Dismissing the appeal of the revenue the Court held that S. 194C, read with S. 204(iii), will come into operation only on payment made by assessee contractor and there was an agreement between said company and the assessee that freight payment would be made by said company directly to truck owners and tax deduction at source as applicable would be made by said company; since payment was not made by assessee, default in tax deduction at source was that of other company and not assessee . Accordingly no disallowance can be made in the assessment of the assessee.
CIT v. Daulat Enterprises. (2018) 94 taxmann.com 261 ( Raj) (HC) Editorial: SLP of revenue is dismissed ,CIT v. Daulat Enterprises. (2018) 256 Taxman 422 /256 Taxman 211(SC)
S. 194C : Deduction at source – Contractors –Persons responsible for paying- As per the agreement between said company and assessee that freight payment would be made by said company directly to truck owners and TDS deduction as applicable would be made by said company; since payment was not made by assessee, default in TDS was that of other company and not assessee – No disallowance can be made in the assessment of the assessee for failure to deduct tax at source .[ S. 40(a)(ia),204(iii) ]