The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) while allowing a departmental appeal, ruled that Section 194C (6) and 194C (7) are independent of each other and cannot be read together to attract disallowance under Section 40(a)(ia) r.w.s. 194C of the Income Tax Act.
In the present case, the Assessee is in the business of trading in aromatic and other chemicals, filed its return of income. The AO in the course of assessment proceedings requested the assessee to furnish the reasons why no TDS was deducted in respect of transportation charges. The AO also observed that the applicability of provisions of Section 194C (6) for non-deduction is not complete without the fulfilling of the conditions laid down under Section 194C (7) of the Act.
On appeal, CIT (A) relied on the decision of Hyderabad Bench of the Tribunal in the case of ACIT vs. Mohammed Suhail and held that sections 194C(6) and 194C(7) of the Act are independent each other and mere non-compliance with the procedure laid down in Section 194C(7) would not trigger a disallowance.
Being aggrieved, the Revenue carried the matter before tribunal and contended that assessee had complied with the provisions of Section 194C(6) by submitting the PAN of the contractors before the AO and there was no prescribed format or authority under the provisions of Section 194C(7) at that point of time to furnish the details.
The Bench observed the rival submission and perused the documents submitted by both the party. The bench found that the case relied by CIT (A) wherein similar view has taken by Kolkata bench in the case of Kali Kinkar Roy (supra) wherein it has been held that sections 194C(6) and 194C(7) are independent of each other and cannot be read together to attract disallowance under Section 40(a)(ia) of the Act.
The bench while holding the same decision noted that since the Assessee failed to furnish the details of remaining contractors the assessee has not complied with the provisions of Section 194C(6) at least to the tune of `12,99,559/-.
In a considered opinion of the bench comprising Judicial Member C.N. Prasad and Accountant Member Manoj Kumar Aggarwal held that said amount is liable to be disallowed under Section 40(a)(ia) of the Act as the assessee did not furnish PAN details to the AO and the assessee was under the obligation to deduct TDS on this amount.
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