AO held that the assessee had made certain contractual payments without deducting tax at source under S 194C of the Act. Accordingly disallowed payments under S. 40(a)(ia) of the Act. Tribunal held that statutory provisions contained sub-sections (1) and (2) of section 194 C prevailing at relevant time excluded individuals and Hindu Undivided Families from requirement of deducting tax at source as long as their turnover did not exceed limit for statutory audit. On facts the assessee had qualified for exclusion clause and, therefore, requirement of deducting tax at source could not be applied. Accordingly the disallowance was deleted. High Court upheld order of the Tribunal. (AY. 2007-08)
PCIT v. Vijay S. Poojari (2019) 109 taxmann.com 212 / 266 Taxman 183 (Bom) (HC) Editorial : SLP of the revenue is dismissed; PCIT v. Vijay S. Poojari. (2019) 266 Taxman 182 (SC)
S. 40(a)(ia) : Amounts not deductible-Deduction at source-Contractors-Turnover did not exceed monetary limit prescribed under the Act for tax audit – Not liable to deduct tax at source-Disallowance cannot be made for failure to deduct tax at source. [S. 44AB, 194C]