ITO (TDS), Haridwar V. M/s. Indian Oil Corporation Ltd., Haridwar

ITA 1280/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73939 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH SENIOR
• Assessee Lawyers: ANSHUL KUMAR
• Section: 133A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.1277 & 1280/DEL./2013 (ASSESSMENT YEARS : 2010-11) ITO (TDS), VS. M/S. INDIAN OIL CORPORATION LTD., HARDWAR. MARKETING DIVISION, UASIDC, LANDOURA, ROORKEE TERMINAL, UTTARAKHAND. (TAN : MRT100197B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANSHUL KUMAR, CA REVENUE BY : SHRI SATPAL SINGH, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE REVENUE EMANATE FRO M THE ORDER OF CIT (APPEALS)-I, DEHRADUN BOTH DATED 31.12.2012 FOR ASS ESSMENT YEAR 2010-11. IN BOTH THESE APPEALS, THE ISSUE IS COMMON WITH REG ARD TO THE DEDUCTION OF TDS U/S 194C OR 194I OF THE INCOME-TAX ACT, 1961. THE GROUNDS OF APPEAL IN BOTH THE YEARS ARE SAME EXCEPT THE DIFFERENCE IN FI GURE. THE GROUNDS IN ITA NO.1277/DEL/2013 READ AS UNDER :- 1. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.4,51,550/- ON ACCOUNT OF SHORT DEDUC TION IN DIRECTING THAT PROVISIONS CONTAINED IN SECTION 194C IS APPLICABLE ON THE PAYMENT MADE BY THE ASSESSEE FOR HIRING OF B USES, ITA NOS.1277 & 1280/DEL./2013 2 IGNORING THE TACT OF THE CASE THAT THE DEDUCTOR COM PANY IS LIABLE TO DEDUCT THE TAX U/S 194I AT THE RATE OF 10% FOR H IRING OF BUSES IN VIEW OF AMENDMENTS MADE U/S 194I W.E.F. 01.06.20 07. 2. THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITIONS OF RS.4,51,550/- ON ACCOUNT OF SHORT DEDU CTION WITHOUT APPRECIATING THE FACT THAT THE HIRED VEHICLES WERE COVERED UNDER THE DEFINITION OF PLAN LAND MACHINERY AS PER PROVIS IONS OF SECTION 43(3) AND ACCORDINGLY THE TDS WAS DEDUCTIBL E AS PER PROVISIONS OF SECTION 194I AT THE PRESCRIBED RATE, INSTEAD OF SECTION 194C AS HELD BY LD. CIT (A) AFTER THE INSER TION OF AMENDED PROVISIONS IN THE SECTION 194I W.E.F. 13.07 .2006. 2. THE ONLY POINT TO BE DECIDED IN THIS APPEAL IS W HETHER THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AS PER THE PROVISIONS OF SEC TION 194I OR 194C OF THE INCOME-TAX ACT, 1961. THE ASSESSEE COMPANY IS ENGA GED IN REFINING CRUDE OIL AND STORING, DISTRIBUTING AND SELLING OF THE PETROL EUM PRODUCTS. FOR THIS PURPOSE, IT ENGAGES TANK-TRUCKS FOR ROAD TRANSPORTA TION OF BULK PETROLEUM PRODUCTS FROM ITS VARIOUS STORAGE POINTS. A SURVEY U/S 133A OF THE I.T. ACT WAS CONDUCTED IN THIS CASE ON 24.01.2011. IT WAS NO TICED THAT THE ASSESSEE WAS TREATING THE ARRANGEMENT AS ONE OF TRANSPORTATION C ONTRACT AND WAS DEDUCTING TAX AT SOURCE IN VIEW OF THE PROVISION OF SECTION 1 94C OF THE I.T. ACT. THE ASSESSING OFFICER, AFTER PERUSING THE ASSESSEE'S 'B ULK PETROLEUM PRODUCTS ROAD TRANSPORT AGREEMENT' WITH THE 'CARRIERS', CAME TO THE CONCLUSION THAT THE ARRANGEMENT WAS OF THE NATURE OF HIRING OF VEHICLES AND TAX WAS DEDUCTIBLE U/S 194-I OF THE INCOME-TAX ACT, 1961. ASSESSEE DREW AT TENTION TO THE CBDT CIRCULARS NO.558 DATED 28.03.1990 AND 681 DATED 08. 03.1994 IN WHICH IT WAS CLARIFIED THAT TDS U/S 194C OF THE I.T. ACT WAS ATT RACTED IN CASES OF ITA NOS.1277 & 1280/DEL./2013 3 TRANSPORTATION CONTRACTS. IT WAS ALSO MENTIONED BY THE ASSESSEE THAT THE CONTRACT MAY APPEAR TO BE A SIMPLE HIRING CONTRACT BUT IS ACTUALLY CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION. THE AO WAS OF THE VIEW THAT THE CBDT CIRCULARS ARE 'JUST OF A GUIDING NATURE AND CA N BE USED ONLY AS AIDS FOR INTERPRETATION OF PROVISIONS AND CANNOT OVERRIDE SP ECIFIC PROVISIONS OF THE ACT'. ACCORDING TO HIM, SINCE THE SPECIFIC PROVISIO N OF TDS U/S 194-I OF THE I.T. ACT WAS INTRODUCED IN THE STATUTE BY THE FINAN CE ACT, 1994, W.E.F. 01.06.1994 AND THE AMBIT OF THE PROVISION WAS EXTEN DED TO PLANT AND MACHINERY W.E.F. 13.07.2006 VIDE THE TAXES LAWS AME NDMENT ACT, 2006, THE PROVISION OF THE LAW HAS TO BE APPLIED, THE CBDT CI RCULARS NOTWITHSTANDING. HE ALSO NOTED THAT THE CONTRACT FOR TRANSPORTATION CONSIDERED IN CBDT CIRCULAR NO.558 WAS OF A DIFFERENT TYPE THAN THE ONE IN THIS CASE. ACCORDING TO HIM, THE ASSESSEE WAS NOT ONLY IN EXCLUSIVE POSSESSION OF TH E VEHICLE BUT COULD ALSO USE IT IN THE MANNER IT WANTED AND TO THE EXCLUSION OF OTHERS DURING TENANCY PERIOD. REFERRING TO VARIOUS CLAUSES OF THE SAMPLE AGREEMENT, HE CAME TO THE CONCLUSION THAT THE ARRANGEMENT HAD THE EFFECT OF H IRING TRUCK AND NOT CREATING A TRANSPORT CONTRACT. IN SUPPORT OF HIS CONCLUSION, HE REFERRED TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S ASS OCIATED HOTELS AND INDIA LTD. VS. R.N. KAPOOR (AIR 1959 S'.L 262) ACCORDING TO WHICH, IF A PARTY GETS EXCLUSIVE POSSESSION OF THE PROPERTY, IT WILL PRIMA FACIE BE CONSIDERED AS A TENANT. CONSEQUENTLY, HE CALCULATED THE TAX DEDUCTI BLE AS PER SECTION 194-I OF ITA NOS.1277 & 1280/DEL./2013 4 THE I.T. ACT AND DETERMINED SHORT-DEDUCTION OF TAX OF RS.3,64,149/. INTEREST OF RS.87,396/- WAS CALCULATED U/S 201 (1A) OF THE I.T. ACT. THUS, TOTAL DEMAND OF RS.4,51,545/- WAS WORKED OUT. AGGRIEVED BY THE ORDE R, THE ASSESSEE PREFERRED THE PRESENT APPEAL. THE CIT (A) HAS GRANTED THE RE LIEF TO THE ASSESSEE RELYING ON THE DECISION OF HON'BLE GAUHATI HIGH COURT IN TH E CASE OF INDIAN OIL CORPORATION LTD. VS. TRADE COMMISSIONER (TRADE-TAX) & OTHERS CR 2997/1998 GAUHATI. 3. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER. LD. AR RELIED ON THE ORDER OF CIT (A) AND ALSO SUBMITTED THAT THIS I SSUE IS ALSO COVERED BY VARIOUS DECISIONS OF ITAT IN ASSESSEES OWN CASE AN D IN OTHER CASES. THE DETAILS OF THESE CASES ARE AS UNDER :- (I) ITO (TDS) VS. INDIAN OIL CORPORATION (MARKETING DIVISION) [2011][15 TAXMANN.COM 210][DELHI ITAT]; (II) INDIAN OIL CORPORATION LTD. (MARKETING DIVISION) VS . ITO (TDS), MATHURA [ITA NOS.14 & 15/AGR/2010 AND ITA NOS.98 & 99/AGR/2 010] AND ITO (TDS), MATHURA VS. M/S. INDIAN OIL CORPORATION LTD. (MARKETING DIVISION) [ITA NOS.41 & 42/AGR/2010 AND ITA NOS.103 & 104/AGR /2010] (III) ACIT (TDS) VS. DELHI PUBLIC SCHOOL [2013][37 TAXM ANN.COM 211][DELHI ITAT] (IV) BHARAT FORGE LTD. VS. ADDL.CIT [2013][36 TAXMANN.CO M 574][PUNE ITAT] 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. IN T HE CASE OF ASSESSEE, ITAT, DELHI BENCH C REPORTED IN [2011][15 TAXMANN .COM 210][DELHI ITAT] HAS DECIDED THE ISSUE AS UNDER:- IN THE LIGHT OF CONSISTENT VIEW TAKEN IN EARLIER DECIDED CASES AND THE VARIOUS CLAUSES IN THE AFORESAID BULK PETROLEUM PRODUCTS ROAD TRANSPORT AGREEMENT, THERE IS NO HESITATION IN UPHO LDING THE FINDING OF THE ITA NOS.1277 & 1280/DEL./2013 5 COMMISSIONER (APPEALS) IN CONCLUDING THAT THE ARRAN GEMENT FOR TRANSPORTATION OF PETROLEUM PRODUCTS WAS ESSENTIALL Y A CONTRACT FOR TRANSPORTATION OF GOODS AND NOT AN ARRANGEMENT OF H IRING OF VEHICLES. IN VIEW THEREOF, TAX IS REQUIRED TO BE DEDUCTED AT SOU RCE FROM THE PAYMENTS TO THE CARRIER IN TERMS OF PROVISIONS OF SECTION 19 4C AND NOT UNDER SECTION 194I. THEREFORE, THE APPEAL FILED BY THE REVENUE IS TO BE DISMISSED. ITAT, AGRA BENCH IN THE CASE OF INDIAN OIL CORPORAT ION LTD. (MARKETING DIVISION) VS. ITO (TDS), MATHURA IN ITA NOS.14 & 15 /AGR/2010 & ORS. HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY REL YING ON THE DECISION OF ITAT, AHMEDABAD BENCH IN THE CASE OF AHMEDABAD URBA N DEVELOPMENT AUTHORITY VS. ACIT, TDS CIRCLE IN ITA NO.1637/AHD./ 2010 DATED 10.03.2011. SIMILAR ISSUE HAS ALSO BEEN DECIDED BY THE ITAT, BENCH B IN ACIT (TDS) VS. DELHI PUBLIC SCHOOL IN FAVOUR OF THE ASSESSEE IN WHICH THE ITAT BENCH HAS RELIED ON THE DECISION OF LOTUS VALL EY EDUCATION SOCIETY VS. ACIT (TDS) (2011) 46 SOT 77. CONSIDERING VARIOUS DECISIONS OF THE ITAT AND DECISIONS IN ASSESSEES CASE, WE FIND NO MERITS IN THE APPEALS OF THE REVENUE AS THE FACTS ARE SIMILAR. ACCORDINGLY, THE APPEALS OF THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2014. SD/- SD/- (A.D. JAIN) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 15 TH DAY OF JANUARY, 2014 TS ITA NOS.1277 & 1280/DEL./2013 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, DEHRADUN. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.