Commissioner of Income Tax, V. M/s Pullaiah Roadways,

ITTA/127/2013

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax against the decision of the Income Tax Appellate Tribunal (ITAT), which had upheld the deletion of a disallowance made by the Assessing Officer. The disallowance pertained to transport charges paid by the respondent-assessee, M/s. Pullaiah Roadways, to truck owners, which the Assessing Officer had treated as a sub-contract under Section 194C of the Income Tax Act. The Tribunal found that the mere hiring of lorries did not amount to a sub-contract, as there was no sharing of risk or execution of work by the lorry owners, and thus, Section 194C(1) did not apply.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 743236 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 27-06-2013
• Assessment Year: misc
• Other Referred Cases: Mythri Transport Corporation
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment Year 2006-2007; Income Tax; Sub-contract; Transport Charges; Carriage of Goods
• Section: 40(a)(ia); 194C(1)

Judgement Text

"THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI INCOME TAX TRIBUNAL APPEAL NO.127 OF 2013 DATED:27.6.2013 Between: Commissioner of Income Tax Rajkamal Complex Lakshmipuram Main Road Guntur-07 … Appellant And M/s. Pullaiah Roadways Main Road Perala Prakasham District … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. NO.127 OF 2013 JUDGMENT: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be admitted against the impugned judgment and order of the learned Tribunal, in relation to assessment year 2006-2007, on the following suggested questions of law: i. In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in upholding the orders of the learned Commissioner of Income Tax (Appeals) in deleting the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Income Tax Act, when the respondent-assessee failed to comply the mandatory requirement under Section 194C(1) of the Act, in regard to transport charges paid by it to the truck owners? ii. In the facts and circumstances of the case, whether the Hon’ble Tribunal is correct in law in holding that mere hiring of lorries by the respondent – assessee to transport of the goods would not come under the category of “sub-contract or carrying out any work” in terms of Section 194C of the Act, when the clause ‘c’ of Explanation III to Section 194C of the Act clearly say that for the purpose of the said provision the expression ‘work’ shall also include carriage of goods and passengers by any mode of transport other than by Railways? iii. Whether the Hon’ble Tribunal is correct in law in holding that Section 194C(1) of the Act shall not apply, when the respondent – assessee merely hired lorries which do not fall in the category of ‘carrying out any work’ under the said provisions? In this case, the learned Tribunal factually found that the assessee had engaged certain lorry owners from open market for execution of the contract undertaken by it for transportation of goods. The revenue wanted to term this transaction as sub-contract. The learned Tribunal, on fact, found that it is nothing but hiring of lorries for carrying goods in relation to execution of contractual works. There is no element of sharing of risk or executing the work to term it as sub- contract. On fact, it was found that since it is not a sub-contract, the question of invocation of provisions of Section 194C(1) of the Income Tax Act (for short, ‘the Act’), does not arise. The learned Tribunal noted its decision in the case of Mythri Transport Corporation[1], wherein it was held that mere hiring of trucks cannot be treated as sub- contract unless the lorry owners involved themselves in carryout 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. When the factual position is such as above, non-application of law would automatically follows. The learned Tribunal has correctly did not apply the provisions of Section 194C of the Act. We do not find any merit in this appeal and the same is accordingly dismissed. No order as to costs. ________________________ K.J. SENGUPTA, CJ ______________________ G. ROHINI, J 27.6.2013 bnr [1] 124 ITD 40 "