Exemption from TDS u/s 194C can’t be denied even if payer didn’t furnish transporter details in Form 26Q

Case Details: Mohmed Shakil Mohmed Shafi Mutawalli v. ITO - [2021] 132 taxmann.com 119 (Ahmedabad - Trib.)

Judiciary and Counsel Details

• • Mahavir Prasad, Judicial Member and Amarjit Singh, Accountant Member
  • R.R. Makwana, Sr. D.R. for the Appellant.
  • Sanjay R. Shah, A.R. for the Respondent.

Facts of the Case

The assessment of assessee was completed by the Assessing Officer (AO) under section 143. Later, the CIT had passed the order under section 263 and directed the AO to make an afresh assessment.

Consequently, the assessment was finalized wherein AO held that only submission of PAN No. of the transporters was not sufficient with respect to the payment made to the transporter. Consequently, the claim of transport expenses was disallowed and added to the total income of the assessee.

The assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal because the assessee had not made compliance with the provision of section 194C(7). Thus, disallowance was justified. The assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that section 194C(7) 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 details of such contractor has to be furnished to the prescribed income-tax authority along with the PAN in 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 assessee didn’t file form no. 15-I/J, provisions of section 40(a)(ia) should not attract in such a case.

In the given case, it was observed that assessee had furnished the copies of PAN along with copies of invoices of transportation bill comprising complete address of the transporter, phone no and complete particulars of the goods loaded through the transportation. Further, the AO had not taken any step to disprove the genuineness of the transportation expenses by not conducting any inquiry.

Therefore, simply for technical lapse under section 194(7), it is not appropriate to disallow the claim of transportation expenses. Accordingly, the decision of CIT(A) was not justified, and appeal of the assessee is allowed.

List of Cases Referred to

• • Soma Rani Ghosh v. Dy. CIT [2016] 74 taxmann.com 90 (Kol. – Trib.) (para 7)
  • CIT v. Sri Marikamba Transport Co. [2015] 57 taxmann.com 273/231 Taxman 484/379 ITR 129 (Kar.) (para 7)
  • Asstt. CIT v. Arihant Trading Co. [2019] 104 taxmann.com 336/176 ITD 397 (Jp. – Trib.) (para 7).