M/S. GLOBE HIGHWAYS, Baroda V. THE ITO-WARD-2(3), Baroda

ITA 1157/AHD/2009

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9630 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: ANIL R SHAH
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G. D. AGARWAL , VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 1157 /AHD/20 09 A. Y . 20 05 - 06 M/S. GLOBE HIGHWAYS 2, SASHWAT COMPLEX, DAXA COLONY, NIZAMPURA, BARO DA PAN: AACFG 9102B VS INCOME TAX OFFICER, WARD - 2(3), BARODA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR.D.R. ASSESSEE(S) BY : SHRI ANIL R. SHAH , A.R. / DATE OF HEARING : 07 / 0 4 /201 5 / DATE OF PRONOUNCEMENT: 17 / 04 /201 5 / O R D E R PER: S. S. GODARA , JUDICIAL MEMBER THIS A SSESSEE S A PPEAL FOR A.Y.2005 - 06 IS DIRECTED AGAINST ORDER OF CIT (A) - II , BARODA DATED 22.01.2009 IN CASE NO.CAB/11 - 235/07 - 08 - A.Y.2005 - 06 CONFIRMING SECTION 40(A)(IA) DISALLOWANCE O F RS.5,44,090/ - OF FREIGHT PAYMENTS DUE NON - DEDUCTION OF TDS , IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT (IN SHORT THE ACT ) . 2. FACTS OF THE CASE ARE IN A NARROW COMPASS. THE A SSESSEE - FIRM IS A TRANSPORTER OF GOODS AND CARRIAGE. IT HAS ITS OWN FLEET OF VEHICLES. T HE ASSESSEE HIRES OUTSIDE VEHICLES TO PERFORM ITS CONTRACTUAL OBLIGATIONS OVER AND ABOVE ITS FLEET CAPACITY . IT HAD FILED ITA NO. 1157 /AHD /20 09 M/S. GLOBE HIGHWAYS FOR A.Y. 20 05 - 06 - 2 - ITS RET URN ON 27.10.2005 DECLARING INCOME OF RS.1,12,254/ - . T HE SAME WAS SUMMARILY PROCESSED. 2.1 THE ASSESSING OFFICER TOOK UP SCRUTINY . HE NOTICE D IMPUGNED FREIGHT PAYMENT S EXCEEDING RS.50,000 MADE TO 11 VEHICLES TOTA L LING TO RS.6,35,950/ - WITHOUT TDS DEDUCT ION . HE WOULD SEEK TO DISALLOW THE SAME U/S.40(A)(IA) OF THE ACT. THE A SSESSEE FILE D ITS REPLY. IT PLEADED THAT S ECTION 19 4(C)( 3)(I) PROVISO INSERTED IN THE ACT W.E.F. 1.10.2004 PRESCRIBING TDS DEDUCTION IN CASE OF PAYME NTS MADE EXCEEDING RS.50,000/ - WOULD NOT INCLUDE THE PAYMENT S ALREADY MADE BEFORE THE SAID DATE . THE ASSESSING O FFICER CONSIDERED SECTION 194C AND THE BOARD S CIRCULAR NO.715 DATED 8 .8.19 9 5 . T HERE DOE S NO T EXIST ANY WRITTEN CONTRACT BETWEEN THE ASSESSEE AND ITS PAYE ES . T HE ASSESSING OFFIC ER QUOTED ASSESSEE S CONDUCT IN REGULARLY ENGAGING THE RECIPIENT ON HIRING BASIS IN TRANSPORTING THE GOODS . PER ASSESSING OFFICER, ALL THESE ARRANGEMENTS MADE ON ROUTINE BASIS LE D TO A LONG, SYSTEMATIC, HEALTHY AND MUTUAL RELATIONSHIP TO BE TAKEN AS AN AGR EEMENT . HE FOUND THAT PAYMENT MADE TO ONE OF THE PAYE E WAS BELOW RS.20,000/ - . AND ALSO THAT DUE TDS HAD BEEN DEDUCTED IN CASE OF ANOTHER PAYEE. TH E ASSESSING AUTHORITY ACCORDINGLY REDUCED THE IMPUGNED FREIGHT DISALLOWANCE TO RS.5,81,590/ - . 3. THE ASSESSE E PREFERRED AN APPEAL. THE CIT(A) HAS AFFIRMED THE ASSESSING OFFICER FINDING S . HOWEVER , HE RESTRICT S THE IMPUGNED DISALLOWANCE TO RS.5,44,090/ - ON THE GROUND THAT IN ONE CASE, GROSS ITA NO. 1157 /AHD /20 09 M/S. GLOBE HIGHWAYS FOR A.Y. 20 05 - 06 - 3 - PAYMENT WAS LESS THAN RS.50,000/ - AND LESS THAN RS. 2 0,000/ - IN EACH INSTAN CE COMING TO RS.37,500/ - . THEREFORE, THE ASSESSEE IS IN APPEAL. 4. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE CASE FILE. THE ASSESSEE CHALLENGE S THE IMPUGNED SECTION 40(A)(IA) DISALLOWANCE ON FREIGHT PAYMENT FOR NON DEDUCTION OF TDS MADE BY THE ASSESSI NG OFFICER AND CONFIRMED IN THE LOWER APPELLATE ORDER . IT RAISES T W O F OLD ED ARGUMENTS , I.E., THERE DOES NOT EXIST ANY CONTRACT BETWEEN THE PAYER AND PAYEE. THE OTHER ONE IS A LEGAL PLEA OF NON APPLICATION OF SECTION 194 (C) (3 )( I) PROVISO. THE REVENUE STR ONG LY SUPPORTS THE LOWER AUTHORITIES ORDERS . I T IS AN UNDISPUTED FACT THAT THE ASSESSEE HIRES ITS PAYEE S VEHICLES ON ROUTINE BASIS IN CASE IT S OWN FLEET IS UNABLE TO PERFORM THE TRANSPORTING ASSIGNMENTS . THE AUTHORITIES BELOW TREAT SUCH AN ARR ANGEMENT AS A CONTRACT TO INVO KE SECTION 194 (C) OF THE ACT. W E DO NOT FIND ANY MATERIAL ON RECORD TO INDICATE ANY RISK AND RESPONSIBILITY BEING PASSED OVER TO THE PAYE E S. THAT BEING THE CASE, WE OBSERVE THAT A MERE HIRING JOB WORK WITHOUT ANY OTHER EVIDENC E DOES NOT PARTAKES THE COLOUR OF RISK AND RESPONSIBILITY FORMING ESSENTIAL CONDITION OF A CONTRACT. W E QUOTE DECISION OF A CO - ORDINATE BENCH OF GUJARAT ROADLINES VS. ITO, AHMEDABAD IN ITA NO.3023/AHD/2008, A.Y.2005 - 06, DECIDED ON 30.03.2012 AND H O LD THAT THE ASSESSEE S PAYEES HAVE NOT B EEN PAID IN LIEU OF ANY RISK AND RE SPONSIBILITY TO TREAT THE IMPUGNED FREIGHT PAYMENT S AS THOSE COVERED U/S. 194C OF THE ACT. THE ASSESSEE S FORMER PLEA (SUPRA) ITA NO. 1157 /AHD /20 09 M/S. GLOBE HIGHWAYS FOR A.Y. 20 05 - 06 - 4 - SUCCEED S . THE LATTER ONE HAS BECOME INFRUCTUOUS. THE IMPUGNED SECTION 40 (A)(IA) DISALLOWANCE IS DELETED. 5. THE ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED ON 17.4. 15 SD/ - SD/ - ( G. D. AGARWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 17 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD