ITO, Ludhiana V. M/s Truck Operator Union, Ludhiana

ITA 1057/CHANDI/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7420 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S KHEMWAL
• Assessee Lawyers: VIPIN KUMAR
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1057/CHD/2011 ASSESSMENT YEAR: 2008-09 ITO WARD III(3), V M/S TRUCK OPERATOR UNION LUDHIANA. ADDA JODHAN MANDI, LUDHIANA. PAN: AAAAT-6198F (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI S.KHEMWAL ASSESSEE BY : SHRI VIPIN KUMAR DATE OF HEARING : 04.01.2012 DATE OF PRONOUNCEMENT : 05.01.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 05.08.2011 PASSED BY THE LD. CIT(A) U/S 143(3) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION MADE BY THE AO U/S 40(A)(IA) OF THE IT ACT, 1961 AT RS.91,03,093/- HOLDING THAT THE PROVISIONS OF SECTI ON 194C WERE NOT APPLICABLE TO THE PAYMENTS MADE BY THE ASS ESSEE TO THE TRUCK OPERATORS, IGNORING THE FACTS THAT THE PA YMENTS MADE BY THE ASSESSEE TO THE TRUCK OPERATORS, IGNORI NG THE FACTS THAT THE PAYMENTS WERE OF SUB-CONTRACTUAL NAT URE. 2. THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE C ONTENTION OF ASSESSEE THAT THE ASSESSEE WAS NOT LIABLE TO DED UCT TAX AT 2 SOURCE ON PAYMENTS MADE TO TRUCK OPERATORS AS THERE WAS NO LIABILITY TO APPLY FOR TAN AND ALSO FOR FURNISHING FORM NO. 15- 1, WHEREAS THERE WAS ORAL AGREEMENT BETWEEN THE ASS ESSEE AS WELL AS TRANSPORTER WHICH IS EVIDENT FROM THE FA CT THAT THE ASSESSEE HAS TAKEN TRANSPORT SERVICES FROM THEM ON CONTRACTUAL BASIS. 3. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AN D THAT OF THE AO BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 3. GROUND NOS. 3 & 4 ARE GENERAL IN NATURE AND NEED NO SEPARATE ADJUDICATION. HENCE, THE SAME ARE DISMISSE D. 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'AR' AND LD. 'DR' SUBMITTED THAT THE ISSUES RAISED IN THE PR ESENT APPEAL ARE COVERED BY THE DECISION OF THE ITAT CHANDIGARH BENCH IN ASSESSEE'S OWN CASE VIDE ITA NO. 761/CHD/2009 DATED 24.02.2010. ON PERUSAL OF THE SAID ORDER, IT IS FO UND THAT THE ISSUES RAISED IN THE PRESENT APPEAL ARE COVERED BY ASSESSEE'S OWN CASE, REFERRED TO ABOVE. THE RELEVANT PART OF THE SAID ORDER IS REPRODUCED HEREUNDER : 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS IN RESPECT OF THE APPLICABILITY OF PROVISIONS OF SECTI ON 194C OF THE I.T. ACT WITH REGARD TO THE PAYMENTS MADE BY TH E ASSESSEE TO THE TRUCK OPERATORS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN ASSOCIATION OF PERSONS, WHICH OBTAINS TENDERS FROM VARIOUS FOOD AGENCIES FOR TRANSPORTATION OF BAGS OF FOOD GR AINS FROM THEIR RESPECTIVE GODOWN TO DIFFERENT PLACES. THE A SSESSEE PROVIDES THE REQUISITE NUMBER OF TRUCKS FOR THE SAI D TRANSPORTATION OF FOOD GRAINS AT DIFFERENT TIMES. THE ASSESSEE UNION WAS ASSOCIATED FOR THE PURPOSE OF 3 MAINTAINING UNITY BETWEEN THE TRUCK OPERATORS. THE ASSESSEE UNION DOES NOT OWN ANY TRUCK, BUT ARRANGEM ENT OF TRUCKS WERE MADE FROM THE SURROUNDING AREAS AS PER THE REQUIREMENT OF DIFFERENT FOOD AGENCIES. ALL THE PAY MENTS WERE RECEIVED BY THE ASSESSEE UNION AFTER DEDUCTION OF TAX AT SOURCE. THE ASSESSEE FURTHER MAKES PAYMENT TO T HE INDIVIDUAL TRUCK OWNERS ACCORDING TO PER TRIP BASIS . THE ASSESSEE HAD NOT DEDUCTED ANY TDS OUT OF THE AFORES AID PAYMENTS BEING MADE TO DIFFERENT TRUCK OWNERS DEBIT ED AS TRANSPORTATION EXPENSES. DURING THE YEAR UNDER CONSIDERATION, AGAINST RECEIPT OF RS. 85,19,255/-, TRANSPORTATION EXPENSES OF RS. 78,77,384/- WERE BOO KED BEING PAID TO 174 TRANSPORTERS. THE ASSESSING OFFI CER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 194C OF THE I.T. ACT WERE APPLICABLE TO THE AFORESAID PAYMENTS BEING MAD E TO THE TRUCK OWNERS ON ACCOUNT OF SUB CONTRACTUAL PAYMENTS . THE PLEA OF THE ASSESSEE THAT ALL THE TRUCK OWNERS OWNE D NOT MORE THAN TWO TRUCKS AND HENCE NO TAX WAS DEDUCTIBL E WAS REJECTED. FURTHER, THE CONTENTION OF THE ASSESSEE THAT IT WAS NOT ELIGIBLE FOR OBTAINING TAN NO. WAS ALSO REJ ECTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 194C (2) OF THE ACT WERE APPLICABLE TO THE SUB CONTRACTUAL PAYMENTS MADE BY THE ASSESSEE TO THE TRUCK OPERATORS AND THE EXEMPTION F ROM DEDUCTING TAX WAS ONLY AVAILABLE IF THE ASSESSEE HA D FILED THE PRESCRIBED FORM IN FORM 15-I OF INCOME TAX RUL ES. THE ASSESSING OFFICER DISALLOWED THE ENTIRE SUB CONTRAC TUAL PAYMENTS MADE IN EXCESS OF RS. 50,000/- IN VIEW OF THE PROVISIONS OF SECTION 40A (IA) OF THE ACT, TOTALIN G RS. 63,10,197/-. 5. THE CIT(A) HELD THAT THE PROVISIONS OF SECTION 1 94C OF THE ACT WERE NOT APPLICABLE FOR THE PAYMENTS MADE B Y THE ASSESSEE TO THE TRUCK OPERATORS IN VIEW OF THE RATI O LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS UNITED RICE LAND LIMITED [213 CTR 332 (P&H)] AND CI TY TRANSPORT CORPORATION VS ITO (MUMBAI TRIBUNAL). FU RTHER, IT WAS HELD BY CIT(A) THAT THERE WAS FORCE IN THE CONT ENTION OF 4 THE ASSESSEE THAT IN THE ABSENCE OF ANY TAN NO., TH E FORM 15-I COULD NOT BE FILED WITH THE DEPARTMENT. IN VIEW OF THE ABOVE, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF TRANSPORTATION CHARGES IN ENTIRETY. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE QUESTION WHICH ARISES BEFORE US IS WH ETHER THE ASSESSEE WAS TO DEDUCT TDS UNDER THE PROVISIONS OF 194C OF THE ACT ON THE PAYMENTS BEING MADE BY THE ASSESSEE UNION TO INDIVIDUAL TRUCK OPERATORS ON ACCOUNT OF TRANSPO RTATION CHARGES. 7. THE PROVISIONS OF SECTION 194C OF THE ACT PROVID ES THAT WHERE ANY PERSON IS RESPONSIBLE FOR PAYING ANY SUM TO A RESIDENT CONTRACTORS FOR CARRYING OUT ANY WORK INCL UDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK, IN PURS UANCE TO THE CONTRACT BETWEEN THE CONTRACTOR AND THE SPECIFI ED PERSON, THEN AT THE TIME OF CREDIT OF SUCH SUM OR P AYMENT IN CASH OR THROUGH CHEQUE / DRAFT OR ANY OTHER MODE, WHICHEVER IS EARLIER, TO THE ACCOUNT OF THE CONTRA CTEE, SHALL DEDUCT TAX AT SOURCE AS PROVIDED UNDER SECTION 194C (1) OF THE ACT. IN CASE OF ANY SUB CONTRACT ALSO, THE PR OVISIONS OF SECTION 194C ARE TO BE APPLIED. THE TAX DEDUCTION AT SOURCE IS TO BE MADE IN ALL SUCH CASES WHERE THE AMOUNT SO CREDITED OR PAID EXCEEDS RS. 20,000/-. IN CASE OF SEVERAL PAYMENTS BEING MADE TO SAME PERSON, THE CUMULATIVE AMOUNT TO BE CONSIDERED IS RS. 50,000/- 8. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE UNION BEING AN ASSOCIATION OF PERSONS WAS TAKING TE NDERS FROM VARIOUS FOOD GRAINS AGENCIES FOR THE TRANSPORT ATION OF THE BAGS OF FOOD GRAINS FROM THEIR RESPECTIVE GODWO NS TO DIFFERENT DESTINATIONS. IN ORDER TO ACHIEVE ITS OB JECTS, THE UNION WAS MADE TO MAINTAIN UNITY BETWEEN SEVERAL TR UCK OPERATORS, WHO IN TURN WOULD PROVIDE THEIR VEHICLES FOR THE PURPOSE. THE UNION COMPRISED OF SMALL AND POOR TRU CK OPERATORS AND AS PER THE CLAIM OF THE ASSESSEE BEFO RE US, EACH INDIVIDUAL DID NOT OWN MORE THAN TWO TRUCKS. DURING 5 THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD MADE PAYMENT OF RS. 79,77,384/- TO 174 TRANSPORTERS AND AS PER THE DETAILS FILED BEFORE THE AUTHORITIES BELOW, THE TRUCK NUMBER OF VEHICLES OWNED BY THE TRUCK OPERATORS AND THE PAYMENT BEING MADE TO THEM WAS DETAILED. THE ASSESS ING OFFICER DISALLOWED RS.63,10,197/- BEING SUB CONTRAC TUAL PAYMENTS MADE BY THE ASSESSEE IN EXCESS OF RS. 50,0 00/-, IN VIEW OF THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. 9. WE FIND THAT SIMILAR ISSUE OF PAYMENTS TO TRUCK OWNERS BY THE TRUCK OPERATORS UNION AROSE BEFORE THE HON'B LE HIMACHAL PRADESH HIGH COURT IN SIRMOUR TRUCK OPERAT ORS UNION VS CIT (ITA NO. 45 OF 2006). WE FIND SUPPOR T FROM THE RATIO LAID DOWN BY THE HON'BLE HIMACHAL PRADESH HIGH COURT IN SIRMOUR TRUCK OPERATORS UNION VS CIT (SUPR A) WHEREIN IT WAS HELD THAT FREIGHT PAID BY THE ASSOCI ATION OF PERSONS TO TRUCK OWNERS, WHO WERE THE MEMBERS OF TH E ASSOCIATION OF PERSONS, WAS NOT LIABLE FOR DEDUCTIO N OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT. 10. FURTHER, IN CIT VS AMBUJA DARLA KASHLOG MANGU TRANSPORT COOP SOCIETY (2009) 31 DTR (HP) 49, IT WA S HELD THAT THE PAYMENT BY SOCIETY / AOP TO MEMBER TRUCK O WNER IS NOT A SUB CONTRACT LIABLE FOR DEDUCTION OF TAX AT S OURCE U/S 194C (2) OF THE ACT. 11. THEIR LORDSHIPS OF JURISDICTIONAL HIGH COURT IN CIT VS UNITED RICE LAND LIMITED (SUPRA) HELD THAT IN THE A BSENCE OF ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE TRANSPORT ERS FOR THE CARRIAGE OF ANY QUANTITY, PRICE OR FOR A SPECIF IC PERIOD, THERE WAS NO LIABILITY TO DEDUCT TAX U/S 194 C OF T HE ACT FROM THE PAYMENTS MADE TO THE TRANSPORTERS. 12. DRAWING STRENGTH FROM THE ABOVESAID RATIO LAID DOWN BY HON'BLE HIMACHAL PRADESH HIGH COURT IN SIRMOUR T RUCK OPERATORS UNION VS CIT (SUPRA), CIT VS . AMBUJA DARLA KASHLOG MANGU TRANSPORT COOP SOCIETY (SUPRA) AND H ON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS UNITED RICE L AND LIMITED (SUPRA), WE HOLD THAT THE ASSESSEE UNION IS NOT LIABLE DEDUCT TAX AT SOURCE FROM THE TRANSPORTATION CHARGES 6 BEING PAID TO IT CONSTITUENTS, THE INDIVIDUAL TRUC K OWNERS, FOR THE CARRIAGE OF GOODS. WE CONFIRM THE ORDER OF CIT(A) IN HOLDING THAT THE PROVISIONS OF SECTION 194C OF THE ACT WERE NOT APPLICABLE TO THE PAYMENTS MADE BY THE ASSESSEE TO THE TRUCK OPERATORS AND HENCE THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION OF EXPENDITURE ON ACCOUNT OF TRANSPORTATION CHARGES TOTALING RS. 63,10,197. WE ALSO UPHOLD THE ORDER OF CIT(A) THAT AS THE ASSESSEE WAS NOT LIABLE TO DEDUCT AT SOURCE ON PAYMENTS MADE TO TRUC K OPERATORS, THERE WAS NO LIABILITY TO APPLY FOR TAN NUMBER AND ALSO FOR FURNISHING THE FORM NO. 15-I. THE GRO UNDS OF APPEAL RAISED BY THE REVENUE ARE THUS REJECTED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED. 5. FOLLOWING THE AFORESAID ORDER OF THE ITAT CHANDI GARH IN ASSESSEE'S OWN CASE, THE PRESENT APPEAL OF THE REVE NUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JAN.,2012. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 5 TH JAN.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH