Pushpaben D.Patel, Surat vs Assessee

ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम& BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 117/Ahd/2011 %नधा)रण वष)/Assessment Year: 2007-08

Mrs.Pushpaben D. Patel ITO, Ward-6(3) 91, Vadiya Nagar Vs Surat. Opp: Nagardas Hall, Nr.Gujarat Gas Circle Adajan, Surat 395 009.

अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)

Revenue by : Shri M.K. Patel Assessee(s) by : Shri Nimesh Yadav

सन ु वाई क तार ख/ Dateof Hearing : 23/03/2015 घोषणा क तार ख / Date of Pronouncement: 10/04/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by

the assessee against the order of the Commissioner of Income-Tax (Appeals)-VI, Surat dated 23.9.2010.

2. The appeal filed by the assessee is barred by limitation by one day. The assessee has filed condonation petition, and we are satisfied with the reasons stated therein for not presenting the appeal before the Tribunal with the prescribed time limit, and DR also had no objection to the condonation of delay of one day in fling of the appeal by the assessee. Therefore, we condone the delay and admit the appeal for hearing.

3. The ground no.1 of the appeal of the assessee reads as under:

"1. Disallowance u/s 40(a)(ia) with regard to Section 194C 2870136/-:

ITA No.117/Ahd/2011 2 (a) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in confirming disallowance of Rs.28,70,136/- u/s.40(a)(ia) with regard to non deduction of TDS u/s 194C of the Income-tax Act, 1961 without considering the fact that the appellant had obtained Form No. 151 from the deductee.

(b) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in not appreciating the fact that the appellant is absolved from liability of TDS as soon as Form No. 151 is obtained from the deductee and the procedural lapse for submitting Form No. 15J will not invite the liability of TDS which had already been absolved."

4. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, it is not in dispute that the assessee paid Rs.28,70,136/- to his transporting sub-contractors on which no tax was deducted at source. The assessee claimed before the AO that no tax was deductible at source on the aforesaid amount in view of second proviso to sub-section (3) of section 194C, as the assessee has received declaration in prescribed form no.15-I from the payees.

5. However, according to the AO, the assessee should have filed Form No.15-I before the Income-tax authorities before 30.6.2007, but the assessee filed the same on 25.11.2009, and therefore, the assessee ought to have deducted TDS on the aforesaid amount, and consequently, he disallowed the same by invoking the provisions of section 40(a)(ia) of the Act

6. On appeal, the CIT(A) confirmed the action of the AO.

7. We find that the second proviso to section 194C which was in force at the material time reads as under:

"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 ITA No.117/Ahd/2011 3

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."

8. Thus, a perusal of the aforesaid provisions shows that if the assessee receives declaration in Form No.15-I from such sub- contractors in respect of transport of goods, then the assessee cannot legally deduct tax at sources on the payment made to such sub- contractors, when the payment or credit to the sub-contractor is earlier at which point of time, the assessee otherwise was required to deduct tax at source, and the date of filing the copy of declaration to the Income-tax authorities, is later than the same. Thus, furnishing of copy of declaration to the Income-tax authorities by the assessee was not a condition precedent for not deducting TDS on payment made to the sub-contractors, rather the receipt of declaration by the assessee in the prescribed form was sufficient for the assessee to make the payment to sub-contractors without deduction of TDS at source.

9. Coming to the facts of the instant case, we find that it is not in dispute that the assessee has filed a copy of declaration received by her in prescribed form to the prescribed income-tax authorities on 25.11.2009. The above facts itself shows that the assessee received declaration in prescribed form from the sub-contractors to whom the payment in question of Rs.28,70,136/- was made by the assessee. No defect in the said form could be pointed out by any of the income-tax authorities.

10. In the above circumstances, merely because the assessee did not furnish the declaration to the income-tax authorities, within due date, which was after the date on which the assessee could have otherwise deducted tax at source, it cannot be held that the assessee made any ITA No.117/Ahd/2011 4

default by not deducting the tax at source. Therefore, as the assessee was not required to deduct the tax at source as per the provisions of second proviso to sub-section (3) to section 194C, the said amount of Rs.28,70,136/- cannot be disallowed by invoking the provisions of section 40(a)(ia) of the Act. If the assessee has defaulted in furnishing the copy of the prescribed form no.15-I received by it within the prescribed time, then the consequence for that default may follow, but certainly disallowance under section 40(a)(ia) of the Act cannot be made.

10. DR could not produce before us the copy of form no.15-I furnished by the assessee to the income-tax authorities, and nor has been able to point any material to show that the assessee was liable to deduct TDS on payment made to sub-contractors from whom it received declaration in the prescribed form. The assessee had received declaration from the sub-contractors to whom the payment in question was made is not in question, and is evidenced from the fact that the copy of the said declaration was filed by the assessee before the prescribed authorities on 25.11.2009, and therefore, in our view, the disallowance made under section 40(a)(ia) cannot be sustained.

11. Our above view finds supports from the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Valibhai Khanbhai Mankad, (2012) 28 taxmann.com 119 (Guj) wherein it was held that once conditions in second proviso to section 194C(3) are satisfied, liability to deduct tax at source ceases and requirement of furnishing Form No.15J is not related to liability to deduct tax at source. We, therefore, delete the addition of Rs.28,70,136/-, and allow this ground of appeal of the assessee.

12. The ground no.2 of the appeal reads as under:

"2. Disallowance u/s 40(a)(ia) with regard to Section 194A 79680/-:

ITA No.117/Ahd/2011 5 (a) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in confirming disallowance of Rs. 79680/- u/s.40(a)(ia) with regard to non deduction of TDS u/s 194 A of the Income-tax Act, 1961 without considering the written submissions."

13. At the time of hearing, the AR of the assessee did not press this ground of appeal, and hence, we dismiss this ground of appeal as not pressed.

14. The ground nos.3 and 4 of the appeal reads as under:

3. Disallowance partly out of office expenses Rs.64OO/-:

(a) The learned Commissioner of Income-tax (Appeals) - IV has erred in confirming disallowance of Rs.6,400/- being 10% of Office Expenses without considering the nature of business and the quantum of turnover vis-a-vis the quantum of the expenditure towards office expenses.

4. Miscellaneous :

(a) The ld.CIT(A) has erred in confirming the interest charged u/s.234B of the IT Act when such additions were not warranted at the time of filing of return.

(b) The appellant craves to add, alter, delete or amend any other ground of appeal during the course of appeal proceedings."

15. At the time of hearing, no argument was made on these grounds of the appeal, hence, the same are dismissed for want of prosecution.

16. In the result, the appeal of the assessee is partly allowed.

Order pronounced in the Court on Friday, the 10th April, 2015 at Ahmedabad.

Sd/- Sd/-

(KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Ahmedabad; Dated 10 /04/2015