Shri Prakashchandra Juglubhai Lonari, Surat V. The Income tax Officer,Ward-6(3), Surat

ITA 2920/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50695 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Presumptive income; Business income; Deemed to accrue or arise in india
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SA INI, JM) ITA NO.2920/AHD/2009 A. Y.: 2006-07 SHRI PRAKASHCHANDRA JUGLUBHAI LONARI, PROP. BALAJI CABLE NETWORK, 6/53, VAIRAGI NI WADI, DELHI GATE, SURAT VS THE INCOME TAX OFFICER, WARD 6(3), AAYAKAR BHAVAN, MAJURA GATE, SURAT PA NO. ACVPP 4182 F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. SOPARKAR, AR RESPONDENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 29-09-2011 DATE OF PRONOUNCEMENT: 05-10-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , SURAT DATED 28 TH JULY, 2009 FOR THE ASSESSMENT YEAR 2006-07, CHALLE NGING THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF RS .33,27,188/- BEING THE DISALLOWANCE U/S 40(A) (IA) READ WITH SECTION 1 94C (2) OF THE IT ACT. 2. THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THA T THE ASSESSEE IN HIS A PROPRIETARY CAPACITY OF BALAJI CABLE NETWO RK MADE A CONTRACT WITH DEVSHREE NETWORK PVT. LTD. FOR RS.33,27,188/- FOR GIVING CABLE TRANSMISSION. THE MODUS OPERANDI HAS BEEN DETAILED BY THE AO IN PARA 5.2 OF THE ASSESSMENT ORDER. IN NUTSHELL THE A OS ARGUMENT IS ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 2 THAT DEVSHREE NETWORK IS ASSESSEES SUB-CONTRACTOR FOR SUPPLY OF SERVICES OF CABLE SIGNALS TO SUBSCRIBERS FOR CERTAI N CONSIDERATION AND SINCE A SUM OF RS.33,27,188/- WAS PAID AS CONTRACT CHARGES TO DEVSHREE NETWORK, TDS SHOULD HAVE BEEN DEDUCTED U/S 194 (2) OF THE IT ACT. BUT SINCE IT WAS NOT DONE, THE AMOUNT I S REQUIRED TO BE DISALLOWED U/S 40(A) (IA) OF THE IT ACT. THE AO HAS FURTHER ANALYZED AS TO WHY THE ASSESSEES ARGUMENT THAT TDS WAS TO B E DEDUCTED ONLY ON PAYABLE AMOUNT AND NOT PAID AMOUNT COULD NO T BE ENTERTAINED. DETAILED REASONING FOR TURNING DOWN AS SESSEES ARGUMENTS IS GIVEN ON PAGE 9 OF THE ASSESSMENT ORDE R. THE MATTER WENT UP TO THE ADDL. CIT, RANGE-9 THROUGH AN APPLIC ATION FILED U/S 144A BY THE ASSESSEE WHO VIDE HIS LETTER DATED 30-1 2-2008 DIRECTED TO DISALLOW THE EXPENDITURE AS PROPOSED BY THE AO. BEFORE THE LEARNED CIT(A) IT WAS ARGUED THAT THE AO HAS SIMPLY TERMED THE ASSESSEES RECEIPT FROM ITS CABLE NETWORK SUBSCRIBE RS AS THE AMOUNT LIABLE TO TDS. IT WAS FURTHER ASSERTED THAT THERE W AS NO PAYMENT TO CUSTOMER INSTEAD IT WAS RECEIPTS AND THERE WAS NO Q UESTION OF PAYMENT. FURTHER, THE ASSESSEE ARGUED THAT (A) PROV ISION OF SECTION 194C (1) OF THE IT ACT ARE APPLICABLE ONLY FROM 01- 06-2007 AND THE CASE FOR ADJUDICATION PERTAINS TO PERIOD 01-04-2005 TO 31-03-2006 AND (B) SECTION 40(A) (IA) OF THE IT ACT APPLIES TO THE AMOUNT PAYABLE AND NOT TO THE AMOUNT WHICH IS ALREADY PAID AND HEN CE, THE EXPENDITURE PAID CANNOT BE DISALLOWED. IN SUPPORT OF HIS CONTENTION THE ASSESSEE RELIED UPON THE DECISIONS IN THE CASE OF CIT VS ESTEL COMMUNICATION PVT. LTD., 217 CTR 102 IN WHICH CASE INTERNET BAND WIDTH OF AN U. S. BASED PARTY TELEGLOBE WAS USED BY THE ASSESSEE FOR PROVIDING ACCESS TO ITS SUBSCRIBERS AND A CHARG E WAS LEVIED ON ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 3 SUBSCRIBERS AND OUT OF THE SAME CERTAIN AMOUNT WAS PAID TO U. S. BASED PARTY. THE AO INVOKED PROVISION OF SECTION 9 (1) (I) AND 9 (1) (VII) OF THE IT ACT AND HELD THE ASSESSEE TO BE LIA BLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE TO U.S. PARTY. 3. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION O F THE ASSESSEE CONFIRMED THE ADDITION AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. HIS FINDINGS ARE REPRODUCED AS UN DER: I HAVE REFERRED TO THIS CASE AND FIND THAT IT IS C LEARLY DISTINGUISHABLE ON FACTS. SECTION 9 PERTAINS TO INC OME DEEMED TO ACCRUE OR ARISE IN INDIA AND SUB SECTION 1(VII) IS IN RESPECT OF AS TO WHAT WOULD BE CONSTITUTING T HE INCOME BY WAY OF FEE FOR TECHNICAL SERVICES. THER EFORE BRUSHING ASIDE THE CASE AS NOT BEING VERY HELPFUL I N DECIDING THE ISSUE, I COME TO THE NEXT ARGUMENT THA T SECTION 40 (I) (A) IS APPLICABLE TO ONLY PAYABLE AMOUNTS. NOTHING CAN BE MORE FOR FETCHED THAN THIS ARGUMENT. THE PAYABLE INCLUDE PAID. THE SCHEME OF TDS EXPECTED TH AT AS AND WHEN THE AMOUNTS WERE PAID TO THE CONTRACTOR S TDS HAD TO BE EFFECTED. THE SCHEME OF PRESUMPTIVE TAXATION PRESUPPOSES AN ELEMENT OF TAXABLE PROFIT I N EVERY PAYMENT. THEREFORE, TO DISTINGUISH PAYABLE FROM PAI D WOULD LEAD TO VERY ABSURD SITUATION. THAT MEANS THA T TAXABILITY (AS PER TDS) IS BEING FASTENED TO THE ST ATUS OF PAYMENT WHICH IS NOT CORRECT. THEREFORE, AGREEING W ITH A. O., I SEE NO MERIT IN ARS ARGUMENTS. THAT BRINGS U S TO NEXT QUESTION AS WHO IS THE CONTRACTOR AND WHO IS SUBCONTRACTOR. IN THE PRESENT CASE MY OWN VIEW IS T HAT SUBSCRIBERS WILL HAVE TO BE KEPT OUT TO ASCERTAIN T HE CORRECT PICTURE. THE APPELLANT IS IN BUSINESS OF CA BLE SERVICES. BUT IT DOES NOT HAVE ITS OWN SOFTWARE TO BE BROADCAST AND SIGNAL. THEREFORE DEVSHREE NETWORK WH O SUPPLIES HIM THE SAME IS CONTRACTOR AND THE APPELLA NT IS ONLY A SUBCONTRACTOR. AS A MATTER OF FACT EVEN DEVS HREE NETWORK IS A SUBCONTRACTOR OF SOME BIGGER CABLE NET WORK ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 4 LIKE STAR OR ZEE. BECAUSE THE MAIN SOFTWARE AND SIG NAL FOR TRANSMISSION IS COMING FROM THEM. SO BOTH THE APPEL LANT AND DEVSHREE NETWORK ARE SUBCONTRACTORS AND THEREFO RE ANY PAYMENT MADE TO THEM IS LIABLE TO TDS. THE LAST ARGUMENT THAT 194 (C) HAS MADE INDIVIDUAL S LIABLE TO TDS ONLY FROM 01.06.2007 ALSO HAS NO MERI T. BECAUSE, EVEN BEFORE THE NEW AMENDMENT WHICH CAME I N TO EFFECT FROM 01.06.2007, THERE WAS A PROVISO IN T HE SAID SECTION INSERTED BY THE FINANCE ACT 2002 WITH EFFEC T FROM 1 ST JUNE 2002, WHICH HAD CLEARLY STATED THAT AN INDIV IDUAL OR HINDU UNDIVIDED FAMILY, WHOSE TOTAL SALES GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSIO N CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIF IED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44 AB DU RING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT O F THE SUBCONTRACTOR SHALL BE LIABLE TO DEDUCT INCOME TAX UNDER THIS SUB SECTION. THE APPELLANT THUS IS SQUARELY C OVERED AND THE DISALLOWANCE U/S 40 A (IA) TO THE EXTENT OF RS.33,27,188/- IS AS PER LAW AND HENCE FULLY JUSTIF IED. IT IS PERTINENT TO MENTION HERE THAT I HAVE PERUSED ANOTH ER CASE CITED BY THE APPELLANT THROUGH SUPPLEMENTARY SUBMISSION ACIT V/S INFOSYS TECHNOLOGIES LTD. ITAT B BENCH BANGALORE. HERE TOO THE ISSUE RELATED TO THE QUESTION WHETHER SERVICES PROVIDED BY TELECOM OPERA TORS TO THE CUSTOMERS AMOUNTED TO TECHNICAL SERVICES OR ROYALTY FOR THE PURPOSES OF SECTION 9 (I) (VII). TH E OTHER DISPUTE WAS ABOUT THE ACCESS FEE TO GARTNER DATABAS E MAINTAINED OUTSIDE INDIA. PLAIN PERUSAL OF HEAD NOT ES MAKES ITS IRRELEVANCE AMPLY CLEAR TO THE ISSUE RAIS ED IS ADJUDICATED AS ABOVE I.E. DISALLOWANCE MADE BY THE A.O. STANDS CONFIRMED AND APPEAL REJECTED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE MAINLY A RGUED THAT PROVISIONS OF SECTION 194 C OF THE IT ACT ARE NOT A PPLICABLE IN THE CASE OF THE ASSESSEE. HE HAS SUBMITTED THAT THE ASS ESSEE IS AN INDIVIDUAL AND IN THE CASE OF THE ASSESSEE, THE ASS ESSEE IS A PERSON ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 5 RESPONSIBLE FOR PAYING ANY SUM TO THE CONTRACTOR. T HE CONTRACTOR IS, THEREFORE, PAYEE. HE HAS SUBMITTED THAT PROVISIONS OF SECTION 194 C (1) OF THE IT ACT ARE APPLICABLE ONLY IN RESPECT OF CONTRACTOR AND THE PROVISIONS OF SECTION 194 C (2) OF THE IT ACT ARE A PPLICABLE IN RESPECT OF SUB-CONTRACTOR. HE FURTHER SUBMITTED THAT THE PR OVISIONS OF SECTION 194 C (1) OF THE IT ACT, AS STOOD FOR THE ASSESSMENT YEAR UNDER APPEAL DO NOT APPLY TO THE CASES OF INDIVIDUAL. THE ASSESS EE BEING AN INDIVIDUAL WAS, THEREFORE, NOT RESPONSIBLE FOR DEDU CTION OF TAX AT SOURCE. HE FILED THE PROVISIONS OF SECTION 194 C O F THE IT ACT AS WERE APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL AND SUBMITTED THAT AMENDED PROVISIONS OF SECTION 194 C OF THE IT ACT T HROUGH WHICH THE CASES OF INDIVIDUALS HAVE BEEN INCORPORATED AND THE SE PROVISIONS ARE APPLICABLE FROM 01-06-2007. HE HAS, THEREFORE, SUBM ITTED THAT AS PER THE LAW APPLICABLE FOR ASSESSMENT YEAR UNDER APPEAL , THERE WAS NO LIABILITY OF AN INDIVIDUAL TO DEDUCT TAX. LATER ON, BY THE AMENDMENT AN INDIVIDUAL HAS ALSO BEEN MADE RESPONSIBLE FOR TDS I F HIS TOTAL SALES HAVE EXCEEDED THE MONETARY LIMITS PRESCRIBED U/S 44 AB OF THE IT ACT. HE HAS SUBMITTED THAT THOUGH THERE WAS NO FORMAL CO NTRACT BETWEEN THE ASSESSEE AND M/S. DEVSHREE NETWORK PVT. LTD. FO R GIVING CABLE TRANSMISSION BUT IN TERMS OF ORAL AGREEMENT THE ASS ESSEE PAID THE AMOUNT IN QUESTION TO M/S. DEVSHREE NETWORK PVT. LT D. HE HAS SUBMITTED THAT THE PROVISIONS OF SECTION 194 C (2) OF THE IT ACT WOULD NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE BECAU SE THE ASSESSEE IS NOT A SUB-CONTRACTOR. IN SUPPORT OF HIS CONTENTI ON HE HAS RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF SHRI PRASHANT H. SHAH VS ACIT IN ITA NO.17/AHD/2011 DATE D 08-07-2011. ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 6 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE AMOU NT IN QUESTION WAS PAID AS CONTRACT CHARGES TO M/S. DEVSHREE NETWO RK PVT. LTD., THEREFORE, TDS SHOULD HAVE BEEN DEDUCTED U/S 194 C (2) OF THE IT ACT AND SINCE IT WAS NOT DONE, THEREFORE, THE AMOUNT WA S RIGHTLY DISALLOWED U/S 40 (A) (IA) OF THE IT ACT. THE LEARN ED DR RELIED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF KURUKSHETRA DARPANS (P) LTD. VS CIT 217 CTR 326 IN WHICH IT WAS HELD AS UNDER: SEC. 194C CREATES AN OBLIGATION ON A PERSON RESPON SIBLE FOR PAYING ANY SUM SPECIFIED THEREIN TO A PERSON FO R CARRYING OUT ANY WORK, TO DEDUCT THE TAX AT SOURCE. IN TERMS OF EXPLN. ILL, IT IS PROVIDED THAT EXPRESSION 'WORK' SHALL INCLUDE, INTER ALIA, BROADCASTING AND TELECAS TING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING AND TELECASTING. BY WAY OF SUCH EXPLANATION, IT IS EVIDENT THAT WHERE THE PAYMENT I S FOR A WORK INVOLVING BROADCASTING AND TELECASTING, THE SA ME SHALL BE SUBJECT TO DEDUCTION OF TAX AT SOURCE IN T ERMS OF S. 194. THE ASSESSEE IS A CABLE NETWORK OPERATOR TH ROUGH WHICH IT PROVIDES TELECASTING OF PROGRAMMES TO THE ULTIMATE CONSUMERS/SUBSCRIBERS. THE ASSESSEE IN TUR N ENTERS INTO A CONTRACT WITH THE LICENSOR OF VARIOUS TV CHANNELS. ON THE PAYMENT SO MADE, S. 194C IS ATTRAC TED. THIS IS FOR THE REASON THAT THE LICENSOR IS A PERSO N WHO IS PERFORMING THE WORK WHICH IS COVERED WITHIN THE MEANING OF CL. (B) OF EXPLN. III TO S. 194C (2). IN THE AGREEMENT BETWEEN THE ASSESSEE AND THE LICENSOR, TH E LICENSOR IS REFERRED TO AS COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTION OF SATELLITE BASED TELEVIS ION CHANNEL(S) SERVICES INCLUDING THE SERVICE AND HAS EXCLUSIVE RIGHTS TO MARKET AND DISTRIBUTE THE SERVI CES IN INDIA TO VARIOUS CUSTOMERS AND USERS OF THE SERVICE '. FURTHER THE AGREEMENT REFERS TO THE ASSESSEE SUBSCR IBER ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 7 AS A PARTY, WHICH IS DESIROUS TO SUBSCRIBE FOR AND RECEIVE THE TELECAST SIGNALS OF THE SERVICE FROM THE COMPAN Y IN ORDER TO FURTHER DISTRIBUTE THE SAME TO THE CUSTOME R(S). FROM THE RECITAL OF THE AGREEMENT ITSELF, IT IS CLE AR THAT THE SERVICE THAT THE ASSESSEE SUBSCRIBER IS AVAILING IS THE RECEIPT OF 'TELECASTING SIGNALS' FROM THE LICENSOR OR THE COMPANY. THE EXPRESSION 'SERVICE' HAS ALSO BEEN REF ERRED TO MEAN THE TV CHANNEL WHICH IS DEALT WITH BY THE L ICENSOR OR THE COMPANY. THEREFORE, WHAT THE ASSESSEE HAS TRANSACTED FOR WITH THE LICENSOR OR COMPANY CERTAIN LY INCLUDES WITHIN ITS AMBIT BROADCASTING AND TELECAST ING FACILITY. THE ESSENCE OF THE CONTRACT IS TO OBTAIN BROADCASTING AND TELECASTING OF TV CHANNELS AND THEREAFTER ITS DISTRIBUTION AMONGST ULTIMATE CUSTOM ERS THROUGH THE CABLE NETWORK OF THE ASSESSEE. WHAT THE ASSESSEE SUBSCRIBER IS LOOKING FOR IS TO OBTAIN THE TELECAST SIGNALS FROM THE LICENSOR, WHICH IS ENOUGH TO DEDUC E THAT THE IMPUGNED CONTRACT INVOLVES BROADCASTING AND TELECASTING OF TV SIGNALS. MOREOVER, THE LICENSOR O R THE COMPANY, AS IS EVIDENT FROM THE SPECIMEN AGREEMENT ON RECORD IS, IN THE BUSINESS OF DISTRIBUTION OF SATEL LITE BASED TV CHANNELS AND HAS EXCLUSIVE RIGHTS TO MARKET AND DISTRIBUTE SAID SERVICES IN INDIA, THE SERVICE THAT IS REFERRED TO IN THE AGREEMENT IS THE BROADCASTING AN D TELECASTING OF TV SIGNALS. FOR THE REASONS RECORDED ABOVE, THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE IN TE RMS OF S. 194C ON PAYMENTS MADE TO THE LICENSOR FOR OBTAIN ING TV SIGNALS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE IN THE REJO INDER SUBMITTED THAT IN THE CASE OF KURUKSHETRA DARPANS ( P ) LTD. (SUPRA), THE ISSUE WAS WITH REGARD TO THE EXPRESSION WORK AS PROVIDED UNDER EXPLANATION III OF THE PROVISO TO SECTION 194C (2) OF THE IT ACT. HE HAS SUBMITTED THAT IN THAT CASE THE LICENSOR AND TH E ASSESSEE WERE THE COMPANIES AND IT WAS HELD BY THE HONBLE HIGH C OURT THAT SECTION 194 C OF THE IT ACT CREATES AN OBLIGATION ON A PERSON RESPONSIBLE FOR ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 8 PAYING ANY SUM SPECIFIED THEREIN TO A PERSON FOR CA RRYING OUT ANY WORK, TO DEDUCT THE TAX AT SOURCE. HE HAS, THEREFOR E, SUBMITTED THAT THE FACTS OF THE ASSESSEES CASE ARE CLEARLY DISTIN GUISHABLE BEING THE STATUS OF THE ASSESSEE AN INDIVIDUAL. THE LEARNED C OUNSEL FOR THE ASSESSEE DID NOT MAKE ANY FURTHER SUBMISSION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE PROVISIONS OF SECTION 194 C RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL READ AS UNDER: [ PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT(HEREAFTER IN THIS SECTION REFERRED TO AS T HE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CO NTRACTOR AND ( A ) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; O R ( B ) ANY LOCAL AUTHORITY; OR ( C ) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL , STATE OR PROVINCIAL ACT; OR ( D ) ANY COMPANY; 1 [OR] [( E ) ANY CO-OPERATIVE 3 [SOCIETY; OR]] ( F ) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER A NY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE O F PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES, OR FOR BOTH; OR ( G ) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGIST RATION ACT, 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR ( H ) ANY TRUST; OR ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 9 ( I ) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956 (3 OF 1956); [OR] [( J ) ANY FIRM,] SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, 6 [DEDUCT AN AMOUNT EQUAL TO ( I ) ONE PER CENT IN CASE OF ADVERTISING, ( II ) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN.] (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE W HOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLY ING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HA S UNDERTAKEN TO SUPPLY SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVE R IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN: [ PROVIDED THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO SE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BU SINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE ( A ) OR CLAUSE ( B ) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WH ICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB-CONTRACT OR, SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SUB-SECTION.] [ EXPLANATION I. FOR THE PURPOSES OF SUB-SECTION (2), THE EXPRESSIO N CONTRACTOR SHALL ALSO INCLUDE A CONTRACTOR WHO IS CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 10 GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRI SE OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA.] [ EXPLANATION II ].FOR THE PURPOSES OF THIS SECTION, WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) OR SUB-SECTION (2) I S CREDITED TO ANY ACCOUNT, WHETHER CALLED SUSPENSE ACCOUNT OR BY AN Y OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SEC TION SHALL APPLY ACCORDINGLY.] [ EXPLANATION III. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION WORK SHALL ALSO INCLUDE ( A ) ADVERTISING; ( B ) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; ( C ) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF T RANSPORT OTHER THAN BY RAILWAYS; ( D ) CATERING.] (3) NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (1 ) OR SUB- SECTION (2) FROM [( I ) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SU B-CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIB LE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB-SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME-TAX [UNDER THI S SECTION:] [ PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PE RSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRESCRIBED FOR M AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PR ESCRIBED, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED M ORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB-CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 11 FURNISH TO THE PRESCRIBED INCOME-TAX AUTHORITY OR T HE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR] ( II ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JU NE, 1972; OR] [( III ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JU NE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO-OPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB-CONTRACTOR IN RELATION TO ANY WORK (INCLUDING S UPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTAKEN BY THE CONTRACTOR FOR THE CO-OPERATIVE SOCIETY.] [ EXPLANATION. FOR THE PURPOSES OF CLAUSE ( I ), GOODS CARRIAGE SHALL HAVE THE SAME MEANING AS IN THE EXPLANATION TO SUB-SECTION (7) OF SECTION 44AE .] (4) [***] (5) [***]] 8. IN THE CASE OF THE ASSESSEE, THE STATUS OF THE A SSESSEE IS INDIVIDUAL AND HE IS PROPRIETOR OF M/S. BALAJI CABL E NETWORK AND HAS MADE A CONTRACT WITH M/S. DEVSHREE NETWORK PVT. LTD . THE AMOUNT IN QUESTION WAS PAID BY THE ASSESSEE TO M/S. DEVSHREE NETWORK PVT. LTD. FOR GIVING CABLE TRANSMISSION. THE PROVISIONS OF SECTION 194C OF THE IT ACT HAD UNDERGONE CERTAIN VITAL CHANGES. THE MAIN PURPOSE OF INTRODUCTION THIS SECTION IN THE ACT WAS TO MAKE PR OVISIONS FOR DEDUCTION OF TAX AT SOURCES FROM THE PAYMENT MADE T O CONTRACTORS AND SUB-CONTRACTORS IN CERTAIN CASES. INCOME TAX IS DEDUCTIBLE AT SOURCE FORM THE INCOME COMPRISED IN PAYMENTS MADE B Y A PERSON SPECIFIED IN THIS SECTION. AS PER THE ORIGINAL SECT ION 194 C(1) OF THE IT ACT, ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY CONTRACTOR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT IS REQUIRED TO DEDUCT TDS. HOWEVER, AS PER SECTION 194 C (2) OF THE IT AC T, ANY PERSON BEING A CONTRACTOR RESPONSIBLE FOR ANY SUM TO ANY S UB-CONTRACTOR IN ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 12 PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT ANY WORK IS REQUIRED TO DEDUCT TAX AT THE TIME OF PAYME NT. SUB-SECTION (2) HAS LATER ON MADE A PROVISION ACCORDING TO WHICH AN Y INDIVIDUAL OR HUF AND WHOSE SALES EXCEEDS THE MONETARY LIMITS PRE SCRIBED U/S 44AB OF THE IT ACT SHALL BE LIABLE TO DEDUCT INCOME TAX AT THE TIME OF PAYMENT TO SUB-CONTRACTOR. IT MAY BE NOTED HERE THA T BY AMENDMENT WITH EFFECT FROM 01-06-2007 BY THE FINANCE ACT, 200 7 AN INDIVIDUAL OR HUF HAS ALSO BEEN ADDED VIDE SUB-CLAUSE (K) IN SECT ION 194 C (1) OF THE IT ACT. THE ASSESSMENT YEAR UNDER APPEAL IS 20 06-07, THEREFORE, THE AMENDMENT TO SECTION 194C (1) (K) OF THE IT ACT BEING INTRODUCED WITH EFFECT FROM 01-06-2007, HAS NO APPLICABILITY T O THE ASSESSMENT YEAR UNDER APPEAL. IN THE CASE OF THE ASSESSEE SINC E THE ASSESSEE PAID THE AMOUNT TO M/S. DEVSHREE NETWORK PVT. LTD. FOR GIVING CABLE TRANSMISSION, THEREFORE, THE ASSESSEE IS A PERSON RESPONSIBLE FOR PAYING THE SUM IN QUESTION TO THE CONTRACTOR. THE CONTRACTOR IN THIS CASE THUS WOULD BE M/S. DEVSHREE NETWORK PVT. LTD. FOR APPLYING THE PROVISIONS OF SECTION 194 C (1) OF THE IT ACT THE C ONTRACT SHOULD BE BETWEEN THE CONTRACTOR AND THE PARTIES AS PER THE L IST GIVEN FROM (A) TO (J) OF SECTION 194 C (1) OF THE IT ACT AS PER THE P ROVISIONS APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL IN WHICH SUB-CL AUSE (K) BEING THE INDIVIDUAL DO NOT FIND MENTION. THUS, IN THE AS SESSMENT YEAR UNDER APPEAL, THE CONTRACT BETWEEN THE CONTRACTOR A ND INDIVIDUAL WOULD NOT CAST ANY OBLIGATION ON THE INDIVIDUAL TO DEDUCT TDS ON THE PAYMENT MADE TO THE CONTRACTOR. SINCE IN THIS CASE, PAYMENT IS MADE BY THE ASSESSEE TO M/S. DEVSHREE NETWORK PVT. LTD. FOR PROVIDING CABLE TRANSMISSION, THEREFORE, NO OTHER PERSON IS I NVOLVED IN THE TRANSACTION/ORAL CONTRACT. THUS, THE ASSESSEE DID N OT ACT AS A SUB- ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 13 CONTRACTOR IN THIS CASE. SINCE THE ASSESSEE HAS NOT ACTED AS A CONTRACTOR AND NO PAYMENT IS MADE TO THE SUB-CONTRA CTOR, THEREFORE, THE FINDINGS OF THE AUTHORITIES BELOW ARE BASED ON WRONG PREMISE AND ASSUMPTION OF CERTAIN FACTS WHICH ARE NOT RELEVANT TO THE MATTER IN ISSUE. ITAT AHMEDABAD BENCH IN THE CASE OF PRASHANT H. SHAH (SUPRA) IN PARA 7 AND 8 HELD AS UNDER: 7. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE ALSO PERUSED THE MATERIAL PLACED BEFORE US IN THE LIGHT OF THE PROVISIONS OF THE ACT AS ALSO THE CASE LAW C ITED. BEFORE WE PROCEED FURTHER, WE MAY LIKE TO POINT OUT THAT THE PROVISIONS OF SECTION 194C OF THE ACT HAD UNDERGONE CERTAIN VITAL CHANGES IN THE RECENT PAST. THE MAIN PURPOSE OF INTRODUCTION OF THIS SECTION IN THE ACT IS TO MA KE PROVISIONS FOR DEDUCTION OF TAX AT SOURCE FROM PAYM ENTS MADE TO CONTRACTORS AND SUB-CONTRACTORS IN CERTAIN CASES. INCOME TAX IS DEDUCTIBLE AT SOURCE FROM INCOME COMP RISED IN PAYMENTS MADE BY THE PERSONS SPECIFIED IN THIS S ECTION. AS PER THE ORIGINAL SECTION 194C(1) ANY PERSON RESP ONSIBLE FOR PAYING ANY SUM TO ANY CONTRACTOR FOR CARRYING O UT ANY WORK IN PURSUANCE OF A CONTRACT IS REQUIRED TO DEDU CT 2% TDS. HOWEVER, AS PER SECTION 194C(2), ANY PERSON BEING A CONTRACTOR RESPONSIBLE FOR PAYING ANY SUM TO ANY SUB- CONTRACTOR IN PURSUANCE OF A CONTRACT WITH THE SUB- CONTRACTOR FOR CARRYING OUT ANY WORK IS REQUIRED TO DEDUCT TAX @ 1% AT THE TIME OF PAYMENT. SUB SECTION (2) H AS LATER ON MADE A PROVISION ACCORDING TO WHICH AN INDIVIDUA L OR HUF, WHOSE TOTAL SALES EXCEEDS THE MONITORY LIMIT PRESCRIBES U/S.44AB SHALL BE LIABLE TO DEDUCT INCOM E TAX AT THE TIME OF PAYMENT TO A SUB-CONTRACTOR. IT IS F URTHER IMPORTANT TO MENTION THAT VIDE AN AMENDMENT WITH EF FECT FROM 1/6/2007 AN INDIVIDUAL OR HUF HAVE ALSO BEEN INDUCTED VIDE SUB-CLAUSE (K) IN SECTION 194C (1) OF THE IT ACT. AT THIS JUNCTURE, IT IS WORTH TO HOLD THAT AS FAR AS THE AY IN HAND IS CONCERNED, I.E. AY 2007-08, THIS LAT EST ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 14 AMENDMENT OF SECTION 194C(1)(K) OF THE ACT BEING INTRODUCED WITH EFFECT FROM 01/06/2007 HAS NO APPLICABILITY. WE THEREFORE HOLD THAT IF THE REVENU E DEPARTMENT HAD MADE AN ENDEAVOUR TO INVOKE THE PROVISIONS OF SECTION 40(A)(IA) FOR THE INFRINGEMEN T OF THE PROVISIONS OF SECTION 194C OF THE ACT BY HOLDING TH AT THE ASSESSEE BEING AN INDIVIDUAL GOT COVERED BY SUB-SEC TION(1), THEN ACCORDING TO US, IT WAS AN INCORRECT APPLICATI ON OF LAW. WE THEREFORE HOLD THAT FOR THE ASSTT.YEAR UNDER CONSIDERATION 2007-08 THE PROVISIONS OF SUB-CLAUSE (K) OF 194C (1) ARE NOT APPLICABLE BEING INTRODUCED W.E.F. 1.6.2007 AND THE ASSESSEE BEING AN INDIVIDUAL IS CONSEQUENTLY OUT OF THE CLUTCHES OF THIS CLAUSE. 7.1. ON ACCOUNT OF THE ABOVE DISCUSSION, THE ISSUE CONFINES TO THE RESIDUAL SUB-SECTION I.E. THE APPLI CABILITY OF PROVISIONS OF SUB-SECTION (2) OF SECTION 194C OF TH E ACT. THE PECULIARITY OF THIS CASE IS THAT A CONTRACT WAS AWARDED TO M/S.PETRONET LNG LTD. NEW DELHI FOR CONSTRUCTION WORK OF PERIPHERAL AND APPROACH ROADS AT LNG TERMINAL DA HEJ. THEREAFTER, THE SAID CONTRACTOR HAD ENTERED INTO A SUB- CONTRACT WITH M/S.A.N.S. CONSTRUCTION LTD., WHO IN TURN, HAD ENTERED INTO AN ANOTHER SUB- CONTRACT WITH THE ASSESSEE. THE WORK TO BE CARRIED OUT BY THE ASSESS EE, THEREFORE PERTAINED TO CONSTRUCTION OF PERIPHERAL A PPROACH ROADS. TO CARRY OUT THE ABOVE WORK, THE ASSESSEE H AD TO PURCHASE CONSTRUCTION MATERIAL, VIZ. SAND, GRAVELS, ETC. IN ORDER TO BRING THE CONSTRUCTION MATERIAL AT THE CON STRUCTION SITE AT DAHEJ, THE ASSESSEE HAS AVAILED THE SERVICE S OF SEVERAL TRANSPORTERS. THE ASSESSEE HAD MADE PAYMEN T UNDER THE HEAD TRANSPORT CHARGES. THE VIEW OF THE AO WAS THAT ON PAYMENT OF TRANSPORT CHARGES, THE ASS ESSEE BEING A SUB-CONTRACTOR WAS REQUIRED TO DEDUCT THE T AX AT SOURCE AS PRESCRIBED UNDER SUB-SECTION (2) OF SECTI ON 194C OF THE ACT. ON THE OTHER HAND, THE ASSESSEES CONT ENTION IS THAT ALTHOUGH THE ASSESSEE COULD BE A SUB-CONTRACTO R M/S.A.N.S. CONSTRUCTION LTD., BUT VIS--VIS TRANSPO RTERS THE ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 15 ASSESSEE HAS NOT ACTED AS A SUB-CONTRACTOR BUT ONLY AS A CONTRACTOR. AS PER ASSESSEES CONTENTION IT WAS A P RINCIPAL TO PRINCIPAL ARRANGEMENT OF TRANSPORTATION OF GOODS , SO NOT COVERED BY ANY OF THE SAID CONTRACTS. IN SUPPO RT OF THIS SUBMISSION, THE ASSESSEE HAS PLACED RELIANCE ON A BOARDS CIRCULAR NO.715 DATED 8/08/1995 [215 ITR (STATUTE 12)] WHEREIN THE CHANGES INTRODUCED IN THE PROVISIONS RE GARDING TAX DEDUCTION AT SOURCE HAVE BEEN CLARIFIED AND THE REIN ONE OF THE QUESTIONS WAS ABOUT THE PAYMENT TO TRANSPORT S AND THE CLARIFICATION WAS AS UNDER:- QUESTION 9: IN CASE OF PAYMENTS TO TRANSPORTS, CA N EACH GR BE SAID TO BE A SEPARATE CONTRACT, EVEN THOUGH PAYMENTS FOR SEVERAL GRS ARE MADE UNDER ONE BILL? ANSWER: NORMALLY, EACH GR CAN BE SAID TO BE A SEPARATE CONTRACT, IF THE GOODS ARE TRANSPORTED AT ONE TIME. BUT IF THE GOODS ARE TRANSPORTED CONTINUOUSLY IN PURSUANCE OF A CONTRACT FOR A SPECI FIC PERIOD OF QUANTITY, EACH GR WILL NOT BE A SEPARATE CONTRACT AND ALL GRS RELATING TO THAT PERIOD OR QUANTITY WILL BE AGGREGATED FOR THE PURPOSE OF THE TDS. 8. IN THE CONTEXT OF ABOVE CLARIFICATION ISSUED BY THE CBDT, IF WE EXAMINE THE ISSUE IN HAND, THEN IN TERM S OF THE PROVISIONS OF SECTION 194C(2) OF THE ACT CONDITIONS TO BE SATISFIED ARE (I) THAT THE ASSESSEE SHOULD BE A CONTRACTOR, (II) THAT THE ASSESSEE SHOULD ENTER INTO A CONTRACT WITH A SUB-CONTRACTOR, (III) THAT THE SUB-CONTRACTOR SHOULD CARRY OUT ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACT OR AND (IV) THAT THE PAYMENT SHOULD BE MADE FOR THE WORK DONE. IN A CASE, WHEN A CONTRACT IS ASSIGNED, GENERALLY THE CLAUSES ARE STRINGENT THAT THE CONTRACTOR IS TO BE RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS COMMITTED . IN THE PRESENT CASE AS WELL, WHEN THE M/S.A.N.S. CONSTRUCT ION LTD. ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 16 HAD GRANTED SUB-CONTRACT DATED 30/1/2006 TO M/S.SAK HI CONSTRUCTION,( PROP. APPELLANT) THEN VIDE CLAUSE (1 ) THE ASSESSEE WAS TO DEPLOY HIS OWN RESOURCES IN TERMS O F MANPOWER & MACHINERY. FURTHER VIDE CLAUSE (2) ASSES SEE HAD UNDERTAKEN THE RESPONSIBILITY OF ANY LEGAL OR F INANCIAL LIABILITY. THE ASSESSEE HAS INDEMNIFIED THE FIRST PARTY, I.E. M/S.A.N.S. CONSTRUCTION LTD. AGAINST ANY LEGAL OR F INANCIAL LIABILITY IF ARISE IN FUTURE PERTAINING TO THE SAID CONTRACT. ASSESSEE WAS MADE SOLELY RESPONSIBLE FOR THE EXECUT ION OF THE JOB. THESE CLAUSES, THEREFORE, SUGGESTED THAT THE ASSESSEE WAS WHOLLY AND EXCLUSIVELY RESPONSIBLE FOR THE ACTS AS ALSO FOR THE DEFAULTS, IF COMMITTED. ON TH E OTHER HAND, THE LORRY OWNERS OR THE TRANSPORTERS WHO HAD BEEN GIVEN TRANSPORTATION CHARGES HAVE NOT BEEN FASTEN ED WITH ANY OF THE ABOVE LIABILITIES, MEANING THEREBY THE TRANSPORTERS WERE NOT THE PART OF THE SAID AGREEMEN T AND THE ASSESSEE HAD AN INDEPENDENT ARRANGEMENT WITH TH EM. IN OTHER WORDS, PECULIARITY OF THIS CASE IS THAT TH E SUB- CONTRACT WHICH WAS ASSIGNED TO THIS ASSESSEE WAS NO T FURTHER SUB-CONTRACTED TO THE LORRY OWNERS. IN A SUB- CONTRACT, A PRUDENT CONTRACTOR GENERALLY INCLUDE TH E CLAUSES OF LIABILITY WHICH WERE UNDERTAKEN BY HIM W HILE ACCEPTING THE EXECUTION OF THE WORK FROM THE MAIN CONTRACTOR. WE MAY LIKE TO CLARIFY THAT A CONDITI ON OF PASSING OF THE LIABILITY CAN NOT EXHAUSTIVE AND CAN NOT BE SAID TO BE THE ONLY CRITERIA TO DECIDE WHETHER THER E WAS AN EXISTENCE OF CONTRACT OR SUB-CONTRACT. THE CATALOG OF CRITERION MUST INCLUDE CERTAIN OTHER CLAUSES AS WEL L, YET IN THIS CASE THIS CRITERIA CAN BE DETERMINATIVE CONSID ERING THE NATURE OF WORK ASSIGNED BY THE ASSESSEE TO TRANSPOR TERS. IT IS NOT THE CASE OF THE A.O. THAT HE HAPPENED TO BE IN POSSESSION OF SOME MATERIAL TO ALLEGE THAT THERE EX ISTED A SPECIFIC CONTRACT BETWEEN THE ASSESSEE AND THE TRAN SPORTERS. WHETHER THE GOODS WERE TRANSPORTED IN PURSUANCE OF ANY SUB-CONTRACT SO AS TO APPLY THE PROVISIONS OF SEC.1 94C (2)? NOTHING HAS BEEN BROUGHT ON RECORD. SO IT WAS NOT ESTABLISHED THAT THE LORRY OWNERS HAVE UNDERTAKEN A NY PART ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 17 OF THE IMPUGNED SUB-CONTRACT WHICH WAS FOUND TO BE RISK ASSOCIATED VIDELICET THIS ASSESSEE. WE, THEREFORE, CONCLUDE THAT IN THE ABSENCE OF TRANSFER OR PASS-OVER OF ANY CONTRACTUAL RESPONSIBILITY TO TRANSPORTERS AS A SUB - CONTRACTOR, THE ASSESSEE BEING AN INDIVIDUAL WAS NO T RESPONSIBLE FOR THE DEDUCTION OF TAX AT SOURCE AS P RESCRIBED U/S.194C(2) OF THE IT ACT. CONSEQUENCE THEREUPON T HE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT WERE INCORR ECTLY INVOKED, HENCE THE VIEW TAKEN BY THE AUTHORITIES BE LOW ARE HEREBY REVERSED. GROUND IS ALLOWED. 9. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT PROVISIONS OF SECTION 194C (1) AND (2) OF THE IT AC T WOULD NOT APPLY TO THE CASE OF THE ASSESSEE. THE DECISION OF THE HONB LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KURUKSHETRA DARPA NS (P) LTD. (SUPRA) WOULD NOT ADVANCE THE CASE OF THE REVENUE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ADDITION. 10. NO OTHER POINT IS ARGUED OR PRESSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- ITA NO. 2920/AHD/2009 SHRI PRAKASHCHADRA JUGLUBHAI LONARI VS ITO, WARD 6( 3), SURAT 18 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD