section has been proposed to be amended w.e.f 1st June 2015 to expressly provide that the relaxation under sub section (6) of....
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....and hence it had duly discharged the onus cast upon it and that it cannot be treated as an assessee in default till it is found that deductees had also failed to pay such tax directly It is evident that the details of all the persons from whom tax was required to be deducted was available on record before the Ld. A.O. and the onus was on the A.O. to ascertain the facts related to payment of tax on income of the transport contractors directly from the recipient of such income. Reliance in this regard nis placed on Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT 293 ITR 226, Jagran Prakashan Ltd. Vs. DCIT 21 taxmann.com 489 and Agra ITAT judgment in the case of Allahabad Bank Vs. ITO bearing ITA Nos. 448 to 454/Agra/2011." 8. Making a reference to the above case laws, learned CIT(Appeals) further observed as under : "7.3 On careful observation, it is clearly seen that the ratio laid down by the Hon'ble ITAT, Agra Bench, Agra and Hon'ble Karnataka High Court squarely applies to the facts in the case of the appellant. The details of all the persons from whom tax was required to be deducted at source are available on record and with the Ld. AO. The permanent account numbers (PANs)....
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..... (supra) and by Kolkata Tribunal in the case of Soma Rani Ghosh (supra). We may gainfully refer to the Tribunal's decision in these cases as under : M/s Raymond UCO Denim Pvt. Ltd.: "7. I have heard both the counsel and perused the records. In this regard I may gainfully refer to section 194C(6) as under : " No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, [where such contractors own ten or less goods carriages at any time during the previous year and furnish a declaration to that effect along with] his Permanent Account Number, to the person paying or crediting such sum." 8. From the above it is clear that TDS is not to be deducted from the payment made to transporters who furnished PAN. The Assessing Officer has wrongly interpreted that this provision is applicable to tax deducted by assessee who are engaged in transport business. This in my considered opinion is an erroneous interpretation not sustainable in law. In my considered opinion learned CIT(Appeals) has correctly appreciated the law and ....