Commissioner Of Income Tax,Corporate Circle 2,Madurai v. M/S. Sri Parameswari Spinning Mills Private Limited,4A Mill Premises

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN TCA.No.601 of 2018 Commissioner of Income Tax,Corporate Circle 2,Madurai.. Appellant/Appellant Vs. M/s. Sri Parameswari Spinning Mills Private Limited,4A Mill Premises, 38/39,Great Cotton Road,Pandalgudi, Auppukottai... Respondent/Respondent Prayer :Tax Case Appeal filed under Section 260A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal Chennai 'C' Bench, Chennai, dated 20.02.2018 inI.T.A.No.1364//Mds/2016 for the assessment year 2012-2013against the order of the Commissioner of Income Tax (Appeals)1Madurai order dated 29.02.2016 in P.A. No. AABCS5356F for theAssessment year 2012-2013 in I.T.A.No.0084/2015-2016 and againstthe order of the Income Tax officer, Non Corporate Ward 1(2)Madurai order dated 31.03.2015 in PAN No. for theAssessment year 2012-2013. For Appellant: Ms.V.Pushpa Senior Standing Counsel For Respondent : Mr.A.S.Sriraman J U D G M E N T[Judgment of the Court was delivered by T.S.Sivagnanam, J.] This appeal filed by the assessee under Section 260 A of theIncome Tax Act, 1961 (hereinafter referred to as the Act) isdirected against the order dated 20.02.2018 passed by the IncomeTaxAppellateTribunalChennai'C'BenchinI.T.A.No.1364/Mds/2016 for the Assessment Year 2012-2013. https://hcservices.ecourts.gov.in/hcservices/ 2. The revenue has filed this appeal raising the followingsubstantial questions of law: “ (i) Whether the Tribunal is correct in confirming that inthe absence dividend income, no disallowance under Section 14Aread with Rule 8D can be made? (ii) Whether the Tribunal is correct in not confirming thedisallowance under Section 40(a)(ia) made by the AssessingOfficer when the assessee did not comply with requirements ofSub-Section 7 of Section 194C read with Rule 31A?.” 3. We have heard Ms.V.Pushpa, learned Senior StandingCounsel for the appellant/Revenue and Mr.A.S.Sriraman, learnedcounsel for the respondent/assessee. 4. The revenue is on appeal before us challenging the orderpassed by the Tribunal dated 20.02.2018 stating that theTribunal while remanding the matter to Assessing Officer hadmade certain observations, which is to the following effect:“11.....In our opinion, considering the facts andcircumstances of the case, the issue requires a fresh look bythe ld. Assessing Officer. Ld. Assessing Officer has to verifywhether assessee had complied with Sub Section (6) of Section194C of the Act. He also needs to verify whether the assesseehad filed form No.26Q, though belatedly. If assessee hascomplied with these there can be no disallowance u/s. 40(a)(ia)of the Act.” 5. Ms.V.Pushpa, learned Senior Standing Counsel wouldcontend that the Tribunal virtually has indicated that theAssessing Officer cannot make disallowance under Section 40(a)(ia) of the Act. The question is as to whether the assessee hasfiled the requisite declaration for claiming the benefit underSection 194C(6). 6. We find sub-Section 6 of Section 194C is the provisionwhich grants benefit to the assessee. This benefit comes withthe condition of compliance of Sub-Section (7) of Section 194C,which is the procedure to be followed. The question would be asto whether if the procedure under Section 194C(7) has not beenadhered to by the assessee would it be fatal and therebydisentitle the assessee to the benefit under sub-Section 6 ofSection 194C. 7. It is a submission of Mr.A.S.Sriraman, learned counselfor the appellant/assessee that Section 31A deals withstatement of deduction of tax under sub-Section 3 of Section 200referring to Section 31(A)(4)(vi). It is submitted that thedeductor at the time of preparing statement of tax, deductorshall furnish particulars of amount paid or credited on whichtax was not deducted in view of the compliance of provision of https://hcservices.ecourts.gov.in/hcservices/ 7. It is a submission of Mr.A.S.Sriraman, learned counselfor the appellant/assessee that Section 31A deals withstatement of deduction of tax under sub-Section 3 of Section 200referring to Section 31(A)(4)(vi). It is submitted that thedeductor at the time of preparing statement of tax, deductorshall furnish particulars of amount paid or credited on whichtax was not deducted in view of the compliance of provision of https://hcservices.ecourts.gov.in/hcservices/ sub-Section 6 of Section 194C by the payee. Section 234(E) wasrelied to state that if the statement is not filed, a fee ofRs.200/-for every day, during which the failure continues, hasto be paid by the assessee. Therefore, it is the submission thatthe non-filing of a statement in terms of sub-Section 7 ofSection 194C cannot take away the benefit which will accrue tothe assessee under sub-Section 6 of Section 194. 8. We fail to understand as to what is the apprehension inthe mind of the Revenue when the Tribunal has remanded thematter to the Assessing Officer to consider whether the assesseehas filed form no. 26(Q) belatedly and to examine as to whetherthe fee has to be collected. We find that there is no ground tointerfere with the order passed by the Tribunal. 9. Ms.V.Pushpa placed reliance on the decision of theHon'ble Supreme Court in the case of CIT Vs. Valibhai KhanbhaiMankad reported in [(2014) 51 Taxmann.com 385 (SC)] where theHon'ble Supreme Court has granted leave to file appeal by therevenue against the order passed by the Gujrat High Court in CITVs. Valibhai Khanbhai Mankad reported in [(2012) 28 Taxmann.com119]. In the said decision the High Court of Gujarat held thatonce conditions of proviso to Section 194(C)(7) are satisfied,liability of payer to deduct taxes at source would cease andconsequently, disallowance of payment of sub-contractor underSection 40(a)(ia) could not be made on the ground that theassesee had not furnished form no.15J as required under Rule29D. We find that the said decision is of no assistance to thecase of the Revenue. 10. Mr.A.S.Sriraman, learned counsel for the assesseereferred to the decision of the ITAT Jaipur in the case of ACITVs. Arihant Trading Co. reported in [176 ITD 397 (Jaipur-Tri)].In the said decision it has been held that Section 194C(6) & (7)are independent of each other and cannot read together toattract disallowance under Section 40(a)(ia) read with Section194C of the Act. 11. In the result we find that there is no substantialquestion of law arising for consideration, accordingly, theappeal filed by the Revenue fails and the same is dismissed. Nocosts. s/d- Assistant Registrar True Copy Sub-Assistant Registrar mp/ska To 1.The Income Tax Appellate Tribunal'C' Bench,Chennai.'C' Bench,Chennai. 2.The Commissioner of Income Tax(Appeals)1Madurai.Madurai. 3.The Income Tax officerNon Corporate Ward-1(2) Madurai. 4.The Commissioner of Income TaxCorporate Ward-1(2), Madurai.Corporate Ward-1(2), Madurai. +1 CC to Mr.S. Sridhar, Advocate sr 54327.+1 CC to Mr.M.SWaminathan, Advocate sr 55016. TCA.No.601 of 2018RV(CO)SP(19/08/2019)