Andrews Mathew, Cochin V. DCIT, Ernakulam

ITA 304/COCH/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69009 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 14-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 304/COCH/2011 ASSESSMENT YEAR : 2006-07 ANDREWS MATHEW, VEMBANAT HOUSE, PUTHIYAKAVU P.O., THRIPUNITHURA. [PAN: ABTPM 9009M] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), ERNAKULAM. (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI ANIL D. NAIR, ADV. REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 14/08/2013 DATE OF PRONOUNCEMENT 25/10/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGIN G THE ORDER DATED 11/01/2011 PASSED BY THE LD. CIT(A)-II, KOCHI FOR THE ASSESSMENT YEAR 2006-07, CONFIRMING THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON HIRE CHARGES PAID BY THE ASSESSEE. 2. THE FACTS RELATING TO THE ISSUE UNDER CONSIDERAT ION ARE STATED IN BRIEF. THE ASSESSEE, INTER ALIA, IS CARRYING ON TRANSPORT CONT RACT BUSINESS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS ALSO HIRED VEHICLES FOR THE ABOVE BUSINESS AND PAID VEHICLE HIRE CHARGES OF RS. 59,43,195/- AND CLAIMED THE SAME AS DEDUCTION. THE ASSESSING OFFICER EXAMINED THE SAID PAYMENTS TO FIN D OUT WHETHER THE ASSESSEE HAS DEDUCTED TAX AT SOURCE U/S. 194C OF THE ACT. THE A SSESSEE SUBMITTED THAT HE HAS OBTAINED FORM NO. 15I FROM THE LORRY OWNERS AS PER THE SECOND PROVISO TO SEC. 194C(3) I.T.A. NO.304/COCH/2011 2 OF THE ACT AS IT EXISTED DURING THE RELEVANT PERIOD AND HENCE HE IS NOT LIABLE TO DEDUCT TAX AT SOURCE. THE ASSESSING OFFICER NOTICED THAT, AS PER THE THIRD PROVISO TO SEC. 194C(3), AS IT EXISTED DURING THE RELEVANT PERIOD, THE ASSESSEE HAS TO FILE DETAILS OF FORM 15I RECEIVED BY HIM IN FORM 15J BEFORE THE COM MISSIONER OF INCOME-TAX. HOWEVER, THE AO NOTICED THAT THE ASSESSEE HAS FILED FORM NO. 15J BEFORE THE ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE EXEMPTION CLAIM MADE BY THE ASSESSEE AS PER SECOND PROVISO TO SECTION 194C( 3) SHALL NOT BE APPLICABLE. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE V EHICLE HIRE CHARGES CLAIMED BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SEC. 40(A)(I A) OF THE ACT. THE LD. CIT(A) HAS ALSO CONFIRMED THE SAID ADDITION. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF HEARING, THE LD A.R CONTENDED THAT THE PROVISION S OF SEC. 194C SHALL NOT APPLY TO HIRE CHARGES PAID FOR HIRING VEHICLES, SINCE THE ASSESSE E IS ENGAGED IN TRANSPORT CONTRACT BUSINESS AND HE HIMSELF EXECUTES THE TRANSPORT WORK BY SIMPLY HIRING THE VEHICLES. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY TH IS BENCH OF TRIBUNAL IN THE CASE OF SHRI V. KOYAKUTTY IN I.T.A. NO. 169/COCH/2013 AND T HE TRIBUNAL, VIDE ITS ORDER DATED 26.07.2013, HAS DECIDED THE ISSUE AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFU LLY PERUSED THE RECORD. THOUGH THE CONTENTIONS RAISED BY THE ASSESSEE DO N OT EMANATE FROM THE GROUNDS OF APPEAL, YET THEY RELATE TO THE VERY APP LICABILITY OF PROVISIONS OF SEC. 194C OF THE ACT, BY VIRTUE OF WHICH THE IMPUGNED D ISALLOWANCE WAS MADE, IN OUR VIEW, THE ASSESSEE IS VERY WELL ENTITLED TO URGE S UCH KIND OF LEGAL ISSUE. THE ADMITTED FACTS ARE THAT THE ASSESSEE IS A TRANSPOR T CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION, HE HAS HIRED LORRIES FROM THE FOLLOWING THREE PERSONS AND HAS PAID HIRE CHARGES AS DETAILED BELOW: (A) V. JABEENA RS. 3 ,84,212/- (B) N.K. SABIRA RS. 3,61,943/- (C) T.K. SAFIYA RS. 85,500/- TOTAL RS. 8,31,655/- ========= THE ASSESSING OFFICER HAS DISALLOWED THE ABOVE SAI D CLAIM ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE U/S 19 4C OF THE ACT FROM THE PAYMENTS CITED ABOVE. I.T.A. NO.304/COCH/2011 3 5. ACCORDING TO THE ASSESSEE, IT IS A CASE OF SIMP LE HIRING OF VEHICLES, WHICH WILL NOT FALL IN THE CATEGORY OF CARRYING OUT ANY WORK IN PURSUANCE OF CONTRACT, AS CONTEMPLATED IN SEC. 194C OF THE ACT. WE FIND F ORCE IN THE SAID CONTENTIONS, AS IT IS IN ACCORDANCE WITH THE DECISION RENDERED B Y HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. POOMPUHAR SHIPPING CORPORATI ON LTD. (282 ITR 3). IN THE SAID CASE, THE ASSESSEE THEREIN WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF COAL UNDER A CONTRACT EXECUTED WITH THE TAMIL NADU ELECTRICITY BOARD. IT HIRED SHIPS BELONGING TO OTHER SHIPPING COMPANIES AND PAI D HIRE CHARGES TO THEM FOR USING THEIR SHIPS. THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE U/S. 194C OF THE ACT ON THE PAYMENTS SO MADE. THE HONBLE MADRAS HIGH C OURT HELD THAT THE PAYMENT OF HIRE CHARGES OF TAKING TEMPORARY POSSESS ION OF SHIPS BY THE ASSESSEE-COMPANY WOULD NOT FALL WITHIN THE PROVISIO NS OF SEC. 194C OF THE ACT AND HENCE NO TAX AT SOURCE WAS REQUIRED TO BE DEDUC TED. IT WAS FURTHER HELD THAT HIRING OF SHIPS FOR THE PURPOSE OF USING THEM IN THE ASSESSEES BUSINESS DID NOT AMOUNT TO A CONTRACT FOR CARRYING OUT ANY WORK AS CONTEMPLATED IN THE PROVISIONS OF SEC. 194C OF THE ACT. 6. IN THE INSTANT CASE ALSO, THE ASSESSEE HAS HIRED LORRIES FROM THREE PERSONS STATED ABOVE. ACCORDINGLY, IN VIEW OF THE DECISION RENDERED IN THE CASE OF POOMPUHAR SHIPPING CORPORATION LTD.(SUPRA), THE SAI D PAYMENTS CANNOT BE CONSIDERED AS PAYMENTS MADE FOR CARRYING OUT ANY WO RK AS CONTEMPLATED U/S. 194C OF THE ACT. 7. THE LD. DR SUBMITTED THAT THE PAYMENT OF HIRE C HARGES WOULD FALL WITHIN THE MEANING OF RENT AS DEFINED U/S. 194I OF THE A CT AND HENCE THE ASSESSEE SHALL STILL BE LIABLE TO DEDUCT TAX AT SOURCE. HOW EVER, WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 194I AND NOTICED THAT THE DEFINI NG OF THE TERM RENT WAS SUBSTITUTED WITH EFFECT FROM 13-07-2006 AND ACCORDI NG TO THE SUBSTITUTED DEFINITION ONLY, RENT PAID FOR USE OF MACHINERY O R PLANT OR EQUIPMENT WOULD ATTRACT THE PROVISIONS OF SEC. 194I OF THE ACT. HOW EVER, THE DEFINITION OF THE TERM RENT AS IT EXISTED UP TO 12-07-2006 WAS CONFINED TO PAYMENTS MADE FOR USE OF LAND OR BUILDING ONLY. THE ASSESSMENT YEAR UNDER C ONSIDERATION IS 2006-07 AND HENCE, THE DEFINITION OF THE TERM RENT THAT EXIST ED UP TO 12-07-2006 SHALL NOT APPLY TO THE INSTANT YEAR, ACCORDING TO WHICH, PAYM ENTS MADE FOR USE OF MACHINERY OR PLANT OR EQUIPMENT WILL NOT FALL WITHI N THE DEFINITION OF RENT. HENCE, THE PAYMENTS MADE BY THE ASSESSEE FOR HIRING OF LORRIES WOULD FALL OUTSIDE THE SCOPE OF THE PROVISIONS OF SEC. 194I OF THE ACT ALSO. 8. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE HIRE CHARGES PAID BY THE ASSESSEE FOR HIRING OF LORRIES ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE EITHER U/S 194C OR 194I OF THE ACT F OR THE YEAR UNDER CONSIDERATION. HENCE, THE IMPUGNED DISALLOWANCE MADE SEC. 40(A)(I A) OF THE ACT IS LIABLE TO BE DELETED. ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE SAID ADDITION. I.T.A. NO.304/COCH/2011 4 4. WE NOTICE THAT THE ASSESSEE, IN THE INSTANT CAS E, HAS HIRED VEHICLES FOR CARRYING IS BUSINESS OF TRANSPORTING GOODS ON CONTRACT. THE YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2006-07. HENCE THE RATIO OF THE AB OVE SAID DECISION SHALL APPLY TO THE FACTS PREVAILING IN THE INSTANT CASE ALSO. SINCE T HERE IS NO ESTOPPELS AGAINST LAW, THE FACT OF OBTAINING FORM NO.15I BY THE ASSESSEE FROM VEHICLE OWNERS OR NON-FILING OF FORM NO.15J BEFORE LD CIT(A) HAVE TO BE IGNORED. ACCORD INGLY, CONSISTENT WITH THE VIEW TAKEN IN THE ABOVE CITED CASE, WE HOLD THAT THE HIR E CHARGES PAID BY THE ASSESSEE FOR HIRING OF LORRIES ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE EITHER U/S 194C OR 194I OF THE ACT FOR THE YEAR UNDER CONSIDERATION. HENCE, TH E IMPUGNED DISALLOWANCE MADE SEC. 40(A)(IA) OF THE ACT IS LIABLE TO BE DELETED. ACCO RDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELE TE THE SAID ADDITION. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. PRONOUNCED ACCORDINGLY ON 25-10-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 25TH OCTOBER, 2013 GJ COPY TO: 1. ANDREWS MATHEW, VEMBANAT HOUSE, PUTHIYAKAVU P.O. , THRIPUNITHURA. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE2(1 ), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN