ITO-WARD-7(2), Nagpur V. SHRI RAJENDRAKUMAR SATYANARAYAN SHARMA, Nagpur

ITA 262/NAG/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3236 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 31-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: K K THAKKAR
• Keywords: Question of law; Non-deduction of tax; TDS
• Section: 40(a)(ia); 194C; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.262/NAG./2014 (ASSESSMENT YEAR : 200910 ) INCOME TAX OFFICER WARD7(2), NAGPUR . APPELLANT V/S RAJENDRA KUMAR SATYANARAYAN SHARMA PROP. M/S. DEEPAK ROADWAY SHOP NO.6, NEW BHAWANI DHARM KATA KAPSI, BHANDARA ROAD, DIST. NAGPUR PAN BITPS1494N . RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI K.K. THAKKAR DATE OF HEARING 29.03.2017 DATE OF ORDER 31.03 .2017 O R D E R PER SHAMIM YAHYA, A.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE IS DIRE CTED AGAINST IMPUGNED ORDER DATED 3 RD FEBRUARY 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS)II, NAGPUR, FOR ASSESSMENT Y EAR 200910. 2. THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED BE LOW: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THERE DOES NOT EXI ST ANY ORAL CONTRACT BETWEEN THE ASSESSEE AND THE PARTIES FROM WHOM TRUCK WERE TAKEN ON HIRE AND ALSO SUCH LORRY OWNERS DO NO T SHARE THE RISK OF THE ASSESSEE INVOLVED IN THE TRANSPORTATION OF THE GOODS WHEN AS PER THE NORMAL TRADE PRACTICE THE RISK AND RESPONSIBILITY IS TRANSFERRED TO THE OUTSIDE TRUCK OWNERS BY WAY O F ORAL CONTRACT 2 RAJENDRA KUMAR SATYANARAYAN SHARMA FOR WHICH IT IS NOT POSSIBLE FOR THE A.O. TO BRING EVIDENCE ON RECORD? 2. WHETHER ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE I S NOT LIABLE TO DEDUCT TAX AT SOURCE ON FREIGHT PAYMENTS MADE TO LO RRY OWNERS IN SPITE OF THE FACT THAT THE ASSESSEE HAS CONDUCTED H IS BUSINESS MAINLY BY ASSIGNING THE TASK OF TRANSPORTATION TO O THER PARTIES BY HIRING THEIR TRUCK WHICH AMOUNTS TO SUB-CONTRACTING THE CONTRACT AND HENCE COVERED BY SECTION 194C OF THE I.T. ACT, 1961. 2. BRIEF FACTS ARE, ASSESSEE IS ENGAGED IN THE BUSINESS OF HIRING AND PLYING OF TRUCKS FOR TRANSPORTATION IN ITS PROPRIET ARY CONCERNED IN THE NAME AND STYLE OF M/S. DEEPAK ROADWAYS . THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 3,31,634, ON 29 TH SEPTEMBER 2009. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE PROVIDED TRANSPORT CONTRACT SERVICES TO CERTAIN COM PANIES LIKE M/S. SUN VIJAY IRON, AND THESE SERVICES WERE PROVIDED BY THE ASSESSEE ON A CONTRACTUAL BASIS. IT WAS NOTED BY THE ASSESSING OF FICER THAT THE ASSESSEE IS THE OWNER OF ONLY TWO TRUCKS AND HIRES VARIOUS PARTIES AND THAT THE ASSESSEE HAD NOT DONE TDS IN RESPECT OF TH E FREIGHT CHARGES PAID. IT WAS EXPLAINED BY THE ASSESSEE THAT HE WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND THAT HE HAS RECEIVED FREIGHT FROM M/S. SUN VIJAY IRON, AS A CONTRACTOR AND FROM DIFFERENT TRANSPORT COMPANIES AS A SUB CONTRACTOR AND THAT AFTER RECEIVING THE TR ANSPORTATION CONTRACT, THE ASSESSEE BESIDES USING ITS OWN TRUCKS /LORRIES, WAS ALSO HIRING THE TRUCKS/LORRIES FROM OUTSIDE PARTIES AS A ND WHEN REQUIRED AS HE DOES NOT HAVE SUFFICIENT NUMBER OF VEHICLES FOR TRANSPORTATION. THE 3 RAJENDRA KUMAR SATYANARAYAN SHARMA ASSESSING OFFICER, HOWEVER, CAME TO THE CONCLUSION THAT AS PER THE PROVISIONS OF SECTION 194C, IF THE AMOUNT OF PAYMEN T CREDITED OR PAID TO A CONTRACTOR OR SUB CONTRACTOR EXCEEDS ` 20,000, AT ONE TIME OR RS.50,000, IN AGGREGATE DURING THE FINANCIAL YEAR, TDS WAS REQUIRED TO BE MADE. THE ASSESSING OFFICER FURTHER NOTED THAT T HE ASSESSEE HAS BREACHED THE PROVISIONS OF SECTION 194C AS THE ASSE SSEE OBVIOUSLY ENTERED INTO SOME SORT OF A CONTRACT WITH THE TRUCK OWNERS TO WHOM THE ASSESSEE SUB-CONTRACTS THE WORK. IT IS NOTED BY THE ASSESSING OFFICER THAT 'THERE HAS TO BE A PROPOSAL IN THIS REGARD FROM ONE OF THE PARTIES AND WHEN ACCEPTED BY THE OTHER PARTY, IT WI LL GIVE RISE TO AN AGREEMENT' . THUS THE ASSESSING OFFICER CONCLUDED THAT EVEN IF THE AGREEMENT IS NOT REDUCED TO WRITING, THERE REMAINS A CONTRACT OR AN ORAL CONTRACT. HE, THEREFORE, DID NOT ACCEPT THE CO NTENTION OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 194C WOULD NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT NO TDS HAD BEEN MADE AS PER THE PROVISIONS OF SECTION 194C AND HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 40(A)(IA) AND ADD ED ` 2,40,10,500 TO THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED COMMISSIONER (APPEALS) OBSERVED AS UNDE R: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. I HAVE ALSO P ERUSED THE 4 RAJENDRA KUMAR SATYANARAYAN SHARMA VARIOUS JUDGMENTS RELIED UPON BY THE APPELLANT. I F IND SUBSTANTIAL FORCE IN THE SUBMISSION OF THE APPELLANT. THE APPEL LANT HAS ENTERED INTO A CONTRACT WITH CERTAIN PARTIES IN PUR SUANCE TO WHICH THE APPELLANT CARRIES OUT TRANSPORT WORK. AS AN WHE N THE APPELLANT'S OWN RESOURCES ARE INSUFFICIENT FOR TRAN SPORTATION, HE GOES TO THE TRANSPORT MARKET AND HIRES THE SERVICES OF CERTAIN TRUCK OWNERS TO WHOM THE FREIGHT PAYMENTS ARE MADE BY THE APPELLANT. THE LD.AO HAS TREATED SUCH TRANSACTION B ETWEEN THE APPELLANT AND THE TRUCK OWNER AS A SUB-CONTRACT, WH ICH IS ERRONEOUS IN THE GIVEN SET OF FACTS AND CIRCUMSTANC ES, AS SUCH LORRY OWNERS DO NOT SHARE RISKS OF THE APPELLANT IN VOLVED IN TRANSPORTATION OF GOODS. FURTHER, AS STATED BY THE APPELLANT, AT MOST OF THE TIMES THE TRUCK OWNERS WOULD MAY NOT EV EN BE AWARE OF THE PRINCIPAL FOR WHICH THE APPELLANT IS E XECUTING TRANSPORT WORK AND IN SUCH CIRCUMSTANCES IT CAN BE CONCLUDED THAT THE TRUCK OWNERS HAVE NOT ENTERED INTO ANY CON TRACT EITHER WITH THE APPELLANT OR THE PRINCIPALS FOR WHICH THE APPELLANT IS EXECUTING THE WORK. THERE ARE VARIOUS JUDICIAL PRON OUNCEMENTS, ON IDENTICAL FACTS, WHICH STRONGLY SUPPORT THE VIEW OF THE APPELLANT.? 4. THEREAFTER, THE LEARNED COMMISSIONER (APPEALS) REFE RRED TO THE FOLLOWING CASE LAWS: I) BHAIL BULK CARRIERS V/S ASSESSEE, ITA NO.3536/MUM./ 2011, DATED 7.3.2012; II) GURPREET SING V/S ASSESSEE, ITA NO.4790/DEL./2011, DATED 24.1.2013 III) RAJENDRA MADHUBHAI GOHIL V/S ITO, ITA NO.683/AHD./2 013, DATED 31.10.2013; IV) RAJIV KISHORI LAL PATODIA, ITA NO.8967/MUM./2010, D ATED 23.5.2013 V) HEMAND M. BHANUSHALI, V/S ASSESSEE, ITA NO.2336/MUM ./ 2011, DATED 13.4.2012. 5. THE LEARNED COMMISSIONER (APPEALS) CONCLUDED AS UND ER: 6. ON PERUSAL OF THE ABOVE FINDINGS AND APPLYING T HE SAME TO 5 RAJENDRA KUMAR SATYANARAYAN SHARMA THE FACTS OF APPELLANT'S CASE, IT IS CLEARLY ESTABL ISHED THAT THE APPELLANT'S CASE IS NOT COVERED BY THE PROVISIONS O F SECTION 194C(1) OR 194C(2) OF THE ACT. THE PROVISIONS OF SE CTION 194C(1) APPLY TO ANY PAYMENT MADE TO A PERSON FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRAC TOR AND THE PERSONS MAKING THE PAYMENT. IF THE CONTENTION OF 'C ARRIED OUT ANY WORK IN PURSUANCE FOR A CONTRACT' IS NOT FULFIL LED, THEN THE PROVISIONS OF THIS SECTION WILL NOT BE APPLICABLE A T ALL. IN THE CASE OF THE APPELLANT, IT IS NOT DISPUTED THAT THE CONTR ACT FOR CARRYING OUT THE WORK HAS BEEN ENTERED INTO BETWEEN THE APPE LLANT AND M/S SUNVIJAY IRON AND OTHERS PARTIES AND IT IS THE APPELLANT ALONE WHO IS RESPONSIBLE FOR CARRIED OUT THE CONTRACT WOR K AS PER THE TERMS AGREEMENT ENTERED INTO WITH ITS PRINCIPLES. T HE LD.AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SUGGEST THAT THERE WAS ANY CONTRACT OR SUB CONTRACT, EITHER WRITTEN OR ORA L, WITH THE OUTSIDE TRUCK/LORRY OWNERS WHEREBY THE RISK AND RES PONSIBILITY, WHICH IS ASSOCIATED WITH A CONTRACT, HAS ALSO BEEN PASSED ON TO THESE OUTSIDE PARTIES. 6.1 THE PROVISIONS OF SECTION 194C(2) WOULD ALSO NO T BE APPLICABLE AS THE RISK AND RESPONSIBILITY OF FULFIL LING OF VARIOUS TERMS AND CONDITIONS OF THE CONTRACT REMAIN WITH TH E APPELLANT. THE APPELLANT HAS MERELY TAKEN ON HIRE THE VEHICLES AND THE SAME CANNOT BE SAID TO BE CONTRACT OR SERVICE OR TO BE A SUB CONTRACT AND THEREFORE THE PROVISIONS OF SECTION 19 4C(2) ARE ALSO NOT APPLICABLE IN THE CASE OF THE APPELLANT. THE CA SE OF SUB CONTRACT CAN BE MADE OUT ONLY WHEN THE APPELLANT OF F-LOADS A DEFINED PART OF THE CONTRACT WORK TO THE SAID LORRY /CONTRACT OWNERS BY WAY OF A WRITTEN OR ORAL WHEREIN THE RICK AND RESPONSIBILITY ARE ALSO TRANSFERRED. 6.2 SINCE NO SUCH FACTS HAS BROUGHT ON RECORD, IT I S EVIDENT THAT PROVISIONS OF SECTION 194C WOULD NOT BE APPLICABLE IN THE CASE OF THE APPELLANT AND THE APPELLANT WAS NEVER RESPONSIB LE TO DEDUCT TAX AT SOURCE MADE TO THE LORRY/TRUCK OWNERS AND CO NSEQUENTLY THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLIC ABLE AND THE ADDITION OF RS.24010500/- IS THEREFORE HEREBY DELET ED. THIS GROUND IS THEREFORE ALLOWED. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LEARNED COMMI SSIONER (APPEALS) 6 RAJENDRA KUMAR SATYANARAYAN SHARMA HAS PASSED A REASONABLE ORDER AND THE CASE LAWS REF ERRED BY HIM DULY SUPPORT THE CASE OF THE ASSESSEE. IDENTICAL ISSUE W AS DEALT WITH BY THIS TRIBUNAL IN M/S. CHADHA TRANSPORT, ITA NO.333/NAG./ 2014, DATED 25 TH FEBRUARY 2016, AS UNDER: 14. NOW WE DEAL WITH THE ISSUE ON THE GROUND THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON PAYMENT AS THAT THE AS SESSEES CASE IS NOT COVERED BY THE PROVISIONS OF SECTION 194C(2) OF THE I.T. ACT INASMUCH AS THERE WAS NO CONTRACT WITH THE TRUCK/LO RRY OWNERS. IN THIS REGARD THE ASSESSEE HAS CONTENDED THAT THERE W AS NO REGULAR CONTRACT OF HIRING OF THE TRUCKS FOR CONTINUE TRANS PORTATION OF VARIOUS GOODS WITH THE TRUCKS/LORRY OWNERS. THAT TH ERE WAS NO ORAL OR WRITTEN AGREEMENT FOR HIRING TRUCKS FOR TRANSPOR TATION OF GOODS TO PERFORM A CONTRACTUAL OBLIGATION BY VIRTUE OF V ARIOUS AGREEMENTS WITH CORPORATE CLIENTS. THAT THE ASSESSE E ALONE IS LIABLE AND UNDER ITS CONTROL AND SUPERVISION HAS EXECUTED THE WHOLE OF CONTRACTS ON BEHALF OF VARIOUS CORPORATE ENTITIES, NAMELY, AMBUJA CEMENT, MANIGARH CEMENT AND MARATHA CEMENT ETC. HEN CE IT IS THE PLEA OF THE ASSESSEE THAT HIRING OF TRUCKS IN THIS CASE IS NOT IN THE NATURE OF PAYMENT MADE TO SUB CONTRACTORS ON WHICH THERE IS OBLIGATION TO DEDUCT THE TAX AT SOURCE U/S 94C OF T HE I.T. ACT. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEES CONTE NTION IS THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN ITA NO. 1219 OF 201 2 IN THE CASE OF M/S BHAIL BULK CARRIERS VIDE ORDER DATED 12-11-2 014. IN THIS CASE HONBLE BOMBAY HIGH COURT HAS UPHELD THE DECIS ION OF MUMBAI ITAT IN THE CASE OF BHAIL BULK CARRIERS VS. ITO 50 SOT 0622. IN THIS CASE THE ITAT HAS DISCUSSED THE ISSUE IN PARA 8 & 8.1 OF ITS ORDER AS UNDER : 8. WE HAVE HEARD THE PARTIES AT LENGTH AND ALSO GONE THROUGH THE FINDINGS OF THE AUTHORITIES BELOW AND THE CASE LAWS AS HAVE BEEN REFERRED IN THE APPELLAT E ORDER AS WELL AS RELIED UPON BY THE LEARNED COUNCIL . THE RELEVANT FACTS FOR ADJUDICATION OF THE ISSUE ARE TH AT THE APPELLANT IS CARRYING OUT THE BUSINESS OF TRANSPORT ATION OF OIL THROUGH TANKERS. IT ENTERED INTO A CONTRACT WITH VARIOUS COMPANIES (HERE MAINLY BPCL) FOR TRANSPORTI NG THE OILS TO VARIOUS DESTINATIONS AS PER THE AGREEME NT ENTERED INTO BY THE SAID COMPANY. THE APPELLANT WAS SOLELY RESPONSIBLE FOR EXECUTING THE CONTRACT ON BE HALF OF ITS PRINCIPAL FOR FULFILLING ITS TRANSPORTATION COMMITMENT, THE APPELLANT BESIDES USING ITS OWN 7 RAJENDRA KUMAR SATYANARAYAN SHARMA TANKERS WAS ALSO HIRING THE TANKERS FROM OUTSIDE PA RTIES AS AND WHEN REQUIRED. IN SUCH A CASE OF HIRING FROM OUTSIDE, THE RESPONSIBILITY OF SUCCESSFUL COMPLETIO N OF TRANSPORTATION WORK RESTED UPON THE APPELLANT. FROM THE RECORD OR THE FINDINGS OF THE AUTHORITIES BELOW NO WHERE IT IS BORNE OUT THAT THERE WAS ANY KIND OF WR ITTEN OR ORAL CONTRACT WITH THE PRINCIPALS BY SUCH OUTSID E TANK OWNERS THAT THEY WILL SHARE THE RISK AND RESPONSIBI LITY WITH THE APPELLANT. 8.1 AT THIS STAGE, IT IS NOT DISPUTE THAT THE DEPARTMENTS CASE IS THAT IN THE PRESENT CASE PROVI SIONS OF SECTION 194C(1) ARE APPLICABLE AND NOT SECTION 194C(2). ONCE IT IS HELD THAT IT IS A CASE OF 194C( 1) THEY IT WOULD BE SENT THAT THIS SECTION APPLIES TO ANY PAYMENT MADE TO A PERSON FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE PERSON MAKING THE PAYMENT. IF THE CONDITION OF CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT IS NOT FULFILLED THEY THE PROVISIONS OF THIS SECTION W ILL NOT BE APPLICABLE AT ALL. HERE IN THIS CASE, THE CONTRA CT FOR CARRYING OUT THE WORK WAS BETWEEN THE BPCL AND THE APPELLANT. THE APPELLANT ALONG HAD RISK AND RESPONSIBILITY FOR CARRYING OUT THE CONTRACT WORK A S PER THE AGREEMENT ENTERED INTO BY IT WITH ITS PRINCIPAL I.E. BPCL. THERE IS NO MATERIAL ON RECORD TO SUGGEST THA T THERE WAS ANY CONTRACT OR SUB-CONTRACT WHETHER WRIT TEN OR ORAL WITH THE OUTSIDE TANK OWNERS AND THE APPELL ANT, WHEREBY THE RISK AND RESPONSIBILITY WHICH IS ASSOCI ATED WITH A CONTRACT HAS ALSO BEEN PASSED ON TO THESE OUTSIDE PARTIES. ONCE THE CIT(APPEALS) HAS ACCEPTED THE FACT THAT THE OUTSIDE TANK OWNERS DO NOT HAD AN Y RESPONSIBILITY OR LIABILITY TOWARDS THE PRINCIPAL, THEN IT CANNOT BE HELD THAT THESE OUTSIDE PARTIES WERE PRIV ITY TO THE CONTRACT BETWEEN THE APPELLANT AND ITS PRINC IPAL THUS THE PAYMENT MADE TO THE OUTSIDE PARTIES DO NOT COME OR FALL WITHIN THE PURVIEW OF SECTION 194C, AS THE CARRYING OUT ANY WORK INDICATES DOING SOMETHING T O CONDUCT THE WORK IN PURSUANCE OF CONTRACT AND HERE IN THIS CASE, IT WAS SOLELY BETWEEN APPELLANT AND ITS PRINCIPAL. THEREAFTER THE TRIBUNAL HAD REFERRED THE DECISION O F HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. POMPUHAR S HIPPING CORPORATION LTD. AND CONCLUDED AS UNDER: THUS IN VIEW OF THE FINDINGS GIVEN ABOVE AND THE L AW LAID DOWN BY THE HONBLE HIGH COURT AS ABOVE, WE AR E 8 RAJENDRA KUMAR SATYANARAYAN SHARMA OF THE CONSIDERED OPINION THAT THE APPELLANT WAS NO T LIABLE TO DEDUCT TDS U/S 194C(1) FOR PAYMENTS MADE TO THE OUTSIDE PARTIES AND CONSEQUENTLY THE DISALLOWAN CE MADE U/S 40(A)(IA) BY THE AUTHORITIES BELOW ARE DELETED. THE APPELLANT THUS GETS RELIEF OF 56,03,21 0/-. THIS ORDER OF THE ITAT WAS SUBJECT MATTER OF APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN INCOME TAX APP EAL NO. 1219 OF 2012 VIDE ORDER DATED 12 TH NOV., 2014. THE HONBLE HIGH COURT HELD AS UNDER: 2. THE APPEAL AROSE OUT OF THE ORDER OF THE FIRST APPELLATE AUTHORITY DATED 15 TH FEBRUARY 2011. THE ONLY ISSUE WAS DIS-ALLOWANCE OF RS.56,03,210/- UNDER SECTION 40(A)(IA) FOR THE FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 194C OF THE INCOME TAX ACT,1961. THE TRIBUNAL FOUND THAT THIS DISALLOWANCE WAS NOT PERMISSIBLE BECAUSE THE ASSESSEE A PARTNERSHIP FIRM IS IN THE BUSINESS OF TRANSPORT. IT IS A TRANSPORT CON TACTOR. IT WAS AWARDED A CONTRACT OF OIL TRANSPORTATION TO VARIOUS LOCATIONS OF BHARAT PETROLEUM CORPORATION L TD., AND OTHER COMPANIES. THE ASSESSEE RECEIVED DURING T HE YEAR IN QUESTION RS.2,83,06,986/- TOWARDS FREIGHT CHARGES. THE CONTRACT DOCUMENT SHOWS THE ASSESSEE ALONG WAS RESPONSIBLE FOR TRANSPORTATION OF OIL FRO M ONE DESTINATION TO OTHER. THE CONTRACTUAL LIABILITY WAS DISCHARGED BY TRANSPORTING OIL MOSTLY THROUGH THE ASSESSEES OWN TANKERS AND ALSO FROM SOME HIRED TANKERS BELONGING TO OUTSIDE PARTIES. AN AMOUNT OF RS/.1,79,03,198/- WAS PAID TO VARIOUS PARTIES AND T HE ASSESSEE FURNISHED THE DETAILS. THE AMOUNTS PAID AN D SUMMARY THEREOF IS NOTED AND WHAT THE ASSESSING OFFICER, THE FIRST APPELLATE AUTHORITY AND TRIBUNAL FOND THAT TDS (TAX DEDUCTED AT A SOURCE) HAD NOT BEEN REMITTED OR THERE IS NO DEDUCTION IN CASES OF THIRD PARTIES. THE TRIBUNAL NOTED THE RIVAL CONTENTIONS A ND RENDERED A FINDING OF FACT BY REFERRING TO THE LEGA L PROVISIONS THAT THE RISK AND RESPONSIBILITY FOR CAR RYING OUT THE CONTRACT WORK WAS SOLELY THAT OF THE ASSESS EE. THERE IS NO MATERIAL TO SUGGEST THAT THERE WAS ANY CONTRACT OF SUB-CONTRACT, WHETHER WRITTEN OR ORAL W ITH THE OUTSIDE TANKER OWNERS AND THE ASSESSEE. IT IS I N THESE CIRCUMSTANCES AND WHEN THESE OUTSIDE TANKER OWNERS DO NOT HAVE ANY RESPONSIBILITY OR LIABILITY THE BHARAT PETROLEUM CORPORATION LTD. OR OTHER PRINCIPA LS THEN, IN THE ABSENCE OF ANY PRIVITY, THE OBLIGATION TO DEDUCT THE TAX AT SOURCE WAS NOT THAT OF THE ASSESS EE. IN SUCH CIRCUMSTANCES, WE DO NOT FIND THAT THE APPE AL 9 RAJENDRA KUMAR SATYANARAYAN SHARMA RAISES ANY SUBSTANTIAL QUESTION OF LAW, THE FINDING S CANNOT BE TERMED AS PERVERSE OR VITIATED BY ERROR O F LAW APPARENT ON THE FACE OF THE RECORD. THE APPEAL IS DISMISSED. 15. NOW WE EXAMINE THE PRESENT CASE ON THE ANVIL OF ABOVE JURISDICTIONAL HIGH COURT DECISION. IN THIS CASE AL SO THE ASSESSEE IS A TRANSPORT CONTRACTOR. THE ASSESSEE WAS AWARDED CO NTRACT OF TRANSPORTATION TO VARIOUS LOCATIONS OF AMBUJA CEMEN T, MANIGARH CEMENT, MARATHA CEMENT ETC. THE ASSESSEE RECEIVED F REIGHT CHARGES FROM THESE COMPANIES. THE CONTRACT WITH THE SE COMPANIES SHOWS THAT THE ASSESSEE WAS RESPONSIBLE F OR TRANSPORTATION OF CEMENT FROM ONE DESTINATION TO OT HER. THE CONTRACTUAL LIABILITY WAS DISCHARGED BY TRANSPORTIN G CEMENT THROUGH ASSESSEES OWN TRUCKS AND ALSO FROM HIRED T RUCKS BELONGING TO OUTSIDE PARTIES. IT IS CLEAR FROM THE FACTS ON RECORD THAT THE RISK AND RESPONSIBILITY FOR CARRYING OUT T HE CONTRACT WORK WAS SOLELY THAT OF THE ASSESSEE. THERE IS NO MATERI AL TO SUGGEST THAT THERE WAS ANY CONTRACT OR SUB CONTRACT WRITTEN OR ORAL WITH THE OUTSIDE TRUCK OWNERS AND THE ASSESSEE. IT IS IN THESE CIRCUMSTANCES THAT WHEN THESE OUTSIDE TRUCK OWNERS DO NOT HAVE ANY RESPONSIBILITY OR LIABILITY TOWARDS THE AMBUJA CEMENT OR OTHER PRINCIPALS THEN IN ABSENCE OF ANY PRIVITY THE OBLIG ATION TO DEDUCT THE TAX AT SOURCE WAS NOT THAT OF THE ASSESSEE. 16. IN VIEW OF THE AFORESAID DISCUSSION, WE FIND TH AT THE FACTS OF THE CASE ARE FULLY IN CONSONANCE WITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BHAIL BULK CARRIERS (SUPRA). ACCORDINGLY WE HOLD THAT THE LEARNED CIT(APPEALS)S ORDER DOES NOT HAVE ANY INFIRMITY AND ACCORDINGLY WE UPHOLD TH E SAME. HENCE REVENUES APPEAL IS LIABLE TO BE DISMISSED ON THIS PLANK AS WELL. 7. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL T O THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARN ED COMMISSIONER (APPEALS). ACCORDINGLY, WE UPHOLD THE SAME. 8. BEFORE PARTING, WE MAY ADD THAT THE ASSESSEES CASE ALSO GETS SUPPORT FROM THE PROPOSITION THAT IF THE AMOUNT IN VOLVED WAS PAID UP TO THE CLOSE OF THE FINANCIAL YEAR, THEN THE PROVIS IONS OF SECTION 10 RAJENDRA KUMAR SATYANARAYAN SHARMA 40(A)(IA) ARE NOT ATTRACTED. FOR THIS PROPOSITION A LSO, WE MAY REFER TO THE FOLLOWING ADJUDICATION IN THE CASE OF CHADHA TR ANSPORT (SUPRA): 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. FIRST WE DEAL WITH THE ISSUE ON THE GR OUND THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED I NASMUCH AS THE ENTIRE FREIGHT EXPENDITURE IS PAID AND NOTHING IS PAYABLE AS ON 31-03-2007. THE FACTS IN THIS REGARD ARE UNDISPUTED . THE ASSESSEES PLEA IS THAT THE ENTIRE FREIGHT AMOUNT W AS PAID AND NOTHING IS PAYABLE AS ON 31-03-2007, AND THAT THIS IS DULY REFLECTED BY A PERUSAL OF THE BALANCE SHEET/PROFIT & LOSS ACCOUNT WHERE NO AMOUNT IS PAYABLE AS ON 31-03-2007. IN THI S REGARD LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON CIT VS. VECTOR SHIPPING SERVICES (P) LTD. 357 ITR 642 (ALL. ). IN THE SAID CASE HONBLE ALLAHABAD HIGH COURT HAS UPHELD THE FI NDING THAT WHEN THE EXPENSES INCURRED BY THE ASSESSEE IS TOTAL LY PAID AND NOT REMAINED PAYABLE AS AT THE END OF THE RELEVANT ACCOUNTING PERIOD, PROVISIONS OF SECTION 40(A)(IA) ARE NOT APP LICABLE. THE HIONBLE HIGH COURT IN PARA 10 OF THE ORDER HAS CON CLUDED AS UNDER : IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FR OM BUSINESS AND PROVISION ON THE GROUND THAT TDS HAS NOT BEEN DEDUC TED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAI D BY THE END OF THE YEAR. 13. REVENUES APPEAL AGAINST THE ABOVE SAID DECISIO N OF THE HONBLE ALLAHABAD HIGH COURT WAS DISMISSED BY THE H ONBLE APEX COURT IN CC NO. 8068/2014 VIDE ORDER DATED 02-07-20 14. THE HONBLE APEX COURT HAS HELD AS UNDER : HEARD MR. MUKUL ROHATGI, LEARNED ATTORNEY GENERAL, FOR THE PETITIONER. DELAY IN FILING AND REFILLING SPECIAL LEAVE PETITIO N IS CONDONED. SPECIAL LEAVE PETITION IS DISMISSED. WE ARE ALSO AWARE THAT THERE ARE CERTAIN OTHER HON BLE HIGH COURT DECISIONS WHEREIN THIS PROPOSITION HAS NOT BEEN UPH ELD THAT PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED ONLY WHEN THE AMOUNT IS PAYABLE. HOWEVER, WE NOTE THAT THERE IS N O JURISDICTIONAL HIGH COURT DECISION ON THIS ISSUE. I N SUCH A SITUATION WE NOW HAVE A HONBLE ALLAHABAD HIGH COURT DECISION WHICH IS IN FAVOUR OF THE ASSESSEE. REVENUE DEPARTMENTS PETITI ON FOR SPECIAL LEAVE TO APPEAL HAS BEEN DISMISSED BY THE HONBLE A PEX COURT BY CONDONING THE DELAY IN FILING THE LEAVE PETITION. I N SUCH A 11 RAJENDRA KUMAR SATYANARAYAN SHARMA SITUATION, IN OUR CONSIDERED OPINION, THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD . 188 ITR 192 HAS TO BE FOLLOWED. IN THE SAID DECISION THE HONBL E APEX COURT HAS EXPOUNDED THAT IN CASE THERE ARE TWO VIEWS POSS IBLE, THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. ACCOR DINGLY IN ABSENCE OF ANY JURISDICTIONAL HIGH COURT DECISION, WE RESPECTFULLY FOLLOW THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. AS ABOVE. ACCORDI NGLY SINCE NO AMOUNT OF THE FREIGHT WAS UNPAID OR WAS PAYABLE AS ON 31-03- 2007 WE HOLD THAT THE PROVISIONS OF SECTION 40(A)(I A) ARE NOT ATTRACTED AND IN THIS VIEW OF THE MATTER WE ARE OF THE OPINION THAT REVENUES APPEAL IS LIABLE TO BE DISMISSED. 9. THUS, FROM THE ABOVE, IT EMANATES THAT IT IS ONLY T HE UNPAID AMOUNT WHICH ATTRACTS THE DISALLOWANCE UNDER THE PR OVISIONS OF SECTION 40(A)(IA). SINCE WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE EARLIER PART OF THE ORDER AND SINCE IT IS NOT CLEAR AS TO WHAT AMOUNT WAS UNPAID AT THE CLOSE OF THE FINANCIA L YEAR, A SPECIFIC DECISION ON THIS ASPECT IS ONLY OF AN ACADEMIC INTE REST. HENCE, WE ARE NOT ENGAGING INTO THE SAME. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2017 SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 31.03.2017 12 RAJENDRA KUMAR SATYANARAYAN SHARMA COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR