Soma Rani Ghosh v. Dy. CIT

INCOME TAX ACT, 1961

--Business disallowance under section 40(a)(ia) --Non-deduction of TDS on payments to residentsPayments made to transporters--Assessee complied with the provisions of section 194C(6)--Where assessee complied with the provisions of section 194C(6), no disallowance under section 40(a)(ia) was permissible, even if there was violation of the provisions of section 194C(7).--Assessee made payments to transporters towards carriage inward and carriage outward and claimed deduction of same. AO opined that assessee was required to deduct tax at source on such payments and since assessee failed to deduct the same, he disallowed under section 40(a)(ia) the said payments. Assessee contended that because of the provision of section 194C(6), she was not liable to effect TDS on payments to transporters who had submitted their PAN and those PAN and addresses of the transporters were filed during the course of scrutiny assessment before AO. Held: Section 194C(6) and section 194C(7) are independent of each other and cannot be read together to attract disallowance under section 40(a)(ia) read with section 194C. Where assessee complied with the provisions of section 194C(6), no disallowance under section 40(a)(ia) was permissible, even there was violation of the provisions of section 194C(7). Therefore, the expense incurred by assessee for carriage inward and carriage outward were not disallowable under section 40(a)(ia).