THE Dy. CIT, CIRCLE - 2(1), Vijayawada V. Yekkala Subba Rao, Vijayawada

CO 31/VIZ/2013

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2259 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PRASAD
• Assessee Lawyers: I SARISH KUMAR
• Section: 143(3); 194C

Judgement Text

ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.483/VIZAG/2012 ( / ASSESSMENT YEAR:2005-06) DCIT , CIRCLE - 2(1) , VIJAYAWADA VS. YEKKALA SUBBA RAO VIJAYAWADA [PAN: AAPPY0050 K ] ( / APPELLANT) ( / RESPONDENT) C.O. NO.31/VIZAG/2013 (ARISING OUT OF I.T.A.NO.483/VIZAG/2012) ( / ASSESSMENT YEAR:2005-06) YEKKALA SUBBA RAO VIJAYAWADA VS. DCIT , CIRCLE - 2(1) , VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI I. SARISH KUMAR, DR / RESPONDENT BY : SHRI M.S.R. PRASAD , AR / DATE OF HEARING : 29.02.2016 / DATE OF PRONOUNCEMENT : 18.03.2016 ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), VIJAYAWADA DATED 29.6.2012 AND IT PERTAINS TO THE ASSESSMENT YEAR 20 05-06. SINCE, THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON, THEY A RE CLUBBED, HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACT OF BI TUMEN AND PETROLEUM PRODUCTS, FILED HIS RETURN OF INCOME FOR THE ASSESS MENT YEAR 2005-06 ON 30.10.2005 DECLARING TOTAL INCOME OF ` 2,92,938/-. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICE U/S 1 42(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') WAS ISSUED. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASS ESSEE APPEARED FROM TIME TO TOME AND FURNISHED BOOKS OF ACCOUNTS AND OT HER DETAILS. THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILS FUR NISHED BY THE ASSESSEE COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AND DETERMINED THE TOTAL INCOME OF ` 74,48,453/- BY DISALLOWING AMOUNT OF ` 66,84,347/- U/S 40(A)(IA) OF THE ACT, FOR FAILURE TO DEDUCT TDS U/S 194C OF THE ACT. ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 3 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. ON FURTHER APPEAL BEFORE THE ITAT, VISAKHAPATNAM BENCH VIDE ITA NO.364/VIZAG/2008 DATE D 12.6.2009, THE ITAT, SET ASIDE THE ASSESSMENT ORDER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE NATURE OF TRANSACTIO NS BETWEEN THE ASSESSEE AND THE OWNERS OF THE HIRED VEHICLES AND D ECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH PRINCIPLES LAID DOWN BY THE BENCH IN THE CASE OF SRI M. SEETARAMAIAH VS. ACIT IN ITA NO.335/VIZAG /2008 DATED 18.5.2009, WHICH IN TURN FOLLOWED THE DECISION IN T HE CASE OF M/S. MYTHRI TRANSPORT CORPORATION IN ITA NO.183/VIZAG/2008. 4. THE ASSESSING OFFICER PURSUANT TO THE ORDER OF T HE ITAT ISSUED A SHOW CAUSE NOTICE AND ASKED TO FURNISH THE DETAILS WITH RESPECT TO HIRE CHARGES PAID. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT IT IS A MERE HIRING OF VEHICLES AND NOT A SUB CONTRACT AS DEFINED U/S 194C(2) OF THE ACT, THEREFORE, THE QUESTION OF DEDU CTION OF TDS DOES NOT ARISE ON PAYMENT OF HIRE CHARGES. THE ASSESSEE FUR THER SUBMITTED THAT HE IS A TRANSPORT CONTRACTOR INVOLVED IN THE BUSINE SS OF CARRIAGE OF GOODS FOR CUSTOMERS. IN THE PROCESS, HE HAS HIRED THE VE HICLE FROM THE MARKET FROM VEHICLE OWNERS TO BE USED IN HIS BUSINESS FOR CARRIAGE OF GOODS. ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 4 THE CONTRACT FOR EXECUTION OF WORK IS BETWEEN HIMSE LF AND HIS CUSTOMERS. THE VEHICLE OWNERS MERELY SUPPLIED THE V EHICLES ON FIXED HIRE CHARGES AND THE RISK INVOLVED IN CARRIAGE OF GOODS IS FULLY ASSOCIATED WITH HIM AND NOT WITH THE VEHICLE OWNERS. THEREFORE, HIS CASE IS SQUARELY COVERED BY THE DECISION RENDERED BY THE HONBLE ITA T, IN THE CASE OF M/S. MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA) AND ALSO IN THE CASE OF M. SEETARAMAIAH VS. ACIT (SUPRA). THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, D ISALLOWED THE AMOUNT U/S 40(A)(IA) OF THE ACT. WHILE DOING SO, TH E ASSESSING OFFICER WAS OF THE OPINION THAT THE VEHICLE OWNERS ALLOWED THEIR VEHICLES TO BE USED BY THE ASSESSEE FOR TRANSPORTATION OF GOODS TO THE RESPECTIVE PLACES OF DESTINATIONS AS PER THE CONTRACT ENTERED INTO BY THE ASSESSEE WITH THE RESPECTIVE CUSTOMERS. THE VEHICLE OWNERS H AVE INCURRED THE EXPENDITURE TOWARDS MAINTENANCE OF VEHICLE SUCH AS SALARIES, DIESEL AND OTHER MAINTENANCE EXPENSES ON THEIR OWN. THEREFORE , THERE WAS A CLEAR CONTRACTUAL RELATIONSHIP EXIST BETWEEN THE ASSESSEE AND THE VEHICLE OWNERS, HENCE, IT IS A CONTRACT AS DEFINED U/S 194C (2) OF THE ACT AND ACCORDINGLY, THE ASSESSEE IS LIABLE TO DEDUCT TDS. SINCE, ASSESSEE FAILED TO DEDUCT TDS, THE ASSESSING OFFICER DISALLOWED THE AMOUNT U/S 40(A)(IA) OF THE ACT. ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 5 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURTHER SUBMITTED THAT THERE IS NO CONTRACT BETWEEN THE VEHICLE OWNERS AND THE PRINCIPALS. THE AGREEMENT IS BETWEEN HIMSEL F AND HIS PRINCIPALS FOR CARRIAGE OF GOODS. THE VEHICLE OWNERS HAVE PROV IDED THE VEHICLES ON FIXED RENTAL BASIS AND THE RISK ASSOCIATED WITH THE TRANSPORT OF GOODS IS VESTED WITH THE CONTRACTOR. THEREFORE, THE ASSESSIN G OFFICER WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THERE EXIS T A CONTRACT BETWEEN THE VEHICLE OWNERS AND THE ASSESSEE AND CONSEQUENTI AL PAYMENT ATTRACTS TDS U/S 194C(2) OF THE ACT. THE ASSESSEE FURTHER SU BMITTED THAT IN THIS CASE, HE HAD ENTERED INTO AGREEMENT WITH HIS CLIENT S FOR CARRIAGE OF GOODS. IN THE PROCESS, HE HAS HIRED THE VEHICLES FR OM THE OWNERS ON FIXED PRICE. THE GOODS CONSIGNMENT NOTES (GCNS) WER E ISSUED BY HIMSELF AND NOT BY THE VEHICLE OWNERS. THE GOODS C ONSIGNMENT NOTE IS A DOCUMENT THAT ACKNOWLEDGES THE RECEIPT OF GOODS B Y THE CUSTOMERS AND MENTIONS THE VEHICLE REGISTRATION NUMBER THROUG H WHICH THE GOODS MENTIONED IN THE GOODS CONSIGNMENT NOTE ARE TO BE T RANSPORTED BESIDES THE PLACE OF ORIGINATION AND DESTINATION. THEREFORE, GCN IS CLEAR EVIDENCE WHICH ESTABLISHED THE CONTRACT BETWEEN ME AND MY CUSTOMERS AND NOT WITH VEHICLE OWNERS. THE ASSESSEE FURTHER S UBMITTED THAT HIS ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 6 CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF M/S. MYTHRI TRAN SPORT CORPORATION VS. ACIT (SUPRA) AND ALSO IN THE CASE OF M. SEETARA MAIAH VS. ACIT (SUPRA). ALTERNATIVELY, THE ASSESSEE SUBMITTED THAT DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS APPLICABLE ONLY TO THE AMOU NT REMAINS PAYABLE AT THE END OF THE FINANCIAL YEAR. HE FURTHER SUBMITTED THAT HE HAS PAID THE AMOUNT BEFORE THE END OF THE FINANCIAL YEAR, THEREF ORE, NO DISALLOWANCE CAN BE MADE FOR THE AMOUNTS HAVE BEEN ALREADY PAID AS PER THE JUDGEMENT OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DC IT (2009) 123 TTJ (JP) AND ALSO TEJA CONSTRUCTIONS VS. CIT (2010) 39 SOT 13. THEREFORE, SUBMITTED THAT NO DISALLOWANCE CAN BE MADE U/S 40(A )(IA) OF THE ACT FOR THE AMOUNTS WHICH HAVE ALREADY BEEN PAID WITHIN THE FINANCIAL YEAR. 6. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER . THE CIT(A) FURTHER HELD THAT THE ISSUE OF PAYMENT OF HIRE CHARGES FOR HIRING THE VEHICLES IS COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM BENC H, IN THE CASE OF M/S. MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA). THE ITAT, IN THE ABOVE CASE HELD THAT MERE HIRING OF VEHICLES DOES N OT TANTAMOUNT TO EXECUTION OF ANY WORK AS DEFINED U/S 194C(2) OF THE ACT. THEREFORE, HIRE CHARGES PAID FOR HIRING THE VEHICLES CANNOT BE DISA LLOWED U/S 40(A)(IA) OF ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 7 THE ACT. THE CIT(A) FURTHER HELD THAT BY RELYING UP ON THE JUDGEMENT OF ITAT, VISAKHAPATNAM BENCH, IN THE CASE OF M/S. MERI LYN SHIPPING & TRANSPORTS VS. ACIT IN ITA NO.477/VIZAG/2008 DATED 29.3.2012 HELD THAT DISALLOWANCE U/S 40(A)(IA) OF THE ACT ARE APPL ICABLE ONLY IN RESPECT OF AMOUNT REMAINS PAYABLE AT THE END OF THE FINANCI AL YEAR AND NOT APPLICABLE FOR THE AMOUNTS WHICH HAVE ALREADY BEEN PAID. HOWEVER, HE FURTHER HELD THAT SINCE, THE ENTIRE ADDITION IS DEL ETED BY HOLDING THAT TDS U/S 194C OF THE ACT IS NOT APPLICABLE FOR MERE HIRI NG OF VEHICLES, NO ACTION IS CALLED FOR ON PAID AND PAYABLE. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE AS WELL AS ASSESSEE ARE IN APPEAL BEFOR E US. 7. THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THE LORRY OWNERS HAVE TO INVOLVE IN MAKING THE LORRIES READY TO TRANSPORT THE ASSESSEES GOODS FOR WHICH PURPOSE, H E HAS TO DEPLOY NECESSARY CAPITAL, NECESSARY MAN POWER, NECESSARY T IME AND BE READY TO SOLVE ALL THE PROBLEMS THAT ARISE IN TRANSPORTAT ION OF GOODS SUCH AS STOPPAGE BY GOVERNMENT AUTHORITIES LIKE SALES TAX, EXCISE, FOREST, MARKETING DEPARTMENT, ETC. WHICH TANTAMOUNT TO POSI TIVE INVOLVEMENT IN THE EXECUTION OF WHOLE OR PART OF THE MAIN CONTRACT BY SPENDING TIME, MONEY AND ENERGY. THE LD. D.R. FURTHER SUBMITTED T HAT THE CIT(A) WAS ERRED IN APPLYING THE RATIOS LAID DOWN BY THE ITAT, IN THE CASE OF SHRI M. ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 8 SEETARAMAIAH (SUPRA) AND M/S. MYTHRI TRANSPORT CORP ORATION (SUPRA), AS THE SAME WERE RENDERED UNDER DIFFERENT SET OF FACTS . IN THE PRESENT CASE ON HAND, THE ASSESSEE HAS SUB CONTRACTED THE TRANSP ORT WORK TO TWO DIFFERENT TRANSPORT OPERATORS AND THE TRANSPORT OPE RATORS HAVE UNDERTAKEN THE WORK WITH POSITIVE INVOLVEMENT IN TH E WORK BY SPENDING THEIR MONEY, ENERGY AND RESOURCES. THE VEHICLE OWN ERS HAVE PAID THE SALARY OF THE DRIVERS ON THEIR OWN AND INCURRED NEC ESSARY EXPENDITURE TOWARDS DIESEL AND MAINTENANCE OF THE VEHICLES. THE REFORE, THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE TRANSPORT OPERATORS IS NOTHING BUT A CONTRACT IN THE NATURE OF ANY WORK AS DEFINED U/S 194C(2) OF THE ACT. 8. THE D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT NOT TO HAVE HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY IN RESPECT OF AMOUNTS PAYABLE AND NOT IN RESPECT OF AM OUNTS PAID, AS THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HON BLE ITAT, VISAKHAPATNAM IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS (SUPRA). THE DEPARTMENT HAS FILED FURTHER APPEAL BE FORE THE HONBLE A.P. HIGH COURT AND THE HONBLE A.P. HIGH COURT HAS SUSP ENDED THE OPERATION OF SPECIAL BENCH DECISION RELIED UPON BY THE ASSESS EE, THEREFORE, THE CIT(A) OUGHT NOT TO HAVE TAKEN THE RATIO LAID DOWN BY THE SPECIAL BENCH ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 9 AND DELETED THE ADDITIONS MADE BY THE A.O. THE D.R. FURTHER ARGUED THAT THE CIT(A) OUGHT TO HAVE CONSIDERED THE NOTES ON CLAUSE 11 OF THE FINANCE BILL, AS PER WHICH THE AMOUNT PAYABLE, CRED ITED OR PAID ATTRACTS THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN SUPPORT OF HIS ARGUMENTS, RELIED UPON THE DECISION OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF SHREE CHOUDHARY TRANSPORT COMPANY VS . ITO (2009) 225 CTR 125 AND ALSO ITAT, HYDERABAD BENCH DECISION IN THE CASE OF M/S. PARNIKA CONSTRUCTION PVT. LTD. VS. DCIT IN ITA NO. 1081/HYD/09 DATED 16.7.2010. 9. ON THE OTHER HAND, THE LD. A.R. SUBMITTED THAT M ERE HIRING OF VEHICLES CANNOT BE SAID TO BE WORK WITHIN THE MEANI NG OF SECTION 194C(2) OF THE ACT. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS HIRED THE VEHICLE IN THE OPEN MARKET TO BE USED IN THE BUSINESS OF CARRIAGE OF GOODS, THEREFORE, MERE HIRING OF VEHICL ES DOES NOT AMOUNT TO ANY WORK AS DEFINED U/S 194C(2) OF THE ACT. THE A. R. FURTHER SUBMITTED THAT THE RISK ASSOCIATED WITH THE GOODS IS VESTED W ITH THE ASSESSEE AND THE VEHICLE OWNERS SIMPLY PROVIDED THE VEHICLES ON FIXED HIRE. THE ASSESSEE HAS TO PAY THE AMOUNT, WHETHER VEHICLES AR E USED OR NOT, THIS IMPLIEDLY SHOWS THAT THIS IS A MERE HIRING OF VEHIC LES NOT A CONTRACT FOR CARRIAGE OF GOODS AS DEFINED U/S 194C(2) OF THE ACT . THE A.R. FURTHER ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 10 SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM BENCH IN THE CA SE OF M/S. MYTHRI TRANSPORT CORPORATION VS. ACIT (SUPRA) AND ALSO IN THE CASE OF M. SEETARAMAIAH VS. ACIT (SUPRA), WHEREIN THE ITAT UND ER SIMILAR SET OF FACTS, HELD THAT MERE HIRING OF VEHICLES DOES NOT A MOUNT TO CARRYING OUT ANY WORK, CONSEQUENTLY TDS PROVISIONS U/S 194C OF T HE ACT WOULD NOT APPLY. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED HIRE CHARGES PAID FOR HIRING VEHICLES TO BE USED IN THE TRANSPORT CONTRACT. THE A.O. WAS OF THE OPINION THA T THE CONTRACT BETWEEN ASSESSEE AND VEHICLE OWNERS IS IN THE NATUR E OF SUB CONTRACT AS DEFINED U/S 194C(2) OF THE ACT. THE ASSESSEE HIRED THE VEHICLES ALONG WITH DRIVERS AND OTHER MAINTENANCE EXPENSES TO BE B ORNE BY THE VEHICLE OWNERS, THEREFORE, THE ARRANGEMENT BETWEEN THE ASSE SSEE AND THE VEHICLE OWNERS IS NOTHING BUT A CONTRACT. CONSEQUE NTLY, THE PAYMENTS ARE COVERED U/S 194C(2) OF THE ACT. IT WAS THE CONT ENTION OF THE ASSESSEE THAT IT IS A MERE HIRING OF VEHICLES NOT A SUB CONTRACT. THE ASSESSEE FURTHER CONTENDED THAT HE IS INVOLVED IN T HE BUSINESS OF ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 11 TRANSPORT CONTRACT AND ENTERED INTO A CONTRACT FOR CARRIAGE OF GOODS WITH ITS CLIENTS. IN THE PROCESS, HE HAS HIRED THE VEHI CLES IN THE OPEN MARKET ON FIXED HIRE CHARGES AND THE VEHICLE OWNERS HAS PR OVIDED VEHICLES WITHOUT ANY RISK ASSOCIATED WITH CARRIAGE OF GOODS. THE ASSESSEE FURTHER SUBMITTED THAT THE ENTIRE RISK ASSOCIATED WITH THE CARRIAGE OF GOODS VEST WITH HIM, WHETHER VEHICLES ARE USED OR NOT, THE AGR EED FIXED AMOUNT HAS TO BE PAID TO THE VEHICLE OWNERS. 11. THE ASSESSEE CONTENTION IS THAT IT IS MERE HIRI NG OF VEHICLES NOT A CONTRACT. TO INVOKE THE PROVISIONS OF SECTION 194C( 2), THERE SHOULD BE A CONTRACT FOR CARRYING OUT ANY WORK. ON PERUSAL OF F ACTS, WE FIND THAT THE ASSESSEE IS INTO THE BUSINESS OF TRANSPORT CONTRACT , HAS ENTERED INTO AGREEMENT WITH HIS CLIENTS FOR CARRIAGE OF GOODS. T HOUGH, CARRIAGE OF GOODS INCLUDED IN THE DEFINITION OF WORK UNDER SEC TION 194C, WHETHER THE ARRAIGNMENT BETWEEN THE ASSESEE AND THE VEHICLE OWNERS FIT IN TO THE DEFINITION IS TO BE ASCERTAINED. IN THE PRESENT CASE ON HAND, THERE IS NO DIRECT CONTRACT BETWEEN THE VEHICLE OWNERS AND T HE CUSTOMERS. THE AGREEMENT IS BETWEEN ASSESSEE AND HIS CUSTOMERS FOR CARRIAGE OF GOODS. THE VEHICLE OWNERS HAVE PROVIDED THE VEHICLES ON FI XED RENTAL BASIS AND THE RISK ASSOCIATED WITH THE TRANSPORT OF GOODS IS VESTED WITH THE ASSESSEE. ON PERUSAL OF DOCUMENT FILED BY THE ASSES SEE, WE FIND THAT ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 12 THE VEHICLE OWNERS HAVE FILED AFFIDAVIT, WHEREIN TH EY HAVE CLEARLY STATED THAT THEY HAVE PROVIDED VEHICLE AND NOT INVOLVED IN THE CARRIAGE OF GOODS. THEREFORE, WE ARE OF THE OPINION THAT THE AS SESSING OFFICER WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THERE EXIST A CONTRACT BETWEEN THE VEHICLE OWNERS AND THE ASSESSEE AND CON SEQUENTIAL PAYMENT ATTRACTS TDS U/S 194C(2) OF THE ACT. 12. DURING THE COURSE OF HEARING, THE A.R. OF THE A SSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL, IS SQUARELY COVERED BY THE DECISION OF ITAT VISAKHAPATNAM BENCH, IN THE CASE OF M/S. MY THRI TRANSPORT CORPORATION VS. ACIT (SUPRA) AND ALSO IN THE CASE O F M. SEETARAMAIAH VS. ACIT (SUPRA). WE HAVE CONSIDERED THE CASE LAWS RELIED UPON BY THE ASSESSEE IN THE LIGHT OF FACTS OF THE PRESENT CASE. THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. MYTHRI TRANSPO RT CORPORATION VS. ACIT (SUPRA), CATEGORICALLY HELD THAT MERE HIRING O F VEHICLES DOES NOT AMOUNT TO CARRYING OUT ANY WORK AS DEFINED U/S 194C (2) OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUND ER: SEC. 194C(2) IS ATTRACTED IF ALL THE FOLLOWING COND ITIONS ARE SATISFIED: (A) THE ASSESSEE SHOULD BE A CONTRACTOR; (B) THE ASSESSEE, IN HIS CAPACITY AS A CONTRACTOR, SHOULD ENTER INTO A CONTR ACT WITH A SUB- CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART O F THE WORK UNDERTAKEN BY THE CONTRACTOR; (C) THE SUB-CONTRACTOR SHOULD CA RRY OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR; (D) PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK THE STRINGENT CLAUSES IN THE WORK ORDER SUGGEST THAT THE ASSESSEE IS SOLELY RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS COMMITTED BY THE ASSE SSEE AND/OR ITS ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 13 EMPLOYEES. IT IS NOT ESTABLISHED BY THE REVENUE THA T OTHER LORRY OWNERS, FROM WHOM THE VEHICLES WERE HIRED, HAVE ALSO BEEN F ASTENED WITH ANY OF THE ABOVE SAID LIABILITIES. IN A SUB-CONTRACT, S PRU DENT CONTRACTOR WOULD INCLUDE ALL THE LIABILITY CLAUSES IN THE AGREEMENT ENTERED INTO BY HIM WITH THE SUB-CONTRACTOR. THE ASSESSEE HAS ALSO CLAIMED B EFORE THE TAX AUTHORITIES THAT THE RESPONSIBILITY IN THE WHOLE PR OCESS LIES WITH IT ONLY. THOUGH THE PASSING OF LIABILITY IS NOT THE ONLY CRI TERIA TO DECIDE ABOUT THE EXISTENCE OF SUB-CONTRACT, YET THIS CONTENTION OF T HE ASSESSEE READ WITH THE LIABILITY CLAUSES OF THE WORK ORDER SUPPORTS IT S SUBMISSION THAT THE INDIVIDUAL VEHICLE OWNERS ARE SIMPLE HIRERS OF THE VEHICLES. AS PER THE PROVISIONS OF S. 194C (2), THE SUB-CONTRACTOR SHOUL D CARRY OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. TH E DICTIONARY MEANING OF THE WORDS 'CARRY OUT' IS TO 'CARRY INTO PRACTICE '; 'TO EXECUTE '; 'TO ACCOMPLISH ' . IT SIGNIFIES A POSITIVE INVOLVEMENT IN THE EXECUTI ON OF THE WHOLE OR ANY PART OF THE MAIN WORK BY SPENDING HIS TIME, MONEY, ENERGY, ETC, AND FURTHER TAKING THE RISKS IN CARRYING ON TH E SAID ACTIVITY. IN THE INSTANT CASE, THERE IS NO MATERIAL TO SUGGEST THAT THE OTHER LORRY OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME, ENERGY AND BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT WORK. IN THE ABSE NCE OF THE ABOVE SAID CHARACTERISTICS ATTACHED TO A SUBCONTRACT IN THE IN STANT CASE, THE PAYMENT MADE TO THE LORRY OWNERS STANDS AT PAR WITH THE PAY MENTS MADE TOWARDS SALARIES, RENT, ETC. HENCE THE REASONING OF THE TAX AUTHORITIES TO HOLD THAT THE PAYMENT MADE FOR HIRED VEHICLES IS A SUB-CONTRA CT PAYMENT IS NOT CORRECT AND NOT BASED ON RELEVANT CONSIDERATIONS. H ENCE, IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRED VEHICLES WOULD FAL L IN THE CATEGORY OF PAYMENT TOWARDS A SUB-CONTRACT WITH THE LORRY OWNERS. IN T HAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE, AS PER THE PROVISIONS OF S. 194C(2), ON THE PAYMENTS MADE TO THE LORRY OWNERS F OR LORRY HIRE. CONSEQUENTLY, THE PROVISIONS OF 5. 40(A)(IA) SHALL NOT APPLY TO SUCH PAYMENTS. 13. THE ASSESSEE RELIED UPON ITAT, VISAKHAPATNAM BE NCH DECISION, IN THE CASE OF ACIT VS. SYED RASHEED TRANSPORTS, ONGOL E IN ITA NO.235/V/2011 DATED 26.12.2011. THE COORDINATE BENC H OF THIS TRIBUNAL, UNDER SIMILAR SET OF FACTS DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION IS REPRODUCED HEREU NDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ASSESSEE HAS HIRED LORRIES FROM ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 14 THE OPEN MARKET FOR EXECUTION OF THE CONTRACT UNDER TAKEN BY IT FOR TRANSPORTATION OF GOODS. IN THE CASE OF MYTHRI TRANSPORT CORPORATI ON CITED (SUPRA), IT HAS BEEN HELD THAT MERE HIRING OF TRUCKS CANNOT BE TREATED A S GIVING WORK ON SUB-CONTRACT UNLESS THE LORRY OWNERS INVOLVED THEMSELVES IN CARR YING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME, ENERGY AND ALSO BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT. IN THE IN STANT CASE ALSO, THE CONTENTION OF THE ASSESSEE IS THAT IT HAS MERELY HIRED THE LORRIE S FROM THE OPEN MARKET. IT IS NOT SHOWN BY THE REVENUE THAT THE LORRY OWNERS, FROM WH OM THE LORRIES WERE HIRED, UNDERTOOK THE RISKS ASSOCIATED WITH THE MAIN CONTRA CT. IN THAT CASE, MERE HIRING OF LORRIES WOULD NOT COME UNDER THE CATEGORY OF SUB-C ONTRACT AS HELD IN THE CASE OF MYTHRI TRANSPORT CORPORATION (SUPRA). ACCORDINGLY THE PROVISIONS OF SEC. 194C(2) SHALL NOT APPLY TO THE ASSESSEE. 14. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N OF THIS TRIBUNAL, WE ARE OF THE OPINION THAT MERE HIRING OF VEHICLE WITH OUT ANY RISK ASSOCIATED WITH THE CARRIAGE OF GOODS DOES NOT AMOUNT TO CARRY ING OUT ANY WORK OR SUB CONTRACT AS DEFINED U/S 194C(2) OF THE ACT. CON SEQUENTLY, HIRE CHARGES PAID FOR HIRING THE VEHICLES ARE NOT LIABLE FOR TDS U/S 194C(2) OF THE ACT. THE CIT(A) RIGHTLY DELETED THE ADDITIONS M ADE BY THE A.O., BY FOLLOWING COORDINATE BENCH DECISION OF THIS TRIBUNA L, IN THE CASES MENTIONED (SUPRA). WE DO NOT FIND ANY ERROR OR INFIR MITY IN THE ORDER PASSED BY THE CIT(A). THEREFORE, WE ARE INCLINED T O UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE ASSE SSEE. 15. THE CROSS OBJECTION FILED BY THE ASSESSEE IS SU PPORTING THE ORDER OF THE CIT(A). HOWEVER, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE A.O., IN PASSING CONSEQUENTIAL ORDER GIVING EFFECT TO ITAT ORDER IN ITA ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 15 NO.364/VIZAG/2008 DATED 12.6.2009 AND SECOND ORDER DATED 21-12- 2010. THE A.R. SUBMITTED THAT THE A.O. HAS PASSED C ONSEQUENTIAL ORDER DATED 12.6.2009 TO GIVE EFFECT TO ITAT ORDER, THERE FORE, SUBSEQUENT ORDER DATED 21.12.2010 PASSED BY THE A.O. IS CONTRA RY TO THE FIRST CONSEQUENTIAL ORDER, THEREFORE, NON-EST IN THE EYES OF LAW. ACCORDINGLY, ANY APPEAL AGAINST INVALID ORDER IS NOT MAINTAINABL E. 16. WE HAVE CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. CONSE QUENT TO THE ORDER OF THE ITAT, THE A.O. HAS PASSED CONSEQUENTIAL ORDER G IVING EFFECT TO THE ITAT ORDER AND DELETED THE ADDITIONS MADE U/S 40(A) (IA) OF THE ACT. THE ITAT, WHILE SETTING ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, DIRECTED THE A.O. TO PASS DE-NOVO ASSESSMENT IN ACC ORDANCE WITH LAW. THE ASSESSING OFFICER, PURSUANT TO THE ORDER OF THE ITAT, CANCELLED THE EARLIER ORDER PASSED U/S 143(3) OF THE ACT, SO AS T O PASS FRESH ASSESSMENT ORDER IN THE LIGHT OF THE DIRECTIONS OF THE ITAT. THEREFORE, WE ARE OF THE OPINION THAT THE CONSEQUENTIAL ORDER PASSED BY THE A.O., GIVING EFFECT TO ITAT ORDER, CANNOT BE CONSIDERED A S A FRESH ASSESSMENT ORDER PASSED BY THE A.O. IN THE LIGHT OF THE DIRECT IONS OF THE ITAT. THE A.O. HAS PASSED DE-NOVO ASSESSMENT ORDER, WHICH IN OUR CONSIDERED ITA NO.483/VIZAG/2012 & CO 31/VIZAG/2013 YEKKALA SUBBA RAO, VIJAYAWADA 16 OPINION IS A ASSESSMENT ORDER AS PER LAW. THEREFORE , WE REJECT THE GROUND RAISED BY THE ASSESSEE. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWAD A 2. / THE RESPONDENT SRI YEKKALA SUBBA RAO, D.NO.54- 18/3/4, SIVAPURAM COLONY, NR. ITI BUS STOP, VIJAYAWADA. 3. + / THE PRINCIPAL CIT (TDS), VIJAYAWADA. 4. + / THE CIT, VIJAYAWADA 5. + ( ) / THE CIT (A), VIJAYAWADA 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM