The ITO Ward-1 Chirala, Chirala V. M/s Pullaiah Road Ways, Perala

ITA 250/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56876 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T LUCAS PETER
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: TDS
• Section: 40(a)(ia); 194C; 148

Judgement Text

ITA NO.250/VIZ/2011 M/S. PULLAIAH ROADWAYS, PERALA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D MANMOHAN, VICE PRESIDENT AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.250/VIZAG/2011 ASSESSMENT YEAR: 2006-07 ITO WARD-1 CHIRALA M/S. PULLAIAH ROADWAYS PERALA (APPELLANT) VS. (RESPONDENT) PAN NO.AACFP 7532Q APPELLANT BY: SHRI T. LUCAS PETER, CIT(DR) RESPONDENT BY: SHRI V. RAGHAVENDRA RAO, ADVOCATE DATE OF HEARING: 15.12.2011 DATE OF PRONOUNCEMENT: 26.12.2011 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 06.5.2011 PASSED BY LEARNED CIT(A), GUNTUR AND IT R ELATES TO THE ASSESSMENT YEAR 2006 07. 2. THE DISALLOWANCE OF RS.53,66,830/- MADE BY THE A SSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT, HAVING BEEN DEL ETED BY LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE FIRM IS CARRYING ON TRANSPORT BUSINESS BY UNDERTAKING TRANS PORT CONTRACT FROM ILTD DIVISION OF M/S ITC LTD. THE ASSESSEE CLAIMED A SU M OF RS.60,39,950/- AS DEDUCTION TOWARDS TRANSPORT CHARGES PAID BY IT TO VARIOUS LORRY OWNERS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSE SSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT ON THE SAID PAYME NTS AND SINCE THE ASSESSEE HAS NOT SO DEDUCTED THE TDS, HE REOPENED T HE ASSESSMENT BY ITA NO.250/VIZ/2011 M/S. PULLAIAH ROADWAYS, PERALA PAGE 2 OF 4 ISSUING NOTICE UNDER SECTION 148 OF THE ACT. FROM THE DETAILS OF TRANSPORT CHARGES PAYMENTS FILED BY THE ASSESSEE, THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS IN EXCESS OF RS.50,0 00/- IN A YEAR TO 26 PARTIES WHICH AGGREGATED TO RS.53,66,830/-. THE AS SESSING OFFICER DISALLOWED THE SAME BY INVOKING THE PROVISIONS OF S EC. 40(A)(IA) OF THE ACT. HOWEVER, THE LEARNED CIT(A) DELETED THE SAID ADDITI ON BY HOLDING THAT THE LORRY OWNERS DID NOT CARRY OUT ANY CONTRACT WORK, B UT HAS ONLY FACILITATED THE ASSESSEE TO CARRY OUT THE CONTRACT UNDERTAKEN BY IT FROM ITC LTD. AGGRIEVED BY THE DECISION OF LEARNED CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 4. THE LEARNED D.R SUBMITTED THAT THERE EXISTED A CONTRACT BETWEEN THE ASSESSEE AND THE LORRY OWNERS AND HENCE THE PROVISI ONS OF SEC. 194C SHALL APPLY TO THE PAYMENTS MADE TO THE LORRY OWNERS. AC CORDINGLY HE SUBMITTED THAT, IF THERE IS FAILURE ON THE PART OF THE ASSESS EE TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS MADE TO THE LORRY OWNERS U/S 194C OF THE ACT, THE SAME IS LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT . IN THIS REGARD, THE LEARNED D.R RELIED UPON THE FOLLOWING CASE LAW: (A) J.RAMA (194 TAXMANN 37) (B) SREE CHOUDHRY TRANSPORT CO. (225 CTR 125 (RAJ )) (C) VELLAPALLI BROS. (196 TAXMANN 269) (D) V.M.SANKAR (127 ITD 316) 5. ON THE CONTRARY, THE LEARNED A.R STRONGLY RE LIED ON THE DECISION RENDERED BY THIS BENCH IN THE CASE OF MYTHRI TRANSP ORT CORPORATION REPORTED IN 124 ITD 40. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. FROM THE ORDER OF LEARNED CIT(A), WE NOTICE THAT TH E ASSESSEE HAS ENGAGED LORRIES FROM THE OPEN MARKET FOR EXECUTION OF THE C ONTRACT UNDERTAKEN BY IT FOR TRANSPORTATION OF GOODS. IN THE CASE OF MYTHRI TRANSPORT CORPORATION CITED (SUPRA), IT HAS BEEN HELD THAT MERE HIRING OF TRUCKS CANNOT BE TREATED AS SUB-CONTRACT UNLESS THE LORRY OWNERS INVOLVED TH EMSELVES IN CARRYING OUT ITA NO.250/VIZ/2011 M/S. PULLAIAH ROADWAYS, PERALA PAGE 3 OF 4 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. IN THE INSTANT CASE, THE CONTENTION OF THE ASSESSEE I S THAT IT HAS MERELY HIRED THE LORRIES FROM THE OPEN MARKET. IT IS NOT SHOWN BY THE REVENUE THAT THE LORRY OWNERS, FROM WHOM THE LORRIES WERE HIRED, UND ERTOOK THE RISKS ASSOCIATED WITH THE MAIN CONTRACT. IN THAT CASE, M ERE HIRING OF LORRIES WOULD NOT COME UNDER THE CATEGORY OF SUB-CONTRACT AS HELD IN THE CASE OF MYTHRI TRANSPORT CORPORATION, (SUPRA). 7. WITH REGARD TO THE DECISIONS RELIED UPON BY LEARNED D.R, IT WAS SUBMITTED THAT THE SIGNIFICANCE OF THE WORDS FOR C ARRYING OUT ANY WORK AS APPEARING IN SEC. 194C(1) WERE NOT CONSIDERED IN TH OSE DECISIONS. IT WAS BROUGHT TO OUR NOTICE THAT THE SIGNIFICANCE OF THOS E WORDS WERE DULY CONSIDERED BY THIS BENCH IN THE CASE OF KRANTI ROAD TRANSPORT PVT. LTD, VIDE ITS ORDER DATED 11-08-2011 IN ITA NO.358/VIZAG/2008 . IT WAS HELD IN THAT CASE THAT THE PROVISIONS OF SEC. 194C(1) SHALL BE A TTRACTED ONLY IN RESPECT OF THE CONTRACT WHICH INVOLVE CARRYING OUT ANY WORK. ACCORDINGLY IT WAS HELD THEREIN THAT MERE HIRING OF LORRIES WOULD NOT FALL IN THE CATEGORY OF CARRYING OUT ANY WORK AND HENCE THE PROVISIONS OF SEC. 194C (1) SHALL NOT APPLY. HENCE WE ARE INCLINED TO FOLLOW THE TWO DECISIONS R ENDERED BY THIS BENCH REFERRED (SUPRA). ACCORDINGLY WE AGREE WITH THE DE CISION REACHED BY LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ON 26.12.2011. SD/- SD/- (D MANMOHAN) (B R BASKARAN) VICE PRESIDENT ACCOUNTANT M EMBER VG/SPS VISAKHAPATNAM, DATE: 26 TH DECEMBER, 2011 ITA NO.250/VIZ/2011 M/S. PULLAIAH ROADWAYS, PERALA PAGE 4 OF 4 COPY TO 1 ITO, WARD-1, CHIRALA 2 M/S. PULLAIAH ROADWAYS, MAIN ROAD, PERALA, PRAKAS HAM (DIST.) 3 4. THE CIT GUNTUR THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM