ITO-WARD-1, Chandrapur V. M/S DASHMESH NATIONAL ROADWAYS, Chandrapur

ITA 310/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1289 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Retrospective amendment; Question of law; Non-deduction of tax
• Section: 194C

Judgement Text

1 ITA NO. 310/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 310/NAG/2014 ASSESSMENT YEAR : 2006 - 07. THE INCOME - TAX OFFICER, M/S DASHMESH NATIONAL ROADWAYS, WARD - 1, CHANDRAPUR. VS. CHANDRAPUR. PAN AA9988N. APPELLANT. RESPONDENT . APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF HEARING : 25 - 11 - 2016 DATE OF PRONOUNCEMENT : 28 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA, A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 07 - 03 - 2014. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15,70,00465/ - MADE U/S 40(A)(IA) OF THE ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN IGNORING THE PRACTICE OF ORAL CONTRACTS THAT EXIST IN THIS LINE OF BUSINESS AND WHICH ARE HONOURED BY THE LAW OF LAND IN A RRIVING AT THE ERRONEOUS CONCLUSION THAT PROVISIONS U/S 194C(2) ARE NOT ATTRACTED. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT NON - EXISTENCE OF A FORMAL CONTRACTUAL AGREEMENT VITIATES THE VERY EXISTENCE OF AN ORAL CONTRACT, AND THEREBY ARRIVING AT A WRONG CONCLUSION THAT NO RELATIONSHIP OF A CONTRACTOR BETWEEN THE APPELLANT AND THE SMALL CONTRACTOR EXISTS. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE ASSESSEE DERIVES INCOME FROM TRANSPORT CONTRACT BU SINESS. AS A 2 ITA NO. 310/NAG/2014. CONTRACTOR, IT PROVIDES CONTRACTUAL TRUCKING SERVICES TO MANUFACTURING COMPANIES SUCH AS ACC LTD., MARATHA CEMENT WORKS, LLOYDS, CMPL, GIPL, SSIL AND SVS . WHILE IT OWNS SOME TRUCKS , IT ALSO HIRES TRUCKS FROM THE MARKET TO FULFIL ITS CONTRACTUAL OBLIGATIONS. WHILE EXPENDITURE ON ITS OWN TRUCKS IS DEBITED UNDER HEADS SUCH AS DIESEL, TYRES, REPAIRS AND MAINTENANCE, PAYMENTS TO ITS SUB - CONTRACTORS WHOSE TRUCKS ITS HIRES ARE DEBITED AS TRANSPORT EXPENSES , 3. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE DEBITED TRANSPORT EXPENSES TO THE TUNE OF RS.15,70,00,465/ - . THE AO WAS OF THE OPINION THAT T HIS PAYMENT IS CLEARLY COVERED BY THE PROVISIONS OF SECTION 194C OF INCOME - TAX ACT, 1961. VIDE EXPLANATION III(C) TO SECTION 194C OF THE ACT, CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS HAS BEEN COVERED. THAT T HE ASSESSEE WAS HENCE REQUIRED TO MAKE TAX DEDUCTION AT SOURCE AT THE PRESC RIBED RATE. THAT T HE SAME WAS HOWEVER NEVER DONE. THE LIST OF SUCH SUB - CONTRACTORS WITH THEIR NAMES, PAYMENTS MADE AND THE COMPANY WHOSE GOODS THEY HAD TRANSPORTED HAS BEEN GIVEN IN THE BODY OF THE ASSESSMENT ORDER IN TABULAR FORM. TO JUSTIFY THE NON - DEDUC TION OF TAX, THE ASSESSEE HAS FURNISHED COPIES OF FORM NO. 15 - I, AS GIVEN IN APPENDIX - II TO INCOME TAX RULES, 1962, AS OBTAINED FROM THE PAYEES I.E. TRUCK - OWNERS FROM WHOM TRUCKS WERE HIRED. AS THAT FORM HAD BEEN NOTIFIED ON 17 TH JUNE, 2005 AND HAD COME IN TO EFFECT ON THE SAME DATE, ALL THE FORMS PERTAINING TO ANY DATE PRIOR TO THAT DATE WERE STRAIGHTAWAY REJECTED BY THE AO AS BEING BOGUS. FUR T HER , HE FOUND THAT THE FORMS HAD BEEN WRITTEN BY THE SAME PERSON, AS EVIDENCED FROM THE HANDWRITING. HE ALSO FOUND THAT MOST OF THE FORMS DID NOT CONTAIN EITHER THE COMPLETE ADDRESS OR THE PERMANENT ACCOUNT NUMBER OR THE DATE OR A COMBINATION OF THESE FACTORS. HE ALSO FOUND THAT THE TITLE OF MOST OF THE FORMS CLEARLY STATED THAT THEY HAD TO BE USED DURING FY 2008 - 09. THE AO ACCORDINGLY CONCLUDED THAT THE FORMS FILED BEFORE HIM WERE NOT GENUINE AND WERE AN AFTERTHOUGHT. THE ASSESSEE WAS THEN ASKED TO SHOW CAUSE 3 ITA NO. 310/NAG/2014. AS TO WHY THE ENTIRE TRANSPORT EXPENSES SHOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. IN ITS RE PLY, THE ASSESSEE STATED THAT IN ITS LINE OF BUSINESS, ONE HAS TO DEAL WITH ILLITERATE AND UNEDUCATED OWNERS OF TRUCKS WHO MIGHT NOT HAVE FI L LED UP THE FORMS PROPERLY. AS REGARDS FILING OF FORMS FOR DATE PRIOR T O 17 TH JUN, 2006, THE ASSESSEE STATED T HAT IT WAS UNDER THE WRONG IMPRESSION ABOUT THE DATE IN QUESTION. AS REGARDS THE MENTION OF FY 2008 - 09, THE ASSESSEE BLAMED THE TYPIST WHO HAD COMMITTED THE MISTAKE. 4. THE AO, HOWEVER, DID NOT ACCEPT THE EXPLANATION. ACCORDING TO HIM, THE LAW WAS VERY CLEAR. N ON - COMPLIANCE COULD NOT BE EXPLAINED AWAY BY CITING TOUGH GROUND REALITIES. AS REGARDS THE WRONG IMPRESSION AND THE MISTAKE BY THE TYPIST, THE AO FLATLY REFUSED TO ACCEPT THOSE LAME EXCUSES. FURTHER, HE NOTED THAT THE MOST IMPORTANT THING ABOUT THE FORMS W AS THE MANDATE TO FILE THEM BY 30 TH JUNE OF THE FOLLOWING YEAR WITH THE STIPULATED AUTHORITY VIZ. INCOME TAX OFFICER, WARD - 3, CHANDRAPUR. IN THE INSTANT CAS E THAT HAS NOT BEEN DONE. THE OFFICE RECORDS AT CHANDRAPUR TOO BORE TESTIMONY TO THIS FACT. THE AO THEN DISALLOWED THE ENTIRE EXPENDITURE OF RS.15,70,00,456/ - IN TERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ADDED IT BACK. 5. UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) ELABORATELY CONSIDERED THE ISSUE . H E OBSERVED AS UNDER : 5. DECISION - I HAVE CAREFULLY CONSIDERED THE ENTIRE MATERIAL INCLUDING THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT : BEFORE PROCEEDING FURTHER, IT IS IMPORTANT TO TAKE INTO ACCOUNT CERTAIN OBSERVATIONS MADE BY THE AO IN HIS ORDER ABOUT THE NON - COMPLIANCE OF THE APPELLANT . ON PAGE NO. 15, AT PARAGRAPH NO. 3.9.2 OF HIS ORDER, THE AO HAS OBSERVED THAT THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE BASIS OF THE TRANSPORT EXPENSES INCURRED IT, THE BILLS AND VOUCHERS IN SUPPORT OF THE SAID EXPENSES NOT HAVING BEEN FILED BY IT . THE AR CONTENDED THAT COPIES ALL THE BILLS AND VOUCHERS WERE FILED BEFORE THE AO WITH A SUMMARY DURING THE ASSESSMENT PROCEEDINGS. WHILE THE AO HAS REPRODUCED THAT FIVE - PAGE SUMMARY IN HIS ORDER IN A TABULAR FORM (WITH DETA ILS OF THE SUB - CONTRACTORS, THE AMOUNTS OF PAYMENT MADE AND THE PRINCIPALS ON WHOSE BEHALF THE GOODS HAD BEEN TRANSPORTED), HE HAS STATED THAT NO BILLS AND VOUCHERS HAD BEEN PRODUCED. AN ENTIRE SET OF THE COPIES OF THE BILLS AND VOUCHERS WITH THE SU MMARY HAS BEEN FILED BEFORE ME AS WELL . I FIND IT INCONGRUOUS THAT THE AO HAS ACKNOWLEDGED THE FILING OF THE SUMMARY (WHICH HE HAS UTILIZED) BUT 4 ITA NO. 310/NAG/2014. HAS STATED THAT THE SUPPORTING BILLS AND VOUCHERS HAVE NOT BEEN FILED. AFTER CAREFUL CONSIDERATION I AM UNAB LE TO ACCORD ANY IMPORTANCE TO THIS OBSERVATION OF THE AO. 1. . 5 . 1 ON P AGE NO. 15 AT PARAGRAPH NO . 3 . 11 OF HIS ORDER , THE AO HAS STATED THAT THE A P PEL L AN T' S C L AIM OF HAVING FILED FORM NO. 15J IN ALL THE CASES OF NON - DEDUCTION OF T AX BEF OR E ITO W ARD - 3, CHANDRAPUR COULD NOT BE CONFIRMED FROM THE OFFICE OF THAT I TO . ON T HE OTHER HAND, THE AR EMPHASIZED THAT NO ADVERSE VIEW SHOULD BE TAKEN IN THIS REG A RD , HE H AV I NG PRODUCED A COPY OF THE ACKNOWLEDGEMENT OF THE OFFICE OF ITO W A RD - 3 , CHAN DRAPUR EVIDENC ING R ECEIPT OF THE SAME , THE SAME ALSO HAV I NG BEEN FILED BE F O R E THE AO. AFTER CAREFUL CONSIDERATION , I AM SATISFIED THAT THE FORMS IN QU ESTION HAD INDEED BEEN FILED BE THE ITO CONCERNED. 5 . 2AT T HIS S T AGE , IT WOULD BE INSTRUCTIVE TO UNDERSTAND HOW THE TRU CKING BUS I NESS O PERATES. I T WAS EXPLAINED IN DETAIL BY THE AR . THE REQUIREMENTS OF TRANSPORTAT I ON OF T HE LA R GE MANUFACTURING CONCERNS ARE CLEARLY VAST AND WELL QUANTIFIED . FOR INSTANCE , A CEMEN T MANUFACTU R ER L I KE MLS MARATHA CEMENT WORKS , WHICH IS A DIVIS I ON OF M L S AMBUJA CEMENTS LTD. , WITH A LARGE CEMENT - PRODUCING FACTORY AT CHANDRAPUR , WOULD R EGU LAR L Y N E ED DOZENS IF NOT HUNDREDS OF TRUCKS DAILY TO TRANSPORT ITS CEMENT OUTPUT TO FARAWAY LOCATIONS. THE COMPANIES WOULD NATURALLY PREFER TO DEAL WITH ONE OR AT THE MOST TWO LARGE OPERATORS WITH WHOM THEY END UP BY HAVING CONTRACTUAL AGREEMENTS. THE TRUCK TRADE IS ESSENTIALLY A FRAGMENTED BUSINESS, IN THAT THERE ARE LITERALLY THOUSANDS OF TRUCK OWNERS WHO HAVE ONE OR AT THE MOST TWO TRUCKS. FEW OWN LARGE FL EETS. EVEN THEN, IT WOULD BE QUITE CORRECT TO SAY THAT THERE ARE HARDLY ANY FLEET OWNERS WHO ARE CAPABLE TO MEETING THE DEMANDS OF A CORPORATE ENTIRELY ON THEIR OWN. IN SUCH A SCENARIO, IT IS THEN LEFT TO THE LARGE OPERATOR TO RELY PARTLY ON ITS OWN TRUCKS AND PARTLY ON THE SMALL OR INDIVIDUAL TRUCK - OWNERS WHO WOULD OPERATE ON IT BEHALF FOR SPECIFIC TRIPS. TO THIS EXTENT, TRUCKS HAVE TO BE PROCURED BY THE LARGE OPERATOR ON A DAILY OR HOURLY BASIS FROM SMALL OR INDIVIDUAL TRUCK - OWNERS, AS THE CASE MAY BE. IN ANY CASE, THE COMPANY PAYS THE LARGE OPERATOR WHO IN TURN PAYS THE INDIVIDUAL TRUCK OWNERS. THE LARGE COMPANIES OBVIOUSLY WOOD SEEK TO ENSURE A CONTRACTUAL OBLIGATION ON PART OF THE LARGE OPERATORS, LEST THEY ARE LEFT WITH A LARGE INVENTORY WHICH CANNOT B E MOVED IN THE ABSENCE OF TRANSPORTATION . THE AR EMPHASIZED THAT THE APPELLANTS BUSINESS WAS NO EXCEPTION TO THIS INDUSTRY - WIDE SCENARIO. 5.3 BEFORE PROCEEDING ANY FURTHER, IT WOULD INSTRUCTIVE TO ADJOURN TO TAKE A LOOK AT THE PROVISIONS OF SECTIONS 40(A)(IA) AND 194(2) OF THE ACT. THEIR RELEVANT EXTRACDS READ AS UNDER : 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS O F BUSINESS OR PROFESSION (I) . . . . . . . (II) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SU PPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID - 5 ITA NO. 310/NAG/2014. (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAS T MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139; OR (B) IN ANY OTHER CASE , ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR: PROVIDED :........... 194C(2). ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE SUB - CONTRACTOR) IN PURSUANCE OF A CONTRACTOR WITH THE SUB - CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABO UR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL T THE IME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB - CONTRACTO R OR THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER NIS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN. PRO VIDED ..... 1. 5.4 AFTER HARMONIOUSLY READING BOTH THE PROVISIONS AS ABOVE, IT WOULD BECOME CLEAR IN THE CONTEXT OF THIS APPEAL THAT PROVISIONS OF SECTION 194C(2) OF THE ACT WOULD B ATTRACTED IN THE CASE OF THE APPELLANT IF THE FOLLOWING THREE CONDITIONS ARE SATISFIED CUMULA TIVELY. A) THE APPELLANT SHOULD BE A CONTRACTOR. B) IN HIS CAPACITY AS CONTRACTOR, THE APPELLANT SHOULD HAVE ENTERED INTO A CONTRACT WITH A SUB - CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART OF OF THE WORK UNDERTAKEN BY THE APPELLANT AS CONTRACTOR. C) THE SUB - CONTRACTOR SHOULD CARRY OUT THE WHOLE OR PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR AND PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WHOLE OR PART OF THAT WORK. 5.5 IT IS CLEAR IN THE CASE AT HAND THAT THE APPELLANT IS A TRANSPORT CONTRACTOR. HOWEVER, THERE IS NO EVIDENCE OF ANY CONTRACTUAL RELATIONSHIP WITH ANY SUB - CONTRACTOR, THE ISSUE OF COMPLETION OF THE CONTRACTED WORK BY THE SUB - CONTRACTOR BEING COMPLETELY OUT OF THE QUESTION. IT IS CLEAR THAT TRUCKS ARE PRODUCED BY THE APPELLANT ON A DAI LY OR HOURLY BASIS, AS THE CASE MAY BE, IN PURSUANCE OF ITS CONTRACTS WITH SEVERAL COMPANIES. THERE IS NO EVIDENCE OR ANY CONTRACTUAL AGREEMENT BETWEEN THE APPELLANT AND THE TRUCK OWNERS WHO ARE SIMPLY REQUIRED TO PICK UP CERTAIN MATERIAL AND DELIVER IT ON THE INSTRUCTIONS OF THE APPELLANT'S STAFF. AS ONLY THE FIRST CONDITION AS SPELT OU T IN THE PREVIOUS SUB - PARAGRAPH HAS BEEN MET, PRIMA FACIE IT WOULD APPEA R T HAT TH E P R OVISIONS OF SECTION 194C(2) OF THE ACT HAVE NOT BEEN A T TRACTED IN THIS CASE. 5.6 COMING TO THE CONTRACTS ENTERED INTO BY THE APPELLANT WITH THE LARGE 6 ITA NO. 310/NAG/2014. COMPANIES, A FEW SAMPLES HAVE BEEN PUT FORTH BY THE AR , THEY HAVING BEEN PRODUCED BEFORE THE AO AS WELL. BROADLY, THE CONTRACTS HAVE BEEN SO STRUCTURED AS TO C AST CERTAIN RESPONSIBILITIES ON THE APPELLANT . WHILE THE APPELLANT IS REQUIRED TO MAKE A CERTAIN NUMBER OF VEHICLES AVAILABLE, HE IS EXPECTED TO HAVE ACTUAL OWNERSHIP OF AT LEAST HALF OF THEM. THE TRUCKS ARE EXPECTED TO BE PROPERLY ROADWORTHY IN T ERMS OF B OTH FITNESS AND STATUTORY DOCUMENTATION. THE - TRANSIT RISK IS OF THE APPELLANT, WHO HAS TO INDEMNIFY THE LARGE COMPANIES AGAINST ANY GOVERNMENTAL/THIRD PARTY ACTION ARISING DURING TRANSIT . THE DRIVERS ARE EXPECTED TO FOLLOW ALL RULES AND REGULATIONS IN TRA NSIT . ON THE OTHER HAND , THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THERE ARE ANY SIMILAR RESPONSIBILITIES CAST ON OR ANY SIMILAR LIABILITIES FASTENED TO ANY OF THE TRUCK - OWNERS BY THE APPELLANT . AS EXPLAINED IN DETAIL BY THE AR, THE TRUCK - OWNERS ARE PICKED UP BY THE REPRESENTATIVES OF THE APPELLANT SIMPLY ON THE BASIS OF THEIR AVAILABILITY. THEY ARE IMMEDIATELY PUT ON THE JOB OF TRANSPORTATION. TYPICALLY, THE JOB IS A ONE - OFF JOB; THERE BEING NO GUARANTEE ON EITHER SIDE - EITHER ABOUT THE AVAILABILIT Y OF THE SAME TRUCK - OWNER FOR ANY FUTURE JOB, OR THE APPELLANT BEING REPEATEDLY IN NEED OF THE SAME TRUCK ON A GUARANTEED BASIS. MORE OFTEN THAN NOT , THE SMALL OR INDIVIDUAL TRUCK - OWNERS ARE NOT EVEN AWARE OF THE NAME OF THE PRINCIPAL I.E. THE LARGE COMPA NY WHOSE GOODS THEY ARE TRANSPORTING. ALL THAT IS OF IMPORTANCE IN SUCH MATTERS IS THE LOADING AND THE UNLOADING POINTS AS ALSO THE TRANSIT ROUTE. IN FACT, THERE CAN BE NO CERTAINTY OF PRICING EITHER, SIMPLY BECAUSE THE RATES GO UP OR COME DOWN ON THE BASI S OF THE SHORTAGE OR THE G LUT IN THE MARKET. IN THESE CIRCUMSTANCES, THERE IS SIMPLY NO QUESTION OF ANY FORMAL CONTRACTUAL ARRANGEMENT BETWEEN THE APPELLANT AND THE SMALL OR INDIVIDUAL TRUCK - OWNERS. AS SUCH I FIND THAT THERE IS NO RELATIONSHIP OF A CONTRAC TOR AND A SUB - CONTRACTOR BETWEEN THE APPELLANT AND THE SMALL OR INDIVIDUAL TRUCK - OWNERS. 5.7 AT THIS STAGE, IT WOULD BE RELEVANT TO ADVERT TO THE DECISIONS RELIED UPON BY THE APPELLANT. THE MULTIPLE JUDICIAL PRONOUNCEMENTS RELIED UPON HAVE A COMMON RATIO, VIZ. THE ABSENCE OF A RELATIONSHIP OF A CONTRACTOR AND A SUB - CONTRACTOR RESULTS IN THE NON - APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) READ WITH SECTION 194C OF THE ACT THE EXISTENCE OF A SUB - CONTRACT BEING CRUCIAL FOR INVOKING THESE PROVISIONS, SUCH SUB - CONTRACT BEING EVIDENCED BY THE FASTENING OF THE DUTIES AND THE LIABILITIES OF THE CONTRACTOR ON THE SUB - CONTRACTORS, THOUGH ON A PROPORTIONATE BASIS. 6. THEREAFTER THE LEARNED CIT(APPEALS) REFERRED SEVERAL DECISIONS AS UNDER : I) ITAT VISAKHAPAT NAM BENCH DECISION IN THE CASE OF MYTRI TRANSPORT CORPORATION V. ACIT 1 ITR 290. II) ITAT MUMBAI BENCH DECISION IN THE CASE OF HEMAND M. BHANUSHALI VS. DCIT (ITA NO. 2336/MUM/2011 DATED 13 TH APRIL,2012. THE LEARNED CIT(APPEALS) CONCLUDED AS UNDER : ON A CAREFUL READING OF THE ABOVE EXTRACTS IT BECOMES CLEAR THAT THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT ARE IDENTICAL WHEN 7 ITA NO. 310/NAG/2014. COMPARED TO THOSE OF THE ABOVE DECISIONS. IT BECOMES CLEAR THAT THE CONTRACTUAL RELATIONSHIP BETWEEN THE ASSESSE E AND THE CONTRACTOR IN THE CITED DECISION HAD NOT DEVOLVED INTO A SUB - CONTRACTUAL RELATIONSHIP FURTHER. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE VARIOUS BENCHES OF THE HONBLE TRIBUNAL IN THE AFORESCITED DECISIONS, IT IS HELD IN THE CASE UNDER CO NSIDERATION THAT THERE WAS NO SUB - CONTRACTUAL RELATIONSHIP BETWEEN THE APPELLANT AND THE SMALL AND INDIVIDUAL TRUCK OWNERS AND THAT IN THE ABSENCE OF ANY SUCH SUB - CONTRACT, IT IS FURTHER HELD THAT THE PROVISIONS OF SECTION 194C(2) OF THE ACT CANNOT BE INVO KED AGAINST THE APPELLANT. AS THE APPELLANT WAS UNDER NO OBLIGATION TO DEDUCT TAX IN TERMS OF PROVISIONS OF SECTION 194C(2) OF THE ACT, THE QUESTION OF SUBJECTING SUCH NON - DEDUCTION TO DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT DOES NOT ARISE. THE ADDITION OF RS.15,70,00,465/ - IS HENCE DELETED IN ITS ENTIRETY. THE APPELLANT HENCE SUCCEEDS ON ITS SOLE GROUND OF APPEAL. 7. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNE D D.R. PLACED RELIANCE UPON THE ORDER OF THE AO. 9. PER CONTRA LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN SIMILAR CASE OF M/S CHADDA TRANSPORT IN ITA NO. 333/NAG/2014 DATED 25 - 02 - 2016. FURTHER SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE ARE AS UNDER : ADDITION MADE U/S 40(A)(IA) OF INCOME TAX ACT, 1961 FOR NON - DEDUCTION OF TAX AT SOURCE U/S 194C. A) THE ASSESSEE IS ENGAGED IN ACTIVITY OF TRANSPORTATION OF GOODS . THE ASSESSEE HAS UNDERTAKEN CONTRACTS FOR VARIOUS CORPORATE ENTITIES NAMELY, AMBUJA CEMENT, ACC, LLYODS METALS ETC. FOR TRANSPORTING OF GOODS OF THE SAID COMPANIES. B) THE ASSESSEE FOR RENDERING THE SERVICES HAS ENTERED INTO A GREEMENTS AND AFORESAID CONTRACTS PROVIDE FOR VARIOUS STIPULATIONS WHICH ARE TO BE STRICTLY ADHERED BY ASSESSEE B E I NG TERMS AND CONDITIONS OF 8 ITA NO. 310/NAG/2014. CONTRACTS. THE PAYMENT RECEIVED BY ASSESSEE ARE CONTRACT PAYMENTS AS ENVISAGED IN SECTION 194C(1) OF I . T . ACT 1961 . TDS IS PROPERLY DEDUCTED ON TRANSPORTATION RECEIPTS RECEIVED BY ASSESSEE. CONTRACTS OF TRANSPORTATIONS. C) ON CERTAIN OCCASIONS ASSESSEE HAS TO HIRE TRUCKS FROM OPEN MARKET IN THE VICINITY OF VARIOUS FACTORIES LOCATED FOR TRANSPORTATION OF GOODS. THE ASSESSEE HAS NO REGULAR CONTRACT OF HIRING OF TRUCKS FOR CONTINUOUS TRANSPORTATION OF VARIOUS GOODS AND IN FACT ASSESSEE HAS NO ORAL OR WRITTEN AGREEMENT FOR HIRING TRUCKS FOR TRANSPORTATION OF GOODS TO PERFORM CONTRACTUAL OBLIGATION UNDERTAKEN BY VIRTUE OF VARIOUS AGREEMENTS WITH CORPORATE CLIENTS . D) THE ASSESSEE ALONE UNDER ITS CONTROL AND SUPERVISION HAS EXECUTED WHOLE OF CONTRACT . THE INDIVIDUAL LORRY OWNERS HAVE NOT CARRIED OUT ANY PART OF THE WORK UNDERTAKEN BY ASSE SSEE. THE PAYMENTS MADE BY ASSESSEE TO VARIOUS DRIVERS OF TRUCKS ARE ON EACH TRIP BASIS. IN VIEW OF ABOVE FACTS PAYMENT MADE BY ASSESSEE FOR HIRING OF TRUCKS IS NOT IN THE NATURE OF PAYMENT MADE TO SUB CONTRACTORS ON WHICH THERE IS OBLIGATION TO DEDUCT TAX AT SOURCE U/S 194C(2). E. THERE I S NO MA T ER I A L ON RECORD TO SUGGES T T HAT THE OTHER T R UCK . OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME , ENERGY AND BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT WORK . . IN ABSENCE OF ABOVE CHARACTERISTICS , IT CANNOT BE SAID THAT PAYMENT MADE FOR HIRED VEHICLES WOULD FALL IN THE CATEGORY OF PAYMENTS MADE TO SUB - CONTRACTOR . 9 ITA NO. 310/NAG/2014. RELIANCE ON: I) ITAT ORDER , NAGPUR BENCH , NAGPUR IN ITA NO . 333/NAG/2014 IN THE CASE OF M/S CHADDA TRANSPORT , CHANDRAPUR , VIDE ORDER DATED 25/02 / 2016 . (P - 1 - 15)(VOL . I) F ) PERUSAL OF BALANCE SHEE / PROFIT & LOSS ACCOUNT WOULD INDICATE THAT NO AMOUNT OF FREIGHT C L AIMED IS PAYABLE AS ON 31/03/2006. ALL FREIGHT AMOUNT CLAIMED IS PAID BY ASSESSEE 'AND NO AMOUNT IS PAYABLE AT THE CLOSE OF ACCOUNT I NG YEAR . PROVISIONS OF SEC. 40(A)(IA) ARE INAPPLICABLE TO AMOUNT PAID AS BUSINESS EXPEND I TURE . RELIANCE ON : I) ITAT ORDER, NAGPUR BENCH, NAGPUR IN ITA NO. 333/NAG/2014 IN THE CASE OF M/S CHADDA TRANSPORT , CHANDRAPUR, VIDE ORDER DATED 25/02/2016 . II) SLP CC NO(S) . 8068/2014 (SUPREME COURT) CIT VS . M/S. VECTOR SHIPPING SERVICES (PVT . ) LTD. DATED 02/07/2014. III) (2013) 357 ITR 642(AII . ) CIT VS. VECTOR SHIPPING SERVICES (P) LTD. G. PAN OF PAYEES WERE PLACED ON RECORD. PROVISIONS OF SEC. 194C(6) INTRODUCED ARE OF CLARIFICATIONS NATURE AND ARE APPLICABLE TO PENDING PROCEEDINGS. CONSIDERING NO OBLIGATION TO DEDUCT TAX AT SOURCE AND CONSEQUENT NO DISALLOWANCE U/S 40(A)(IA) OF I.T. ACT, 1961 SUSTAINABLE. 10 ITA NO. 310/NAG/2014. RELIANCE ON : 1) 319 ITR 306 (SC) CIT VS. ALOM EXTRUSIONS LTD. 2) 224 ITR 677 (SC) ALLIED MOTORS (P) LTD. ETC VS. CIT. 3) ITAT ORDER IN ITA NO. 63/HYD/2013 IN THE CASE OF ASSOCIATED ROADWAYS (P) LTD. VIDE ORDER DATED 20/05/2013. H. IN THE CASE OF ASSESSEE DISALLOWANCE/ADDITION MADE IS UNSUSTAINABLE CONSIDERING THE CONCEPT OF REAL INCOME. INCOME ASSESSED IS RS.15.76 CRORES NIS APPROX. 59.52% OF RECEIPTS OF RS.26.46 CRORES. RELIANCE ON: 1) 240 ITR 355 (SC) UNITED COMMERCIAL BANK VS. CIT. I. WITHOUT PREJUDICE, AMENDMENT TO SECTION 40(A)(IA) BY FINANCE (NO.2) ACT 2014 BEING CLARIFICATORY IN NATURE HAS RETROSPECTIVE EFFECT. IN VIEW OF ABOVE 30% OF THE AMOUNT PAYABLE IS DISALLOWABLE U/S 40(A)(IA) OF I.T. ACT, 1961. RELIANCE ON : ITAT ORDER, SMC BENCH, AHMEDABAD IN CASE OF M/S AMRUTA QUARRY WORKS IN ITA NO. 1481/AHD/2013 VIDE ORDER DTED 19/07/2013. 10. UPON CAREFUL CONSIDERATION WE FIND THAT IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF M/S CHADDA TRANSPORT (SUPRA). THE TRIBUNAL IN THE AFORESAID CASE HAS OBSERVED AS UNDER : 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. FIRST WE DEAL WITH THE ISSUE ON THE GROUND THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED INASMUCH AS THE ENTIRE FREIGHT E XPENDITURE 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 WAS PAID AND NOTHING IS PAYABLE AS ON 31 - 03 - 2007, AND THAT THIS IS 11 ITA NO. 310/NAG/2014. DULY REFLECTED BY A PERUSAL OF TH E BALANCE SHEET/PROFIT & LOSS ACCOUNT WHERE NO AMOUNT IS PAYABLE AS ON 31 - 03 - 2007. IN THIS 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 FINDING THAT WHEN THE EXPENSES INCURRED BY THE ASSESSEE IS TOTALLY PAID AND NOT REMAINED PAYABLE AS AT THE END OF THE RELEVANT ACCOUNTING PERIOD, PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. THE HIONBLE HIGH COURT IN PARA 10 O F THE ORDER HAS CONCLUDED AS UNDER : IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROVISION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. 13. REVENUES APPEAL AGAINST THE ABOVE SAID DECISION OF THE HONBLE ALLAHABAD HIGH COURT WAS DISMISSED BY THE HONBLE APEX COURT IN CC NO. 8068/2014 VIDE ORDER DATED 02 - 07 - 2014. THE HONBLE APEX COURT HAS HELD AS UNDER : HEARD MR. MUKUL ROHATGI, LEARNED ATTORNEY GENE RAL, FOR THE PETITIONER. DELAY IN FILING AND REFILLING SPECIAL LEAVE PETITION IS CONDONED. SPECIAL LEAVE PETITION IS DISMISSED. WE ARE ALSO AWARE THAT THERE ARE CERTAIN OTHER HONBLE HIGH COURT DECISIONS WHEREIN THIS PROPOSITION HAS NOT BEEN UPHELD T HAT PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED ONLY WHEN THE AMOUNT IS PAYABLE. HOWEVER, WE NOTE THAT THERE IS NO JURISDICTIONAL HIGH COURT DECISION ON THIS ISSUE. IN SUCH A SITUATION WE NOW HAVE A HONBLE ALLAHABAD HIGH COURT DECISION WHICH IS IN FAVO UR OF THE ASSESSEE. REVENUE DEPARTMENTS PETITION FOR SPECIAL LEAVE TO APPEAL HAS BEEN DISMISSED BY THE HONBLE APEX COURT BY CONDONING THE DELAY IN FILING THE LEAVE PETITION. IN SUCH A SITUATION, IN OUR CONSIDERED OPINION, THE DECISION OF HONBLE APEX COU RT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. 188 ITR 192 HAS TO BE FOLLOWED. IN THE SAID DECISION THE HONBLE APEX COURT HAS EXPOUNDED THAT IN CASE THERE ARE TWO VIEWS POSSIBLE, THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. ACCORDINGLY 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. ACCORDINGLY 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)(IA) ARE NOT ATTRACTED AND IN THIS VIEW OF THE MATTER WE ARE OF THE OPINION THAT REVENUES APPEAL IS LIABLE TO BE DISMISSED. 12 ITA NO. 310/NAG/2014. 14. NOW WE DEAL WITH THE ISSUE ON THE GROUND THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON PAYMENT AS THAT THE ASSESSEES 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/LORRY OWNERS. IN THIS REGARD THE ASSESSEE HAS CONTENDED THAT THERE WAS NO REGULAR CONTRA CT OF HIRING OF THE TRUCKS FOR CONTINUE TRANSPORTATION OF VARIOUS GOODS WITH THE TRUCKS/LORRY OWNERS. THAT THERE WAS NO ORAL OR WRITTEN AGREEMENT FOR HIRING TRUCKS FOR TRANSPORTATION OF GOODS TO PERFORM A CONTRACTUAL OBLIGATION BY VIRTUE OF VARIOUS AGREEM ENTS WITH CORPORATE CLIENTS. THAT THE ASSESSEE 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. HENCE 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 THE I.T. ACT. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEES CONTENTION I S THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN ITA NO. 1219 OF 2012 IN THE CASE OF M/S BHAIL BULK CARRIERS VIDE ORDER DATED 12 - 11 - 2014. IN THIS CASE HONBLE BOMBAY HIGH COURT HAS UPHELD THE DECISION 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 AUTHORI TIES BELOW AND THE CASE LAWS AS HAVE BEEN REFERRED IN THE APPELLATE ORDER AS WELL AS RELIED UPON BY THE LEARNED COUNCIL. THE RELEVANT FACTS FOR ADJUDICATION OF THE ISSUE ARE THAT THE APPELLANT IS CARRYING OUT THE BUSINESS OF TRANSPORTATION OF OIL THROUGH T ANKERS. IT ENTERED INTO A CONTRACT WITH VARIOUS COMPANIES (HERE MAINLY BPCL) FOR TRANSPORTING THE OILS TO VARIOUS DESTINATIONS AS PER THE AGREEMENT ENTERED INTO BY THE SAID COMPANY. THE APPELLANT WAS SOLELY RESPONSIBLE FOR EXECUTING THE CONTRACT ON BEHALF OF ITS PRINCIPAL FOR FULFILLING ITS TRANSPORTATION COMMITMENT, THE APPELLANT BESIDES USING ITS OWN TANKERS WAS ALSO HIRING THE TANKERS FROM OUTSIDE PARTIES AS AND WHEN REQUIRED. IN SUCH A CASE OF HIRING FROM OUTSIDE, THE RESPONSIBILITY OF SUCCESSFUL COMPLE TION 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 WRITTEN OR ORAL CONTRACT WITH THE PRINCIPALS BY SUCH OUTSIDE TANK OWNERS THAT THEY WILL SHAR E THE RISK AND RESPONSIBILITY WITH THE APPELLANT. 8.1 AT THIS STAGE, IT IS NOT DISPUTE THAT THE DEPARTMENTS CASE IS THAT IN THE PRESENT CASE PROVISIONS 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 C ONTRACT IS NOT FULFILLED THEY THE PROVISIONS OF THIS SECTION WILL NOT BE 13 ITA NO. 310/NAG/2014. APPLICABLE AT ALL. HERE IN THIS CASE, THE CONTRACT 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 AS PER THE AGREEMENT ENTERED INTO BY IT WITH ITS PRINCIPAL I.E. BPCL. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THERE WAS ANY CONTRACT OR SUB - CONTRACT WHETHER WRITTEN OR ORAL WITH THE OUTSIDE TANK OWNERS AND THE APPELLANT, WHEREBY TH E RISK AND RESPONSIBILITY WHICH IS ASSOCIATED 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 ANY RESPONSIBILITY OR LIABILITY TOWARDS THE PRINCIPAL, THEN IT CANNOT BE HELD THAT THESE OUTSIDE PARTIES WERE PRIVITY TO THE CONTRACT BETWEEN THE APPELLANT AND ITS PRINCIPAL 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 TO 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 OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. POMPUHAR SHIPPING CORPORATION LTD. AND CONCLUDED AS UNDER : THUS IN VIEW OF THE FINDINGS GIVEN ABOVE AND THE LAW LAID DOWN BY THE HONBLE HIGH COURT AS ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TDS U/S 194C(1 ) FOR PAYMENTS MADE TO THE OUTSIDE PARTIES AND CONSEQUENTLY THE DISALLOWANCE MADE U/S 40(A)(IA) BY THE AUTHORITIES BELOW ARE DELETED. THE APPELLANT THUS GETS RELIEF OF 56,03,210/ - . THIS ORDER OF THE ITAT WAS SUBJECT MATTER OF APPEAL BEFORE THE HONBLE JUR ISDICTIONAL HIGH COURT IN INCOME TAX APPEAL 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 DIS - ALLOWANCE WAS NOT PERMISSIBLE BECAUSE THE ASS ESSEE A PARTNERSHIP FIRM IS IN THE BUSINESS OF TRANSPORT. IT IS A TRANSPORT CONTACTOR. IT WAS AWARDED A CONTRACT OF OIL TRANSPORTATION TO VARIOUS LOCATIONS OF BHARAT PETROLEUM CORPORATION LTD., AND OTHER COMPANIES. THE ASSESSEE RECEIVED DURING THE YEAR IN QUESTION RS.2,83,06,986/ - TOWARDS FREIGHT CHARGES. THE CONTRACT DOCUMENT SHOWS THE ASSESSEE ALONG WAS RESPONSIBLE FOR TRANSPORTATION OF OIL FROM ONE DESTINATION TO OTHER. THE CONTRACTUAL LIABILITY WAS DISCHARGED BY TRANSPORTING OIL MOSTLY THROUGH THE ASSES SEES 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 THE ASSESSEE FURNISHED THE DETAILS. THE AMOUNTS PAID AND 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 AND RENDERED A FINDING OF FACT BY REFERRING TO THE LEGA L 14 ITA NO. 310/NAG/2014. PROVISIONS THAT THE RISK AND RESPONSIBILITY FOR CARRYING OUT THE CONTRACT WORK WAS SOLELY THAT OF THE ASSESSEE. THERE IS NO MATERIAL TO SUGGEST THAT THERE WAS ANY CONTRACT OF SUB - CONTRACT, WHETHER WRITTEN OR ORAL WITH THE OUTSIDE TANKER OWNERS AND THE AS SESSEE. IT IS IN THESE CIRCUMSTANCES AND WHEN THESE OUTSIDE TANKER OWNERS DO NOT HAVE ANY RESPONSIBILITY OR LIABILITY THE BHARAT PETROLEUM CORPORATION LTD. OR OTHER PRINCIPALS THEN, IN THE ABSENCE OF ANY PRIVITY, THE OBLIGATION TO DEDUCT THE TAX AT SOURCE WAS NOT THAT OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE DO NOT FIND THAT THE APPEAL RAISES ANY SUBSTANTIAL QUESTION OF LAW, THE FINDINGS CANNOT BE TERMED AS PERVERSE OR VITIATED BY ERROR OF 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 ALSO THE ASSESSEE IS A TRANSPORT CONTRACTOR. THE ASSESSEE WAS AWARDED CONTRACT OF TRANSPORTATION TO VARIOUS LOCATIO NS OF AMBUJA CEMENT, MANIGARH CEMENT, MARATHA CEMENT ETC. THE ASSESSEE RECEIVED FREIGHT CHARGES FROM THESE COMPANIES. THE CONTRACT WITH THESE COMPANIES SHOWS THAT THE ASSESSEE WAS RESPONSIBLE FOR TRANSPORTATION OF CEMENT FROM ONE DESTINATION TO OTHER. THE CONTRACTUAL LIABILITY WAS DISCHARGED BY TRANSPORTING CEMENT THROUGH ASSESSEEW OWN TRUCKS AND ALSO FROM HIRED TRUCKS BELONGING TO OUTSIDE PARTIES. IT IS CLEAR FROM THE FACTS ON RECORD THAT THE RISK AND RESPONSIBILITY FOR CARRYING OUT THE CONTRACT WORK WA S SOLELY THAT OF THE ASSESSEE. THERE IS NO MATERIAL 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 RE SPONSIBILITY OR LIABILITY TOWARDS THE AMBUJA CEMENT OR OTHER PRINCIPALS THEN IN ABSENCE OF ANY PRIVITY THE OBLIGATION TO DEDUCT THE TAX AT SOURCE WAS NOT THAT OF THE ASSESSEE. 16. IN VIEW OF THE AFORESAID DISCUSSION, WE FIND THAT 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 THE SAME. HENCE REVENUE S APPEAL IS LIABLE TO BE DISMISSED ON THIS PLANK AS WELL. 17. SINCE WE HAVE ALREADY HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT ATTRACTED INASMUCH AS NO AMOUNT WAS PAYABLE AS ON THE CLOSE OF THE YEAR AS WELL AS IN ABSENCE OF ANY CONTRACTS, THER E WAS NO OBLIGATION ON THE PART OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE, WE FIND THAT ADJUDICATION ON THE OTHER PLANKS OF ARGUMENT OF THE LEARNED COUNSEL OF THE ASSESSEE IS NOW ONLY OF ACADEMIC SIGNIFICANCE. HENCE WE ARE NOT ENGAGING INTO THE SAME. 1 1. WE FIND THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL WITH THE ONE 15 ITA NO. 310/NAG/2014. DEALT WITH BY THE TRIBUNAL. LEARNED D.R. HAS NOT BEEN ABLE TO BRING ABOUT ANY DISTINCTION BETWEEN THE FACTS OF THAT CASE AND THE PRESENT CASE. HENCE RESPECTFULLY FOLLOWING THE PRECEDE NT AS ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 12. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAH YA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 28 TH DEC. , 2016. COPY FORWARDED TO : 1. M/S DASHMESH NATIONAL ROADWAYS , PADOLI NAGPUR ROAD, CHANDRAPUR. 2. I.T.O., WARD - 1, CHANDRAPUR. 3. C.I.T. - 4 , NAGPUR. 4. CIT(APPEALS), - I , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTR AR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.