No disallowance for mistake in Transporters declaration details filed u/s 194C with Income Tax Authorities. Deduction is allowable if all conditions were fulfilled – ITAT
Prelude:
Section 194C contains the provisions for deduction of tax at source on payments made to contractors. Sub section (6) provides an exception for deduction of tax in case of payments made to a Contractor (transporter) engaged in playing, hiring or leasing of goods carriage. As amended by the Finance Act, 2015, the exemption postulates two conditions, (i) The transporter does not own more than ten goods carriage any time during the previous year, and (ii) he furnishes a declaration to that effect along with his PAN to the person making the payment. However no format of declaration has been specified.
The sub-section (7), further provides that the exemption is available subject to submission of such particulars to the Income Tax Authorities as prescribed. In this regard, CBDT vide Notification No. 16/2011 dated 29th March, 2011 w.e.f. 1st April, 2011 amended Rule 31A to provide that quarterly statement of TDS shall include particulars of amount paid or credited on which tax was not deducted on account of declarations u/s 194C(6).
It is notable that earlier also, there was a similar provision contained in sub-section (3) of section 194C which provided exemption from deduction of tax in case of a sub-contractor on production of a declaration in Form 15-I with the distinction that the maximum number of goods carriage owned was two and the exemption was limited to an individual only. However the said exemption was subject to one more qualification that the person making the payment shall furnish (just like in case of Form 15G, 15H) to Commissioner of Income Tax, the details, including the amount paid, of such sub-contractors in Form 15-J on or before 30th June following the financial year.
In the instant case, a controversy arose as to the disallowance made u/s 40(a)(ia) of the Income Tax Act, 1961 (the Act) for the reason that the amount mentioned in Form 15-J was less than the actual payment made. The issue is relevant in the new regime of quarterly TDS Statements also as there might be some inadvertent typing mistake in filling the details in TDS quarterly Statement (Form 26Q) while furnishing particulars of amount paid/credited.
ABCAUS Case Law Citation:
ABCAUS 2192 (2018) (02) ITAT
Brief Facts of the Case:
In the instant case, the sub-contractors had furnished the required declarations in Form-I and the assessee in turn had filed Form-J with the Income Tax Authorities. However there was a difference between the amount mentioned in the details furnished by the assessee in Form-J and the actual amount payable on account of transportation charges.
Accordingly, he Assessing officer (the AO), made a disallowance under section 40(a)(ia) of the Act for the said difference.
The CIT(Appeals) also upheld the addition. Aggrieved by the order of the First Appellate Authority, the assessee was before the Tribunal raising inter alia the issue of disallowance u/s 40(a)(ia).
Observations made by the Tribunal:
The ITAT observed that the basis of the exemption from deducting TDS was (i) the sub-contractor was an individual and (ii) he did not own more than 2 goods carriages at any time during the previous year, (iii) the sub-contractor furnished the prescribed declaration within time.
It was noted that compliance of the above all conditions was not disputed
The Tribunal noted the jurisdictional High Court on similar facts had held that the exemption from the liability to deduct tax at source would be complete the moment the requirement contained are satisfied. Once the declaration form are filed by the sub-contractor, the liability to deduct tax would not arise. The Hon’ble High Court concurred with the Tribunal and opined that the non filing of Form 15-J by the assessee was only a technical defect
In view of the above, the ITAT opined that simply because the amount mentioned in the form 15J was incorrect, it could not be held that TDS was not required to be deducted to the extent of that amount only and not to the extent of entire amount payable to sub-contractor who was fulfilling all the conditions of second proviso to sub-section (3) of section 194C.
Decision/ Conclusion/Held:
Following the judgement of the Jurisdictional High Court the ITAT deleted the disallowance made by the AO
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