TaxTMI 
TaxTMI 
2020 (3) TMI 336
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.... erred in confirming the order of Income Tax Officer (TDS), Noida, treating the appellant as an assessee in default for non-deduction of TDS u/s 194C on payments made to the Transporters. (b) That the Ld. CIT(A) has failed to appreciate that the appellant assessee has complied the provisions of sub section 7 of Section 194C of Income Tax Act, 1961 and furnished prescribed Form No. 26Q to the Income Tax Officer (TDS) alongwith relevant details required by the law. The appellant craves leave to add, alter, amend, modify or forego any of the grounds of appeal before or at the time of hearing." ITA No.-4316/Del/2016 "1. The order passed by the Ld. CIT(A) is bad in law, wrong on facts and against the principles of natural justice. 2.(a) That the on the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in confirming the order of Income Tax Officer (TDS), Noida, treating the appellant as an assessee in default for non-deduction of TDS u/s 194C on payments made to the Transporters. (b) That the Ld. CIT(A) has failed to appreciate that the appellant assessee has complied the provisions of sub section 7 of Secti....
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....e Government to explain the new provisions and whereunder a case was made out that the exemption provided In sub-section of section 194C was restricted to the small transporters who were covered under section 44AE of the I.T. Act, 1961 and relying upon the Circular No. 5 of 2010 the ld. A.O. has rejected the claims of the appellant and has held the same to be an assessee in default and passed the impugned order against the appellant. 4. The Explanatory Circular cannot take the position of law. In retrospect the Revenue has realized that there was a lacuna in the provisions of sub-section 6 of section 194C as it did not convey the meaning which was the intended purpose of the said sub-section and which was conveyed by the Circular No. 5 of 2010 dated 03/06/2010. If the law is not properly worded and because of such deficiencies is getting interpreted in more than one ways an assessee cannot be faulted for taking the interpretation more convenient to it. In view of this the reliance placed by the Id. A.O. on the Explanatory O.M. and not on the law is misplaced. There is no denying that the Legislature intended to mitigate the hardships face by a small transporters and not to....
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....ida to furnish details of person and payment of freight and cartage / payment to transports. 6. Copy of letter dated 27.02.2015 filed before the Income Tax Officer (TDS), Noida in response to notice dated 23.02.2015 furnishing the details of payment of freight and cartage made to transport Operators by the appellant company for the financial year 2013-14. 7. Copy of letter dated 05.03.2015 filed before the Income Tax Officer (TDS), Noida in response to notice dated 23.02.2015 furnishing the details of payment of freight and cartage made to transport Operators by the appellant company for the financial year 2014-15 (upto Dec 2014). 8. Copy of annexures to the Form 26Q filed for the financial year 2013-14 and 2014-15 duly showing the name, pan of the transporters etc. and appellant has also mentioned "t" in the remark column evidencing that as the concern party is transporter and hence TDS has not been deducted in compliance to requirement u/s 194C(7) of the Income tax Act, 1961. 6. Additional evidence, if any (C.1.1) Also, a copy of the order in the case of Dilip Kumar vs. ACIT [2019] 111 taxmann.com 52 (Madras) was also filed from the assessee....
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....order, in order to substantiate the claim that requirements under Section 194C(7) of I.T. Act have been duly complied with by the assessee. (F) In the result, both the appeals are partly allowed for statistical purposes. Order is pronounced in Open Court on 05/03/20. ============= Document 1 The deductor assessee, is engaged in the business of manufacturing and trading in soft drinks under the brand narne Pepsi, Mirinda, 7up, Mirinda lemon, Everess Buda ele. In this case, in order to ascertain to the reasons of negative growth in TDS collection during the FY.2014-15, a verification letter dated 16.10.2014 was issued to the assessee. Assessee vide reply dated submitted the comparative chart showing the negative growth. Further, notice u/s 201/201(1A) was issued to the assessee and e-mailed on 23.02.2015 requiring the deducter to furnish details of payment of freight Cartage/Payment of Transport operators alongwith month wise & party wise breakup and the deductor was, required to show cause as to why order u/s 201(1)/201(1A) of the I.T. Act, 1961 be not passed declaring the deductor assessee in default in respect of non-deduction of tax at ....
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....nciple of law that where language used in the statute is clear and unambiguous external aid is impermissible. The assessee has followed the law as contained in the section 1940(6) on the issue while making payment of freight etc at the relevant point of time as the provision of sub section(6) of section 1940 are clear and on other interpretation is possible. In the light of above mentioned facto, we request your honour not to consider the assessee as assessee in default in pursuant to section 201(1)/(1A) of the Act as the assessee has acted in a legal and bonafide manner relying upon the provision of the Act while not deducting TDS on payment made to transporters. Further on the basis of the above contention treating the assessee as an assessee in default is completely untenable and the proceeding initiated may kindly be dropped. Further, the deductor vide reply dated 19.3.2015 submitted the declaration of three transporters who are covered under 44AE of the I. T Act, 1961for the F.Y 2013-14 & 2014-15. The certificates furnished by the deductee of M/s Vipin Kumar Transporter is undated, M/s Madhav Roadlines (10.03.2015) and M/s Kes....
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.... from 01.10.2009, the second Proviso below sub section (3) of Section 194C granted exemption from deduction of tax at source on payment made to small transport operators who did not own more than 2 transport goods carriages. Transporter operators were reporting 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 and collecting TDS certificates from all over the country was a mammoth task. Thus, it is clear that even earlier big transport operators who regularly contract and business from big assesses were not covered within the ambit of non deduction of T.D.S. on payment to transport operators. The explanatory note for amendment also mentions under heading "(b) provision for payment and tax deducted at source to transporter." That the difficulties faced by small transport operators was considered by C.B.D.T. and their difficulty was sought to be removed by introducing sub section (6) in section 1940 in lieu of erstwhile second proviso below sub section (3) of section 194C. 2(b). The expl....
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....emedy so that it leads to intended consequences. 08. It is, therefore, the Act has been amended to exempt payments to transport operators (as defined in section 44AE) from the purview of TDS. However, this would also only apply in cases when the operator. Document 2 furnishes his Permanent Account Number (PAN) to the deductor. Deductor 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 format. 09. From the above discussion, the legislative intent is very clear that was to Ireep small transport operator outside the scope of TDS and to apply the same on Medium and large transport operators was not the intention of the legislature. Hence any payment made to such transport operators is still within the ambit of section 194C and any assessee making payment to such transport operators is liable to deduct tax at source in accordance with the provision of section 194C of the Income Tax Act. 10. Thus is incorrect on the part of the deductor assessees to interpret Section 1940 (6) is exempting all transporter who prov....