MICO CAR SERVICES [ I ] P. LTD [ New Ascoanslink [I] P. Ltd, Pune V. DCIT II TDS PUNE, Pune

ITA 2313/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1048 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Additional evidence; Non-deduction of tax; Reassessment proceedings
• Section: 143(3); 194C; 201(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 2203 TO 2206/PN/2013 %' ( ')( / ASSESSMENT YEARS : 2006-07 TO 2009-10 ASCOTT TRANSLINKS INDIA PVT. LTD., A/4, SUBHASHREE WOODS, NEXT TO KUNAL ICON, PIMPLE SAUDAGAR, PUNE-411027 PAN : AAECM3748A ....... / APPELLANT ' / V/S. DCIT, CIRCLE 1(1), PUNE / RESPONDENT / ITA NOS. 2313 TO 2315/PN/2012 %' ( ')( / ASSESSMENT YEARS : 2006-07 TO 2008-09 MICO CAR SERVICES (I) PVT. LTD., A/4, SUBHASHREE WOODS, NEXT TO KUNAL ICON, PIMPLE SAUDAGAR, PUNE-411027 PAN : AAECM3748A ....... / APPELLANT ' / V/S. DCIT II TDS, PUNE / RESPONDENT 2 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 ASSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI B.C. MALAKAR / DATE OF HEARING : 08-09-2015 / DATE OF PRONOUNCEMENT : 23-09-2015 * / ORDER PER VIKAS AWASTHY, JM : THESE ARE SET OF SEVEN APPEALS FILED BY THE ASSESSEE. F OUR APPEALS ARE AGAINST THE ORDERS PASSED U/S. 143(3) R.W.S. 1 47 OF THE ACT FOR THE ASSESSMENT YEARS 2006-07, 2007-08, 2008-09 AND 2009-10 AND THREE APPEALS ARE AGAINST THE ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) FOR THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. THE A SSESSEE, ASCOTT TRANSLINKS INDIA PRIVATE LIMITED WAS FORMERLY KNOWN AS MICO CAR SERVICES (I) PVT. LTD. THUS, ALL THE SEVEN APPEALS ARE BY THE SAME ASSESSEE. ITA NOS. 2203 TO 2206/PN/2013 ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATE D 13-09-2013 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT COMMO N FOR THE ASSESSMENT YEARS 2006-07, 2007-08, 2008-09 AND 2009-1 0. ITA NOS. 2313 TO 2315/PN/2012 ARE DIRECTED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE FOR ASSESSMEN T YEARS 2006-07, 2007-08 AND 2008-09 RESPECTIVELY, PASSED U/S. 201(1) AND 201(1A) OF THE ACT. ALL THE IMPUGNED ORDERS FOR THE RESPEC TIVE ASSESSMENT YEARS ARE DATED 03-09-2012. THE ISSUE INV OLVED IN ALL THE APPEALS IS ARISING FROM SAME VIOLATIONS AND FACTS IN ALL THE IMP UGNED ASSESSMENT YEARS ARE IDENTICAL, HENCE THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. 3 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS ENG AGED IN THE BUSINESS OF PROVIDING VEHICLES ON HIRE BASIS TO DIFFERENT INDUS TRIES, CALL CENTERS, BPO ETC. THE ASSESSEE IS PROVIDING SERVICES TO THE CONTRACTING COMPANIES BY USING ITS OWN VEHICLES AS WELL AS BY HIRING CARS FROM THIRD PARTIES. THE ASSESSEE IS HIRING ABOUT 350 CARS ALONG WITH THE DR IVERS ON FIXED CHARGES FROM THIRD PARTIES/INDIVIDUAL VEHICLE OWNERS. T HE ASSESSEE MAKES THE PAYMENT ON MONTHLY BASIS IRRESPECT IVE OF THE FACT WHETHER THE VEHICLES ARE USED OR NOT. THE ASSESSING OFFI CER ON THE BASIS OF REMARKS MADE BY THE AUDITOR IN THE AUDIT REPOR T THAT NO TDS HAS BEEN DEDUCTED ON THE PAYMENTS MADE FOR HIRING THE CARS INVOKED THE PROVISIONS OF SECTION 201(1) AND 201(1A) OF THE ACT. T HE ASSESSING OFFICER HELD THAT BY NOT DEDUCTING TAX AT SOURCE (TDS) O N THE PAYMENTS MADE FOR HIRING CARS, THE ASSESSEE HAS VIOLATED TDS PROVIS IONS IN THE IMPUGNED ASSESSMENT YEARS. THE ASSESSING OFFICER, ACCORDI NGLY, RAISED DEMAND U/S. 201(1) AND U/S. 201(1A) OF THE ACT. THE DETAILS OF DEMAND RAISED UNDER THE PROVISIONS OF AFORESAID SECTIONS FOR THE IM PUGNED ASSESSMENT YEARS ARE AS UNDER: ASSESSMENT YEARS EXPENDITURE ON WHICH TAX WAS DEDUCTIBLE BUT NOT DEDUCTED AS PER TAX AUDIT REPORT TDS INTEREST U/S. 201(1A) TOTAL 2006 - 07 1,54,40,354 3,50,496 2,31,327 5,81,823 2007 - 08 6,22,95,824 13,98,847 7,55,377 21,54,224 2008 - 09 3,17,80,554 7,22,175 3,03,313 10,25,488 TOTAL DEMAND 37,61,535 4 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 AGGRIEVED BY THE ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE ACT FOR THE THREE RESPECTIVE ASSESSMENT YEARS, THE ASSESSE E PREFERRED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDERS R EJECTED THE APPEALS OF THE ASSESSEE AND UPHELD THE DEMAND RAISE D U/S. 201(1) AND 201(1A) OF THE ACT. AGAINST THE FINDINGS OF THE COMMISS IONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN SECOND APPEAL BEFO RE THE TRIBUNAL. IN ALL THE THREE ASSESSMENT YEARS, THE ASSESSE E HAS RAISED IDENTICAL GROUNDS OF APPEAL. FOR THE SAKE OF CONVENIENCE, THE GROUNDS OF APPEAL IN ASSESSMENT YEAR 2006-07 ARE REPRODUCED AS UNDER: 1. THE ORDER PASSED BY DEPUTY COMMISSIONER OF INCOME T AX TDS II, PUNE FOR FINANCIAL YEAR 2005-06 I.E. ASSESSMENT YEAR 200 6-07 IS BAD IN LAW AS IT WAS PASSED EX-PARTE ORDER AND WITHOUT GIVING REASONABLE OPPORTUNITY TO THE APPELLANT. 2. THE LD. CIT(A)-V, PUNE HAS ERRED IN LAW AND ON FACT S IN UPHOLDING THE DEMAND OF RS.5,81,823/- RAISED BY THE DCIT TDS II, PUNE WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE APPELLANT. 3. THE LEARNED DCIT TDS II AND THE HONORABLE CIT (APPE ALS)-V, PUNE ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194(C) OF INCOME TAX ACT, 1961 ARE APPLICABLE TO THE PRESENT TRANSACTIONS AS THERE WAS NO CONTRACT/SUB- CONTRACT WITH PARTIES TO CARRY PASSENGERS, THE TRAN SACTION WAS MERELY TO MAKE AVAILABLE ON HIRE THE VEHICLE TO THE APPELLANT WITH NO RESPONSIBILITY OF THE PASSENGERS. 4. THE LEARNED DCIT TDS II AND THE HONORABLE CIT (APPE ALS)-V PUNE, ERRED IN HOLDING THAT THE ENTIRE AMOUNT QUALIFIED BY C.A IS LIABLE FOR TDS. THE CONDITIONS APPLICABLE OF TDS NEEDS TO BE TAKEN INTO CONSIDERATION. 5. THE LEARNED DCIT TDS II AND THE HONORABLE CIT (APPE ALS)-V PUNE, ERRED TO HELD THAT FIXED CHARGES ARE PAYABLE FOR USE OF C ARS IRRESPECTIVE OF ITS USE. THE PAYMENT IS NOT CONSEQUENT AND DID NOT FALL WITHIN THE SCOPE UNDER SECTION 194 (C) (WHICH IS MORE PARTICULARLY D ESCRIBED IN THE 5 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 STATEMENT OF FACTS). HENCE I DENY THE ENTIRE ADDITI ON FOR A.Y. 2006 - 07 OF RS. 5,81,823=00. 6. THE HONORABLE CIT (APPEALS)-V PUNE, HAS ERRED IN HO LDING THAT AGREEMENTS FOR HIRING OF VEHICLES WERE NOT PRODUCED BEFORE THE A.O. DURING THE TIME OF ASSESSMENT PROCEEDINGS AND WRONG LY TREATED THE SAME AS ADDITIONAL EVIDENCE (WHICH IS MORE PARTICUL ARLY DESCRIBED IN THE STATEMENT OF FACTS). 7. THE APPELLANT MAY BE PERMITTED TO RAISE/ ALTER OR A MEND THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. THE LD. AR OF THE ASSESSEE HAS STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NO. 1 AND 4 IN THE APPEALS CHALLENGING THE ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE ACT. 3. BASED ON THE INFORMATION RECEIVED FROM DCIT(TDS) THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON CERTAIN PAYMENTS, RE ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. ACCORDIN GLY, NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 18-07-2011 FOR ASSESSMENT YEARS 2006-07, 2007-08, 2008-09 AND 2009-10. THE ASSE SSEE FILED OBJECTIONS AGAINST THE REASSESSMENT PROCEEDINGS. THE O BJECTIONS OF THE ASSESSEE WERE CONSIDERED AND REJECTED VIDE SEPARATE S PEAKING ORDERS DATED 10-12-2012. ON MERITS, THE STAND OF THE ASSESSE E WAS THAT, THE ASSESSEE HAS NOT ENTERED INTO CONTRACT OR SUB-CONTRA CT FOR HIRING OF VEHICLES WITH DRIVERS WITH THE THIRD PARTIES/INDIVIDUAL VEHICLE OWNERS, THEREFORE, THE PROVISIONS OF SECTION 194C OF THE ACT ARE N OT ATTRACTED. HENCE, NO TDS WAS DEDUCTED ON SUCH PAYMENTS. NOT CON VINCED, THE ASSESSING OFFICER MADE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT ON THE PAYMENTS MADE WITHOUT DEDUCTION OF TAX AT SOURCE IN ALL T HE IMPUGNED ASSESSMENT YEARS. 6 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 AGGRIEVED BY THE ORDERS OF ASSESSING OFFICER IN THE RESPEC TIVE ASSESSMENT YEARS, THE ASSESSEE FILED SEPARATE APPEALS B EFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF I NCOME TAX (APPEALS) AFTER ANALYZING THE AGREEMENTS ENTERED INT O WITH VARIOUS COMPANIES FOR PROVIDING VEHICLES AND AGREEMENTS ENTERED B Y ASSESSEE WITH INDIVIDUAL VEHICLE OWNERS REJECTED THE CONTENTIONS OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLO WANCE MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA). THE AMOUNT DI SALLOWED IN THE IMPUGNED ASSESSMENT YEARS U/S. 40(A)(IA) FOR NON-DEDUCT ION OF TDS ON PAYMENT OF CAR RENTAL CHARGES IS AS UNDER: ASSESSMENT YEAR NATURE OF PAYMENTS/CREDITS AMOUNT QUALIFIED IN AUDIT REPORT AMOUNT DISALLOWED BY THE ASSESSING OFFICER 2006 - 07 RENTAL/CAR HIRING CHARGES RS.1,54,40,354/ - RS.22,73,944/ - 2007 - 08 CAR HIRING CHARGES RS.6,13,57,179/ - RS.77,30,341/ - 2008 - 09 RENTAL/CAR HIRING CHARGES RS.3,17,55,554/ - RS.40,86,220/ - 2009 - 10 CAR HIRING CHARGES RS.71,73,403/ - RS.16,62,355/ - AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APP EALS), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. TH E ASSESSEE HAS IMPUGNED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALL THE ASSESSMENT YEARS BY RAISING SIMILAR GROUNDS. FOR THE SAK E OF CONVENIENCE THE GROUNDS RAISED BY ASSESSEE IN ASSESSME NT YEAR 2006-07 ARE REPRODUCED AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, ERRED ON FACTS AND IN LAW IN UPHOLDING DISALLOWANCE OF RS.22,73,944/- U/S 40(A)(IA) BEING 7 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 CAR HIRE CHARGES ON THE GROUNDS THAT THE ASSESSEE H AS FAILED TO DEDUCT TAX THEREON U/S 194C OF THE ACT. HE ERRED ON MERELY RELYING ON THE AUDITORS REMARKS IN THE TAX AUDIT REPORT WITHOUT AP PRECIATING THE CORRECT LEGAL POSITION. IN PARTICULAR HE FAILED TO APPRECIA TE THAT PROVISIONS OF TDS ARE INAPPLICABLE TO CAR HIRE SIMPLICITER IN THE REL EVANT ASSESSMENT YEAR. HE ALSO ERRED IN STATING THAT THE RELEVANT AGREEMEN TS APPEAR TO HAVE BEEN CREATED AS AN AFTER-THOUGHT. HE ALSO FAILED TO APPRECIATE THE ARGUMENTS AND CONTENTIONS ADVANCE IN THIS BEHALF. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS)-I ERRED ON FACTS AND IN LAW IN NOT APPREC IATING THAT THE ASSESSEE HAS ALREADY BEEN BURDENED WITH CONSEQUENCE S U/S 201(1)/(1A) FOR THE SAID ALLEGED FAILURE TO DEDUCT THE TAX AND HE CANNOT BE BURDENED TWICE FOR SAME ALLEGED DEFAULT. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 4. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSES SEE SUBMITTED THAT THE ASSESSEE IS PROVIDING VEHICLES ON HIRE TO VARIOUS SOFTWARE COMPANIES, INDUSTRIAL COMPANIES, BPOS ETC. THE N UMBERS OF VEHICLES REQUIRED FOR PROVIDING THE SERVICES KEEPS ON CHAN GING. THEREFORE, THE ASSESSEE HIRES VEHICLES FROM THE THIRD PART IES, FOR WHICH THE ASSESSEE HAS ENTERED INTO LEASE AGREEMENT WITH THE INDIVIDUALS FOR PROVIDING VEHICLES WITH DRIVERS ON HIRE CHARGES. THE ASSE SSEE IS PROVIDING VEHICLES TO THE COMPANIES ON THE TERMS AND CONDITIONS SET OUT BY THE COMPANIES IN THEIR CONTRACT AGREEMENT. THE RISK AND LIABILITY TO COMPLY WITH THOSE CONDITIONS ALWAYS REMAIN WITH THE ASSE SSEE. THE ASSESSEE DOES NOT PASS ON OR OFF LOAD THE CONDITIONS SET OUT IN THE CONTRACT AGREEMENT TO THE THIRD PARTIES/INDIVIDUALS FROM WHOM THE VEHICLES ARE HIRED. THERE IS NO WRITTEN OR ORAL CONTRACT OR SUB-CONTRACT WITH THE THIRD PARTIES. IN THE ABSENCE OF ANY CONTRACT OR SUB-CONTRACT 8 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 WITH THE THIRD PARTIES PROVISIONS OF SECTION 194C WOULD NO T COME INTO PLAY. THUS, THE ASSESSEE IS NOT LIABLE TO DEDUCT ANY TA X ON THE PAYMENTS MADE FOR HIRING OF THE VEHICLES. THE PAYMENTS AR E MADE BY THE ASSESSEE FOR HIRING VEHICLES ON RENTAL BASIS AND NOT ON KILOMETER BASIS. IRRESPECTIVE OF THE FACT WHETHER THE VEHICLES HIRED ARE PUT TO USE OR NOT DURING THAT PERIOD, THE PAYMENTS ARE MADE. THE LD. AR OF THE ASSESSEE IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON T HE DECISIONS RENDERED IN THE CASES OF RAJIV KISHORI LAL PATODIA VS. ACIT, 36 CCH 109 (MUM)(TRIB) AND NALAWADE C MARUTI VS. JCIT, 48 SOT 566 (PU NE)(TRIB). THE LD. AR PLACED ON RECORD TERMS AND CONDITIONS OF THE AGREEMENT ENTERED WITH COMPANIES FOR PROVIDING VEHICLES AND ALSO THE LEASE AGREEMENT ENTERED INTO WITH THE THIRD PARTIES FOR HIRING OF CARS/VEH ICLES. 4.1 THE LD. AR OF THE ASSESSEE MADE AN ALTERNATE SUBMIS SION THAT WITHOUT PREJUDICE TO HIS EARLIER SUBMISSIONS, THE PAYMENTS MADE BY THE ASSESSEE FOR HIRING CARS CAN AT THE MOST BE TREATED AS RENT. THUS, TDS PROVISIONS AS APPLICABLE ON PAYMENT OF RENT U/S. 194-I CA N BE APPLIED. THE PROVISIONS OF SECTION 194-I WERE AMENDED VIDE TAXATIO N LAWS (AMENDMENT) ACT, 2006 W.E.F. 13-07-2006 TO INCLUDE MACHINERY, PLANT, EQUIPMENT IN THE DEFINITION OF RENT FOR THE PURPOSE OF SEC TION 194-I. THUS, IN THE CASE OF ASSESSEE THE PROVISIONS OF SECTION 1 94-I WILL NOT BE APPLICABLE IN RESPECT OF ASSESSMENT YEAR 2006-07. FOR A SSESSMENT YEAR 2007-08, IT SHALL COME INTO FORCE W.E.F. 13-07-2006. 5. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE ASSES SEE HAD 9 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 MADE STEREO TYPE AGREEMENT WITH THE THIRD PARTY FOR PR OVIDING VEHICLES. A PERUSAL OF THE AGREEMENT WOULD SHOW THAT THEY ARE TA ILOR MADE TO ESCAPE THE PROVISIONS OF SECTION 194C. THE LD. DR REFERRED TO ONE OF THE DRAFT LEASE AGREEMENTS ENTERED INTO BY THE ASSESSEE WIT H THE INDIVIDUAL VEHICLE OWNERS/THIRD PARTIES. THE LD. DR POINTED OUT THAT THE TITLE OF THE LEASE AGREEMENT I.E. AGREEMENT TO HIRE PLANT AND MACH INERY (VEHICLES) EXECUTED IN 2005 SHOWS THAT THE AGREEMENT IS A NTE-DATED. THE WORDS PLANT AND MACHINERY WERE INCLUDED IN DEFINITIO N OF RENT IN SECTION 194-I IN THE YEAR 2006 W.E.F. 13-07-2006. WHEREA S, THE AGREEMENT IS DATED 03-07-2005. IT IS HIGHLY IMPROBABLE THAT THE ASSESSEE IN YEAR 2005 WOULD KNOW THAT THE WORDS PLANT AND MACHINERY WOULD BE INCLUDED IN THE DEFINITION OF RENT IN SECTION 194-I OF THE ACT IN TIMES OF COME. THE LD. DR FURTHER SUBMITTED T HAT EVEN IF ALTERNATE SUBMISSION OF THE ASSESSEE IS ACCEPTED STILL THE ASSESSEE WAS LIABLE TO DEDUCT TAX ON THE PAYMENT OF RENT, WHICH THE A SSESSEE HAS FAILED TO DO. THUS, THE ASSESSING OFFICER HAS RIGHTLY MADE D ISALLOWANCE UNDER THE PROVISIONS OF SECTION 40(A)(IA) ON THE PAYMENTS MA DE TO THE INDIVIDUAL VEHICLE OWNERS/THIRD PARTIES. THE LD. DR FURTHER S UBMITTED THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN S USTAINING THE DEMAND U/S. 201(1) AND INTEREST U/S. 201(1A) IS EQUALLY VALID AND JUSTIFIED. THE LD. DR PRAYED FOR DISMISSING ALL THE APPEALS OF T HE ASSESSEE. 6. THE LD. AR OF THE ASSESSEE CONTROVERTING THE SUBMISSIO NS OF LD. DR SUBMITTED THAT AS FAR AS THE WORDS PLANT AND MAC HINERY USED IN LEASE AGREEMENT FOR HIRING CARS/VEHICLES IS CONCERNED, SECT ION 43(3) DEFINES PLANT WHICH INCLUDES VEHICLES. THUS, THE LEASE AGR EEMENT 10 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 ENTERED INTO BY THE ASSESSEE CANNOT BE SAID TO BE ANT E-DATED OR TAILOR MADE. THE LD. AR REITERATED THAT A PERUSAL OF LEASE AGRE EMENT WOULD CLEARLY SHOW THAT THE ASSESSEE HAS NOT TRANSFERRED AN Y RISK, LIABILITY OR RESPONSIBILITY ON TO THE LESSOR/VEHICLE OWNERS FORM WHOM VE HICLES ARE HIRED. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO EXAMINED THE DOCUMENTS PLACED ON RECORD B Y THE ASSESSEE IN THE FORM OF PAPER BOOK WHICH INCLUDES THE SAM PLE AGREEMENT ENTERED INTO WITH THE COMPANIES AS WELL AS LEA SE AGREEMENT ENTERED INTO WITH THE INDIVIDUAL VEHICLE OWNERS/THIRD PARTIES FOR HIRING OF VEHICLES. FOR THE SAKE OF CONVENIENCE WE ARE REFERRING TO AGREEMENT WITH TATA MOTORS FILED IN THE PAPER BOOK FOR ITA NOS. 2203-06/PN/2013. A BARE PERUSAL OF THE TERMS AND COND ITIONS OF THE CONTRACT SHOWS THAT THE ASSESSEE IS RESPONSIBLE FOR PRO VIDING VEHICLES AND DRIVERS TO THE COMPANIES. THE ASSESSEE IS RESPONSIB LE FOR ENSURING THAT THE VEHICLES PROVIDED ARE IN GOOD CONDITION AND COMP LY WITH THE STANDARDS SET OUT BY THE COMPANY IN THE CONTRACT AGR EEMENT. THE ASSESSEE HAS TO ENSURE PUNCTUALITY AND MAINTENANCE OF THE VEHIC LES. IN CASE OF ANY DEFAULT OR NEGLIGENCE IN COMPLYING WITH THE TER MS AND CONDITIONS OF THE CONTRACT, THE ASSESSEE WAS LIABLE FOR PEN ALTY/FINE. THE ASSESSEE IS RESPONSIBLE FOR THE CONDUCT OF DRIVERS. THE A SSESSEE HAS TO ENSURE PUNCTUALITY AND DISCIPLINE OF THE DRIVERS. THE ASSES SEE HAS TO VOUCH FOR THE CREDIBILITY OF DRIVERS AND THE VEHICLES INCLUDIN G STATUTORY COMPLIANCES. 11 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 8. THE ASSESSEE HAS ALSO PLACED ON RECORD LEASE AGREEM ENT ENTERED INTO BY THE ASSESSEE WITH THE CAR OWNERS. THE TERMS A ND CONDITIONS OF THE LEASE AGREEMENT SHOWS THAT THE PAYMENT OF LEASE RE NTAL ARE FOR THE FIXED PERIOD AND NOT ON THE BASIS OF KILOMETERS. THE ASSE SSEE/LESSEE HAS NOT OFF LOADED OR HAS TRANSFERRED ITS LIABILITIES AND RESP ONSIBILITIES ON THE LESSOR OF THE VEHICLES. THE RELEVANT EXTRACT OF TH E LEASE AGREEMENT IS REPRODUCED AS UNDER: LEASE MANAGEMENT FEES: THE LESSEE SHALL PAY LEASE MANAGEMENT FEES OF AN AM OUNT AS SPECIFIED IN THE SCHEDULE. OWNERSHIP OF THE VEHICLE: THE PARTIES HEREBY CONFIRM THAT THEIR INTENT IS THA T THE VEHICLE SHALL AT ALL TIMES REMAIN THE PROPERTY OF THE LESSOR AND SHALL B E REGISTERED IN THE NAME OF LESSOR I.E MEHBOOB SHAIKH. SUBJECT TO THE COMPLIANCE WITH THE OBLIGATIONS UNDER' THESE PRESENTS, THE LESSEE SHALL HAVE THE RIGHT TO HAVE EXCLUSIVE PEACEFUL POSSESSION, OPERATION AND USE OF THE VEHICLE DURING THE LEASE TERM UNLESS THERE IS A PREMATURE TERMINAT ION OF LEASE. DELIVERY OF VEHICLE : THE LESSOR SHALL ARRANGE WITH THE RESPECTIVE SUPPLI ER TO HAVE THE VEHICLE READY FOR DELIVERY. THE VEHICLE SHALL BE DEEMED TO BE DELIVERED TODAY. THE LESSEE SHALL TAKE DELIVERY OF THE VEHICLE FROM THE SUPPLIER'S PREMISES. ALTERNATIVELY, AT THE LESSEE'S REQUEST, T HE VEHICLE MAY BE DELIVERED TO THE LESSEE'S ADDRESS. ANY LOSS OR DAMA GE TO THE VEHICLE IN TRANSIT FROM THE SUPPLIER'S PREMISES TO THE LESSEE' S ADDRESS SHALL BE TREATED AS AN ACCIDENT CASE AND THE LIABILITY SHALL BE COVERED AS PER THE INSURANCE POLICY. TERMS OF MAINTENANCE OF THE VEHICLE : IN THE EVENT THE LESSEE HAS ELECTED NOT TO AVAIL TH E OFFER OF THE LESSOR AS SPECIFIED WRITTEN HEREUNDER, THEN IN THAT EVENT THE LESSEE AT HIS COST SHALL PROVIDE FOR ON-GOING MAINTENANCE OF THE VEHIC LE TO KEEP IT IN GOOD CONDITION, NORMAL WEAR AND TEAR EXCEPTED. 12 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 RENTALS : IN CONSIDERATION OF THE LEASE OF THE VEHICLE AND / OR AVAILING OF FLEET MANAGEMENT SERVICES FROM THE LESSOR, THE LESSEE AGREES TO PAY TO THE LESSOR REGULARLY AN D PUNCTUALLY WITHOUT ANY ATEMENTS OR DEDUCTIONS (EXCEPT STATUTORY DEDUCT IONS WHICH THE LESSEE IS REQUIRED TO DEDUCT UNDER APPLICABLE LAWS) (I) LEASE RENTAL / HIRING CHARGES/OR (II) FLEET MANAGEMENT FEES, ON THEIR RESPECTIVE DUE DATES, AS MORE SPECIFICALLY MENTIONED IN THE SCHEDULE, IRRESPECTIV E OF WHETHER THE VEHICLE HAS BEEN PUT TO USE OR NOT OR IS UNDER REPA IRS MAINTENANCE OR FOR REPLACEMENT FOR ANY PERIOD WHATSOEVER. PAYMENT OF LEASE RENTAL : THE LESSEE AGREES TO MAKE PAYMENT OF EACH OF THE LE ASE RENTAL ON DUE DATE UNTIL THE TERMINATION OF THE LEASE EITHER ON A CCOUNT OF PREMATURE TERMINATION OR ON ACCOUNT OF THE EXPIRATION OF THE LEASE TERM. FOR EACH RENTAL, THE LESSOR SHALL RAISE AN INVOICE / DEBIT NOTE IN THE NAME OF THE LESSEE. THE LESSOR SHALL RAISE INVOICE / DEBIT NOTE MINIMUM 10 DAYS PRIOR TO DUE DATE, EXCEPT FOR THE RENTAL FO R THE FIRST MONTH IN RESPECT OF WHICH DEBIT NOTE/INVOICE WILL BE SENT WI THIN 15 DAYS FROM THE LEASE COMMENCEMENT DATE. GENERAL THE LESSEE NAMED MICOCAR SERVICES INDIA PRIVATE LIM ITED SHALL BE FILLING DIESEL, PETROL, GAS, OIL ETC OUT OF ITS OWN FUNDS. THE LESSEE SHALL BE PROVIDING IDENTITY CARD TO EVER Y CAB DRIVER OF MICOCAR. THE LESSEE SHALL BE PROVIDING STICKERS OF MICOCAR ON EVERY VEHICLE. THE LESSEE SHALL PROVIDE PICK-UP & DROP DU TY SLIP AND ANY OTHER STATIONERY AS REQUIRED. THE LESSEE SHALL INST ALL & MAINTAIN GPRS TRACKING SYSTEMS IN THE VEHICLE AT ITS OWN COST. TH E LESSOR SHALL NOT BE RESPONSIBLE FOR ANY KIND OF DAMAGES DUE TO ANY ACCI DENTS OR OTHER NATURAL CALAMITIES. THE LESSOR SHALL PROVIDE ITS VE HICLE WITH NO RESPONSIBILITY OF PASSENGERS. 9. A PERUSAL OF THE COVENANTS SET OUT IN THE LEASE AGRE EMENT SHOWS THAT THE ASSESSEE IS RESPONSIBLE FOR PROVIDING FUEL, ALL VEH ICLES HIRED ON 13 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 LEASE WILL BE UNDER CONTROL AND RESPONSIBILITY OF THE ASSESSE E. THE LESSOR IS NOT RESPONSIBLE IN ANY MANNER WHATSOEVER FOR DA MAGE CAUSED EITHER DUE TO ACCIDENT OR NATURAL CALAMITIES DURING HIRE PE RIOD. EVEN THE IDENTITY OF THE DRIVERS WILL BE VERIFIED BY THE ASSESSEE. THUS, IN OUR CONSIDERED VIEW BY NO STRETCH OF IMAGINATION THE HIRING OF T HE VEHICLES BY THE ASSESSEE CAN BE TERMED AS SUB-CONTRACT. THE ASSESSEE HAS NOT TRANSFERRED ANY OF HIS RESPONSIBILITY, OR LIABILITY IN PART OR FULL TO THE LESSOR FROM WHOM VEHICLE IS HIRED. 10. THE LD. AR OF THE ASSESSEE IN SUPPORT OF HIS SUBMISSION S HAS PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF RAJIV KISHORI LAL PATODIA VS. ACIT (SUPRA) WHEREIN TH E CO- ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT A CASE OF S UB-CONTRACT, WOULD BE WHERE IT OFF LOADS A PART OF CONTRACT WORK, I.E., TR ANSPORTATION OF PASSENGERS BY CAR, TO OTHER VENDORS. THE TRIBUNAL W HILE HOLDING SO ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF MYTHRI TRANSPORT CORPORATION VS. ACIT, 1 ITR (TRIB) 290 (VISHAK.) IN THE S AID CASE THE TRIBUNAL HAS LAID DOWN THE CONDITIONS WHICH ARE ESSENTIAL TO ATTRACT THE PROVISIONS OF SECTION 194C. THE CONDITIONS LISTED IN THE CAS E OF MYTHRI TRANSPORT CORPORATION (SUPRA) TO ATTRACT THE PROVISIONS OF SECTION 194C ARE AS UNDER: (A) THE ASSESSEE SHOULD BE A CONTRACTOR. (B) THE ASSESSEE, IN HIS CAPACITY AS A CONTRACTOR, SHOULD ENTER INTO A CONTRACT WITH A SUB-CONTRACTOR OR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR, (C) THE SUB-CONTRACTOR SHOULD CARRY OUT THE WHOLE O R ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR. (D) PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WHO LE OR ANY PART OF THE WORK. 14 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 THE TRIBUNAL HELD THAT SECTION 194C(2) IS ATTRACTED IF ALL THE ABOVE MENTIONED CONDITIONS ARE SATISFIED. 11. IN THE PRESENT CASE, ONLY CONDITION (A) IS SATISFIED, I.E. THE ASSESSEE IS A CONTRACTOR. SO FAR AS THE CONDITIONS MENT IONED IN (B), (C) AND (D) ARE CONCERNED, NONE OF THE CONDITIONS APPLY IN THE PRESENT CASE. THUS, THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED A ND THUS, THE ASSESSEE IS CLEARLY OUTSIDE ITS PREVIEW. 12. NOW WE PROCEED ON TO THE ALTERNATE SUBMISSIONS OF TH E ASSESSEE, THAT THE PAYMENTS MADE BY THE ASSESSEE ARE IN THE NATURE OF REN T UNDER THE PROVISIONS OF SECTION 194-I OF THE ACT. FOR THE SAKE OF CONVENIENCE THE RELEVANT EXTRACT OF THE PROVISIONS OF SECTION 194-I A RE REPRODUCED AS UNDER: 194-I. ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO [A RESIDENT] ANY I NCOME BY WAY OF RENT, SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY THE IS SUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, [DEDUCT INCOME-TAX THEREON AT THE RATE OF (A) TWO PER CENT FOR THE USE OF ANY MACHINERY OR PL ANT OR EQUIPMENT; AND (B) TEN PER CENT FOR THE USE OF ANY LAND OR BUILDIN G (INCLUDING FACTORY BUILDING) OR LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY BUILDING) OR FURNITURE OR FITTINGS:]]. XXXXXXXXXX EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) RENT MEANS ANY PAYMENT, BY WHATEVER NAME CALL ED, UNDER ANY LEASE, SUB-LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF (EITHER SEPARATELY OR TOGETHER) ANY, (A) LAND; OR 15 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 (B) BUILDING (INCLUDING FACTORY BUILDING); OR (C) LAND APPURTENANT TO A BUILDING (INCLUDING FACTO RY BUILDING); OR (D) MACHINERY; OR (E) PLANT; OR (F) EQUIPMENT; OR (G) FURNITURE; OR (H) FITTINGS, WHETHER OR NOT ANY OR ALL OF THE ABOVE ARE OWNED BY THE PAYEE;] 13. A BARE PERUSAL OF THE PROVISIONS OF SECTION 194-I SHOW S THAT WHERE ANY PAYMENT IS MADE BY WAY OF RENT, TAX IS TO BE DEDUCTED @ 2% OF THE PAYMENT/CREDIT OF THE AMOUNT PAID/CREDITED AS REN T FOR THE USE OF MACHINERY OR EQUIPMENT OR PLANT. EXPLANATION TO SECTION 194-I DEFINES RENT WHICH INCLUDES PAYMENTS MADE UNDER ANY LEA SE, SUB- LEASE, TENANCY OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR USE OF MACHINERY OR PLANT, WHICH INTER ALIA INCLUDES MACHINERY OR PLANT. THE ASSESSEE HAS ADMITTED THAT AS PER THE PROVISIONS OF SUB -SECTION (3) OF SECTION 43 THE TERM PLANT INCLUDES VEHICLES. THE RELEVANT EXTRACT OF SECTION 43(3) READS AS UNDER: 43(3) PLANT INCLUDES SHIPS, VEHICLES, BOOKS, SCIEN TIFIC APPARATUS AND SURGICAL EQUIPMENT USED FOR THE PURPOSE OF THE BUSI NESS OR PROFESSION BUT DOES NOT INCLUDE TEA BUSHES OR LIVESTOCK OR BUILDIN GS OR FURNITURE AND FITTINGS]; 14. THUS, FROM CONJOINT READING OF PROVISIONS OF SECTION 19 4-I AND THE PROVISIONS OF SECTION 43(3), WE CAN SAFELY CONCLUDE THAT AN Y PAYMENT MADE UNDER LEASE AGREEMENT FOR USE OF VEHICLES PARTAKE THE CHARACT ER OF RENT ON WHICH TAX HAS TO BE DEDUCTED UNDER THE PROVIS IONS OF SECTION 194-I. IN THE PRESENT CASE THE ASSESSEE HAS FURNISHED LEASE AGREEMENT FOR HIRING CARS. THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THE OWNERS/LESSOR FOR HIRING OF CARS. IT IS AN 16 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 ADMITTED FACT THAT THE ASSESSEE HAS NOT DEDUCTED ANY TDS ON THE PAYMENTS SO MADE. 15. THE LD. COUNSEL HAS POINTED OUT THAT THE DEFINITION OF R ENT AS DEFINED IN EXPLANATION TO SECTION 194-I HAS BEEN AMENDED BY THE TAXATION LAWS (AMENDMENT) ACT, 2006 W.E.F. 13-07-2006 TO INTER ALIA INCLUDE PAYMENT/CREDIT MADE FOR THE USE OF MACHINERY AND PLANT UNDER AGREEMENT OR ARRANGEMENT. THUS, PROVISIONS OF SECTION 19 4-I CANNOT BE INVOKED PRIOR TO 13-07-2006 FOR ANY PAYMENT/CREDIT MADE FOR USE OF PLANT AND MACHINERY. THE PRESENT SET OF APPEALS RELATE T O ASSESSMENT YEARS 2006-07 TO 2009-10. SINCE, THE AMENDED PROVISIONS OF SECTION 194-I WERE NOT APPLICABLE IN THE FINANCIAL YEAR 2005-06 RE LEVANT TO THE ASSESSMENT YEAR 2006-07, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS IN THE ASSESSMENT YEAR 2006-0 7. ACCORDINGLY, NO DISALLOWANCE U/S. 40(A)(IA) OR ANY DEMAND U/S. 201(1) AND U/ S. 201(1A) CAN BE MADE. WITH RESPECT TO ASSESSMENT YEAR 2 007-08, SINCE, THE AMENDMENT IS EFFECTIVE FROM 13-07-2006 THE PAYMENTS MADE BY THE ASSESSEE FROM 01-04-2006 TO 12-07-2006 SHALL NOT BE CO NSIDERED EITHER FOR MAKING DISALLOWANCE U/S. 40(A)(IA) OR FOR THE PURPOSE OF SEC TION 201(1) AND 201(1A) OF THE ACT. HOWEVER, THE ASSESSEE IS LIA BLE FOR NOT DEDUCTING TDS UNDER THE PROVISIONS OF SECTION 194-I ON T HE PAYMENTS MADE AFTER 13-07-2006. SINCE, THE ASSESSEE HAS DEFAULTED IN NOT COMPLYING THE PROVISIONS OF SECTION 194-I, THE DISALLOWANCE U/S. 40(A)(IA) HAS TO BE MADE FOR NON-DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE IN THE ASSESSMENT YEARS 2008-09 AND 20 09-10. SIMILARLY, THE ASSESSEE IS ALSO LIABLE FOR THE DEMAND RAISED U /S. 201(1) AND 201(1A) FOR NOT COMPLYING WITH THE TDS PROVISIONS. 17 ITA NOS. 2203 TO 2206/PN/2013 & 2313 TO 2315/PN/2012, A.YS. 2006-07 TO 2009-10 & 2006-07 TO 2008-09 16. TO CONCLUDE, WE HOLD THAT IN VIEW OF OUR ABOVE FINDINGS ITA NO. 2313/PN/2012 AND ITA NO. 2203/PN/2013 FOR ASSESSMENT YEAR 2006-07 ARE ALLOWED. ITA NO. 2314/PN/2012 AND ITA NO. 2204/PN/2013 FOR ASSESSMENT YEAR 2007-08 ARE PARTLY ALLOWED AND ITA NO. 2315/PN/2012 FOR ASSESSMENT YEAR 2008-09, ITA NOS. 2205 & 2206/PN/2013 FOR ASSESSMENT YEARS 2008-09 AND 2009-1 0 RESPECTIVELY ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD DAY OF SEPTEMBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 23 RD SEPTEMBER, 2015 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-I, PUNE 4. ' / THE CIT-I, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE