Dismissing the appeal of the revenue the Tribunal held that, Scheduled tribes are exempt from the provisions of the Act by virtue of section 10(26) of the Act. As a result, there was no occasion to deduct tax at source on the sum payable to them. No disallowance can be made for failure to deduct tax at source. As regards other payments if payees had included the receipts in their computation of total income and return of income, it would be sufficient compliance with the provisions requiring deduction of tax at source and no disallowance should be made under section 40(a)(ia) of the Act. Matter remanded. (AY. 2013-14)
ITO v. S. S. Netcom Pvt. Ltd. (2020) 84 ITR 67 (SN) (Gauhati)(Trib.)
S. 40(a)(ia) : Amounts not deductible-Deduction at source-Scheduled Tribes-Not liable to deduct tax at source as the receipt is not taxable in their hands-Payments to other persons matter remanded to the AO to verify whether payees had included receipts in computation of their total income. [S. 10(26), 195(7)]