Exemption from TDS under section 194C available even if the payer fails to furnish details in TDS Return
Case Details: Mohmed Shakil Mohmed Shafi Mutawali v. ITO- [2021] 132 taxmann.com 119 (Ahmedabad- Trib.)
Facts of the case:
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The assessment of the assessee was completed by the A.O. under section 143. Later, the CIT had passed the order u/s 263 and directed the A.O. to make a fresh assessment. During such assessment, the A.O. held that mere submission of PAN nos. of transporters is not sufficient with respect to the payment made to the transporters. Therefore, the expenses incurred against transport charges was disallowed u/s 40(a)(ia) and added to the total income of the assessee. The appeal filed by the assessee before the CIT(A) was dismissed due to non-compliance of the provisions of section 194(7). The assessee thus filed the instant appeal before the Tribunal. |
Ruling of Tribunal:
- Section 194(7) of the Income Tax Act provides that if a person who is responsible for paying or crediting sum to a contractor on which tax is not deducted in accordance with section 194C(6), then the details of such contractors has to be furnished to the prescribed income tax authority along with PAN in TDS return i.e. Form 26Q.
- It should be noted that the Hon’ble High Court of Karnataka, in the case of Marikamba Transport Co. [2015] 57 taxmann.com 273, has held that a mere technical defect should not result in a disallowance. In case of a payment is made to sub-contractor, mere because the assessee didn’t file Form 15I/J, provisions of section 40(a)(ia) should not attract in such a case.
- In the given case, it was observed that the assessee had furnished the copies of PAN along with copies of invoices of transportation bills comprising complete address of the transporter, phone no., and complete particulars of the goods loaded through the transportation. Further, the A.O. had not taken any step to disprove the genuineness of the transportation expenses by not conducting any enquiry.
- Therefore, simply for technical lapse u/s 194(7), it is not appropriate to disallow the claim of transportation expenses. Therefore, the CIT(A) was not justified in rejecting the plea of the assessee and appeal of the assessee is allowed.
Disclaimer: The above article is based upon the judgement of the Hon’ble ITAT Ahmedabad and is meant for educational purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article.
