| COURT: | Supreme Court |
| CORAM: | A.K. Sikri J., Ashok Bhushan J |
| SECTION(S): | 194C, 200, 40(a)(ia) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | paid vs payable, TDS deduction, TDS disallowance |
| COUNSEL: | Raj Kumar Mehta |
| DATE: | May 3, 2017 (Date of pronouncement) |
| DATE: | May 4, 2017 (Date of publication) |
| AY: | 2006-07 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 40(a)(ia): S. 194C read with s. 200 are mandatory provisions. The disallowance stipulated in s. 40(a)(ia) for failure to deduct TDS u/s 194C is one of the consequences for the default. Accordingly, though there is a difference between “paid” and “payable”, s. 40(a)(ia) covers not only those cases where the amount is payable but also when it is paid. The contrary interpretation that s. 40(a)(ia) applies only to cases where amounts are “payable” will result in defaulters going scot free | |
It is clear that Section 40(a)(ia) deals with the nature of default and the consequences thereof. Default is relatable to Chapter XVIIB (in the instant case Sections 194C and 200, which provisions are in the aforesaid Chapter). When the entire scheme of obligation to deduct the tax at source and paying it over to the Central Government is read holistically, it cannot be held that the word ‘payable’ occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid. If the provision is interpreted in the manner suggested by the appellant herein, then even when it is found that a person, like the appellant, has violated the provisions of Chapter XVIIB (or specifically Sections 194C and 200 in the instant case), he would still go scot free, without suffering the consequences of such monetary default in spite of specific provisions laying down these consequences
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