Principal Commissioner Of Income ... vs M/S Zuberi Engineering Co
2022 Latest Caselaw 396 Raj/2

         HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

               D.B. Income Tax Appeal No. 67/2019

Principal Commissioner Of Income Tax -I, New Central Revenue
Building, Statue Circle, Jaipur (Raj)
                                                                  ----Appellant
                                    Versus
M/s Zuberi Engineering Co., 2835, Jogiyan Ka Tibba, Puta Khurra,
Jaipur

                                                                ----Respondent

For Appellant(s) : Ms. Parintoo Jain through VC For Respondent(s) :

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SAMEER JAIN

Order

18/01/2022

This appeal filed by the revenue arises out of the judgment

of Income Tax Appellate Tribunal in relation to the respondent-

assessee for assessment year 2012-13. The appeal is admitted

for consideration of following substantial question of law:-

"Whether the Tribunal was justified in setting aside the enhancement of income made by the CIT(A) under Section 251 of the Income Tax Act, 1961 on the ground that same did not arise out of the assessment proceedings?"

We notice that the revenue has raised two more issues in the

present appeal. The first issue pertains to disallowance of

expenditure incurred by respondent-assessee in terms of Section

40(a)(ia) of Income Tax Act, 1961 (for short 'the Act'). The

assessee had claimed the benefit of sub-section (6) of Section

(2 of 4) [ITA-67/2019]

194C of the Act and contended that since the payment was in the

nature of hiring or leasing goods carriage charges and the

contractor was engaged for such purpose did not own more than

10 goods carriage vehicles, the requirement of deduction of tax at

source at the time of making payment did not arise. The assessee

had also contended that the Permanent Account Numbers of the

contractors were also indicated and were before the department.

The revenue contended that until and unless requirements of sub-

section (7) of Section 194C were satisfied irrespective of

applicability of sub-section (6) the expenditure could not have

been allowed and the provision of Section 40(a)(ia) would be

applicable. The Tribunal in the impugned judgment came to the

conclusion that the assessee could claim the benefit of no

requirement of deduction of tax at source under sub-section (6) of

Section 194C even though there may be a breach of the

requirement of sub-section (7).

Sub-section (6) of Section 194 provides that no deduction

shall be made for any sum credited or paid or likely to be credited

or paid during the previous year to the account of the contractors

during the course of business of plying, hiring or leasing goods

carriages where such contractors owns 10 or less goods carriages

at any time during the previous years and furnishes a declaration

to that effect along with the permanent account number, to the

person paying or crediting such sum. The revenue does not

dispute that these conditions were fulfilled. Sub-section (7) of

Section 194C in turn provides that a person responsible for paying

or crediting any sum to the person referred to in sub-Section (6)

shall furnish, to the prescribe income tax authority or the person

(3 of 4) [ITA-67/2019]

authorized by it, such particulars, in such form and within such

time as may be prescribed.

It could thus be seen that sub-section (6) of Section 194C

makes substantive provision for not deducting tax at source while

paying or crediting any sum in favour of the specific class of

persons. The requirement of claiming such benefit is also provided

in sub-section (6) namely that the payee had to furnish a

declaration along with PAN number to the person crediting such

sum. As long as these conditions are satisfied, there would be no

requirement of deducting tax at source while making payment of

such charges. Sub-section (7) of Section 194C on the other hand

is a procedural provision and requires a person responsible to pay

or credit such sum to furnish details to the income tax authority in

prescribed form. Non-fulfillment of requirement of sub-section (7)

may lead to penal consequences but not to dis-allowances of the

benefit under sub-section (6) as long as these requirements were

substantially fulfilled. Independently if the revenue was of the

opinion that on facts, the assessee was not correct in taking

recourse to sub-section (6) of Section 194C, it would be open for

the revenue to come to such a conclusion. In fact, in the present

case, the assessee had contended that the full details of PAN

numbers of the contractors were provided to the revenue and if

the revenue was desirous, further enquiries could have been made

with the contractors. We do not find that Tribunal has committed

any error and no question of law arises.

Yet another issue raised by the revenue is in respect of the

benefit of deduction of employees' contribution to the provident

fund of the ESI and PF which was done by the assessee beyond

(4 of 4) [ITA-67/2019]

the prescribed period. Counsel for the revenue agreed that the

issue was held by this Court against the revenue. She however

submitted that the revenue has carried several appeals to the

Hon'ble Supreme Court and this should be made subject to the

outcome of such appeals. However in the present case we find

that issues involve a sum of Rs1.90 lakhs. For such small sum we

are not inclined to keep the issue pending. This question is also

therefore not considered.

                                    (SAMEER JAIN),J                                               (AKIL KURESHI),CJ

                                   Nawal Gandhi/









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