Subhashree Enterprises, Sambalpur V. ACIT, Sambalpur

ITA 378/CTK/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5366 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Business income; Business expenditure
• Section: 40A(3); 194C; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 M/S. SUBHASHREE ENTERPRISES, C/O. SHRI RAMESH KUMAR AGARWAL, AT/PO: RENGALI, DIST: SAMBALPUR. VS. ACIT, CIRCLE - 1(1), SAMBALPUR PAN/GIR NO. ABIFS 1109 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY, AR REV ENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 21/09 / 2017 DATE OF PRONOUNCEMENT : 09 /10 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - BERHAMPUR DATED 21.3.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL ON 20.9.2017 STATING THAT THESE GROUNDS OF APPEAL SHOULD BE HEARD AND DECIDED IN THE PRESENT APPEAL. 3. LD D.R. HAD NO OBJECTION TO ADMITTING THESE REVISED GROUNDS OF APPEAL FILED BY THE ASSESSEE AND HEARD THE SAME IN THE PRESENT APPEAL OF THE ASSESSEE. THEREFORE, THE REVISED GROUNDS OF APPEAL WERE ADMITTED AND THE PARTIES WERE ALLOWED TO MAKE THEIR SUBMISSIONS THEREIN. 4. THE REVISED GROUNDS OF APPEAL ARE AS UNDER: 2 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 1. FOR THAT, THE APPELLATE ORDER PASSED IN ITA, NO - 0683/11 - 12 ON DATED 21 ST MAR, 2013, FOR THE A/Y 2009 - 10 IS ARBITRARY, ILLEGAL AND DEVOID OF MERIT, BEING UNJUSTIFIED & UNWARRANTED D ESERVES TO BE QUASHED IN LIMINE. 2. FOR THAT, THE DISALLOWANCE OF EXPENDITURE OF AN AMOUNT OF RS. 1, 76, 55,030/ - OUT OF THE TOTAL CLAIM TOWARDS TRANSPORTATION CHANGES ON THE ALLEGED GROUND OF CONTRAVENTION OF PROVISION OF SECTION 40(A)(IA) FOR NON REDUCTION OF TDS U/S 194C DESERVES TO BE DELETED IN ABSENCE OF A CONTRACT WHETHER WRITTEN OR ORAL FOR A SPECIFIC PERIOD, QUANTITY OR PRICE FOR CARRYING OUT THE WHOLE OR PART OF THE WORK. 3. FOR THAT, THE DISALLOWANCE OF EXPENDITURE OF AN AMOUNT OF RS. 1,76,55,030/ - OUT OF THE TOTAL CLAIM TOWARDS TRANSPORTATION CHARGES ON THE AL LEGED GROUND OF CONTRAVENTION OF PROVISION OF SECTION 40(A)(IA) FOR NON DEDUCTION OF TDS U/S 194C DESERVES TO BE DELETED IN ABSENCE OF CONDITION PRECEDENT FOR INVOCATION OF SECTION 40(A)(IA), BEING ILLEGAL, UNJUSTIFIED AND UNWARRANTED AND DEVOID OF ANY MER IT, BEING GENUINE BUSINESS EXPENDITURES, DESERVES TO BE ALLOWED IN TOTO. 4. FOR THAT THE DISALLOWANCE OF EXPENDITURE OF AN AMOUNT OF RS.1,76,55,030/ - OUT OF THE TOTAL CLAIM TOWARDS TRANSPORTATION CHARGES ON THE ALLEGED GROUND OF CONTRAVENTION OF PROVISION OF SECTION 40A(3) IS A PRESUMPTION, ASSUMPTION & MISCONCEPTION AND OUGHT TO HAVE BEEN ALLOWED. 5. FOR THAT THE DISALLOWANCE OF EXPENDITURE OF AN AMOUNT OF RS.1,76,55,030 OUT OF THE TOTAL CLAIM TOWARDS TRANSPORTATION CHARGES ON THE ALLEGED GROUND OF CONTR AVENTION OF PROVISION OF SECTION 40A(3) DESERVES TO BE DELETED DUE TO COMPELLING GROUND REALITIES AND EXISTENCE OF EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES . 3. THE FACTS IN BRIEF ARE THA T THE ASSESSING OFFICER FOUND THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF EXECUTION OF TRANSPORT CONTRACT. O N VERIFICATION OF THE LEDGER ACCOUNT O F TRANSPORTATION CHARGES, IT IS SEEN THAT THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE IN VIOLATION OF SEC.40A(3) OF THE ACT. FURTHER, TDS AS REQUIRED U/S.194C OF T HE ACT 3 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 HAS ALSO NOT BEEN MADE IN RESPECT OF SUCH PAYMENTS. IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT SECTION 194C WAS NOT APPLICABLE AS THE AMOUNTS HAVE BEEN PAID TO VARIOUS TRUCK DRIVERS THROUGH AGENTS, THEREFORE, THERE WAS NO OBLIGATION FOR THE ASSESSEE TO DEDUCT TDS U/S.194C OF THE ACT. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HELD THAT THE CIRCULAR NO.487 O F THE BOARD DTD.18 - 06 - 1987 PROVIDES THAT AN ORAL AGREEMENT CAN BE A VALID ENFORCEABLE CONTRACT. HE HELD THAT THERE IS A CONTRACT EXISTING BETWEEN TH E TRUCK OWNERS AND THE ASSESSEE AS PER WHICH IN EXCHANGE FOR PROVIDING SERVICES TO THE ASSESSEE , THE TRUCK OWNERS A RE RECEIVING CONSIDERATION BY WAY OF MONETARY PAYMENTS. FURTHER, THE ASSESSING OFFICER ALSO OBSERVED THAT SECTION 40A(3) OF THE ACT HAS BEEN AMENDED W.E.F. 1.4.2009, WHEREIN, THE AGGREGATE PAYMENTS MADE DURING A DAY TO A PARTY SHALL BE CONSIDERED FOR T HE PURPOSE OF THE PRESCRIBED LIMIT. THEREFORE, HE HELD THAT THE AMOUNT RELATING TO VIOLATION OF SEC.1 94C WAS MUCH M ORE THAN THE AMOUNT RELATING TO VIOLATION OF S EC.40A(3). THEREFORE, HE DISALLOWED THE AMOUNT OF RS.1,76,55,030/ - U /S.40(A)(IA) OF THE ACT. 4 . ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: 4.3.1 SO FAR AS VIOLATION OF SEC.40A(3) IS CONCERNED, THE DETAILS GIVEN BY THE AO IN THE ASSESSMENT ORDER HAVE NOT BEEN DISPUTED. THE LD. A/R HAS SIMPLY ARGUED THAT THESE PAYMENTS CONSIST OF SEVERAL SMALL PAYMENTS THOUGH MADE DURING THE DAY TO THAT 4 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 PARTICULAR PARTY. ON CAREFUL CONSIDERATION OF THE MATTER, I AM UNABLE TO AGREE WITH THE L D. A/R'S CONTENTION THAT SINCE THE PAYMENTS CONSIST OF INDIVIDUAL PAYMENTS DURING A DAY SEC.40A(3) IS NOT ATTRACTED. THIS IS BECAUSE I AM OF THE CONSIDERED VIEW THAT THE AMENDMENT BROUGHT ABOUT BY FINANCE ACT,2008 W.E.F. 01 - 04 - 2009 IS APPLICABLE FROM ASST. YR.2009 - 10 ONWARDS. AS PER THE AMENDED PROVISION, THE AGGREGATE PAYMENTS MADE DURING A DAY TO A PARTY SHALL BE CONSIDERED FOR THE PURPOSE OF SEC.40A(3). SINCE IN ALL THE CASES CITED BY THE AO THE PAYMENT EXCEEDS RS.20,000/ - , THE DISALLOWANCE TO THE EXTENT MENTIONED BY THE AO IN THE ASSESSMENT ORDER SO FAR AS VIOLATION OF SEC.40A(3) IS CONCERNED, IS IN ORDER. THE CASE LAWS CITED BY THE ID. A/R ARE CLEARLY DISTINGUISHABLE ON FACTS AS THEY RELATE TO THE ASSESSMENT YEARS EARLIER TO ASST.YR.2009 - 10. HOWEVER, THI S ADDITION WAS NOT SEPARATELY MADE BY THE AO IN THE ASSESSMENT ORDER BECAUSE HE DISALLOWED THESE PAYMENTS ALONG WITH OTHER PAYMENTS MADE TO THOSE PARTIES U/S.40(A)(IA). THEREFORE, IF AT ANY LATER STAGE IN CASE THE ADDITION U/S.40(A)(IA) IS TO BE HELD AS NO T SUSTAINABLE THEN THE ADDITION OF TH E AMOUNT REFERRED BY THE AO IN THE ASSESSMENT ORDER RELATING TO VIOLATION OF SEC.40AC3) SHALL STAND. 4.3.2 COMING TO THE DISALLOWANCE U/S.40(A)(IA), I FIND NO INFIRMITY IN THE ACTION OF THE AO. THE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER ARE NOT DISPUTED BY THE ID. A.R. OU T OF THE TOTAL TRANSPORT PAYMENT CONSISTING OF RS.7,21,97,812/ - , TDS HAS BEEN MAD E IN MAJORITY OF THE CASES. SO FAR AS THE AMOUNT OF RS.1,76,55,050/ - POINTED OUT BY E AO, I FIND NO REASON AS TO WHY THE ID. A/R SHOULD TAKE A DIFFERENT CONTENTION THAT TRUCK DALALS ARE ENGAGED ONLY IN THESE CASES AND NOT IN OTHER CASES WHERE THE TDS WAS ADMITTEDLY MADE. THEREFORE, THE ARGUMENT REGARDING TRUCK DALALS AND THE CASE LAWS BASED ON SUCH FACTS IS CLEARLY AN AF TERTHOUGHT ON THE PART OF THE APPELLANT AFTER THE AO POINTED OUT THE VIOLATION OF SEC.L94C. IT MAY FURTHER BE MENTIONED THAT THERE IS NO REQUIREMENT FOR A WRITTEN AGREEMENT TO ATTRACT PROVISIONS OF SEC.L94C. WHETHER THERE IS A CONTRACT OR NOT IS TO BE INFE RRED FROM THE CONDUCT OF THE PARTIES. RECENTLY THE HON'BLE KARNATAKA HIGH COURT IN SMT. J. RAMA VS. CIT (2012) 344 ITR 608(KARN) EXAMINED THE ISSUE IN DETAIL. IN THE SAID ORDER THE HON'BLE COURT OBSERVED AS UNDER. 'IN ORDER TO APPRECIATE THE RIVAL CONTENTIONS, IT IS NECESSARY TO BAR IN MIND THE ADMITTED FACTS: THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HIRING OF VEHICLES. UNDER A WRITTEN AGREEMENT, THE ASSESSEE IS PROVIDING VEHICLES TO ONE OF ITS CUSTOMERS, M/S MAHINDRA TRANSPORT SOLUTIONS GROUP. CLAUSE 5 OF THE WRITTEN AGREEMENT ENTERED INTO BETWEEN THEM STIPULATES THAT THE PROVISION OF SERVICE WOULD INVOLVE PROVIDING 5 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 VEHICLES OWNED BY THE ASSESSEE OR ASSOCIATES OF THE ASSESSEE OR AGENTS, FOR TRANSPORTATION OF THE EMPLOYEES OF THOMSON CORPORATION(INTERNATIONAL) PVT. LTD. THE MATERIAL ON RECORD DISCLOSES THAT THE ASSESSEE IS OWNING A FLEET OF VEHICLES. THAT IS NOT SUFFICIENT TO MEET THEIR OBLIGATIONS. THEREFORE, THE ASSESSEE HIRED VEHICLES FROM THE OWNERS OF THE VEHICLES. THERE IS NO WRITTEN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND SUCH INDIVIDUAL OWNERS. IT IS THOSE VEHICLES HIRED IN THE AFORESAID MANNER WHICH ARE UTILIZED FOR PERFORMING THE CONTRACT ENTERED INTO BETWEEN THE ASSESSEE AND ITS CUSTOMERS. IN THE ABSENCE OF ANY MATERIAL PLACED BY THE ASSESSEE, THE ONLY INFERENCE THAT CAN BE DRAWN FROM THE FACTS OF THE CASE IS THAT THE ASSESSEE HAS UTILIZED THE VEHICLES TAKEN ON LEASE TO PERFORM THE WRITTEN CONTRACT ENTERED INTO BETWEEN THE ASSESSEE AND VARI OUS CUSTOMERS. OUT OF THE TRANSPORTATION CHARGES RECEIVED UNDER THE AFORESAID WRITTEN CONTRACT, A SUBSTANTIAL PORTION HAS BEEN PAID TO THE VARIOUS OWNERS OF THE VEHICLES TOWARDS TRANSPORTATION CHARGES. THOUGH A GROUND IS TAKEN THAT SU CH PAYMENT IS NOT IN E XCESS OF R S.20,000/ - AND, THEREFORE, THERE IS NO OBLIGATION TO DEDUCT TDS, THE MATERIAL ON RECORD DISCLOSES THAT TOTAL AMOUNT PAID TOWARDS TRANSPORTATION CHARGES IS ROUGHLY ABOUT RS.79,45,225/ - . IN THE ABSENCE OF ANY PARTICULARS, IT CANNOT BE SAID THAT THE RE WAS NO LIABILITY TO DEDUCT TAX ON THAT SCORE. LAW DOES NOT STIPULATE THE EXISTENCE OF A WRITTEN CONTRACT AS A CONDITION PRECEDENT FOR PAYMENT OF TDS. THE CONTRACT MAY BE IN WRITING OR IT MAY BE ORAL BUT THE LIABILITY TO PAY TAX ARISES WHEN THE RECIPIENT OF THE SAID AMOUNT RECEIVES PAYMENT IN EXCESS OF RS.20,000/ - . PROVISO (2) TO SEC.L94C WHICH IS ATTRACTED TO THE FACTS OF THIS CASE MAKES IT VERY CLEAR THAT WHEN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY WHOSE TOTAL SALES FROM HE BUSINESS OR PROFESSION CARRIED ON BY HIM IN EXCESS OF THE MONETARY LIMIT SP ECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB - CONTRACTORS, SHALL BE LIABLE TO DEDUCT INCOME TAX UNDER THE SUB - SECTIO N. IT IS NOT IN DISPUTE THAT THE TURNOVER OF THE ASSESSEE EXCEEDS THE MONETARY LIMIT SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB. THEREFORE, THE LIABILITY TO DEDUCT TAX ARISES UNDER THE SAID PROVISO TO THE SUB - CONTRACTOR FROM WHOM THE VEHICLES ARE HIRED AND THE SAID AMOUNT PAYABLE TO THE SUB - CONTRACTOR IS IN EXCESS OF RS.20,000/ - . THEREFORE, THE THREE AUTHORITIES HAVE CONCURRENTLY HELD THAT THE TRANSACTION IN QUESTION IS A TRANSPORT CONTRACT. THE LIABILITY TO DEDUCT OUT OF THE MONEY PAID TO THE SUB - CONTRACTORS DOES ARISE. IMMEDIATELY, TDS IS NOT DEDUCTED AND THE SAID AMOUNT IS NOT PAID TO THE AUTHORITIES. THEREFORE, THE CLAIM FOR DEDUCTION U/S.40(A)(IA) IS NOT ATTRACTED AND THE AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE SAID DEDUCTION AND TRE ATING THE SAID AMOUNT AS THE INCOME OF THE ASSESSEE AND CLAIMING TAX ON THAT AMOUNT, '(EMPHASIS SUPPLIED) 6 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 A PPLING THE RATIO OF THE ABOVE DECISION, IT IS HELD THAT IN THE INSTANT C ASE THE HIRING OF THE RUCKS BY THE APPELLANT FOR A CONSIDERATION CONSTITU TES A CONTRACT FOR WHICH IT WAS REQUIRED TO DEDUCT TAX AS THE AMOUNT PAID EX CEEDED THE PRESCRIBED LIMIT. SINCE THAT A DMITTEDLY HAS NOT BEEN DONE, I FIND NO INFIRMITY IN THE ACTION OF THE AO IN DISALLOWING THE AMOUNT OF RS.1,76,55,030/ - U/S.40(A)(IA). 4.3.1.1 IN THE WRITTEN SUBMISSION FILED ON 12 - 02 - 2013, THE ID. A/R HAS ARGUED THAT SINCE MOST OF THE AMOUNTS WERE PAID DURING THE YEAR, SEC.40(A)(IA) SHALL NOT BE APPLICABLE AS THE SAME IS ATTRACTED ONLY WHEN THERE IS AN AMOUNT PAYABLE. TO BEGIN WITH IT N EEDS TO BE MENTIONED HERE THAT THE ID. A/R HAS NOT FILED ANY SUCH DETAILS BEFORE ME IN SUPPORT OF HIS CONTENTION THAT NO AMOUNT REMAINS PAYABLE AT THE END OF THE YEAR IN RESPECT OF THE ADDITION MADE BY THE AO. BUT ADMITTEDLY, SINCE A PORTION OF THE AMOUNT IS ALSO HELD AS LIABLE FOR DISALLOWANCE U/S.40A(3) DEFINITE LY THE ADDITION MADE BY THE AO U /S.40(A)(IA) CONTAINS SOME AMOUNT WHICH ARE PAID AND NOT OUTSTANDING AT THE END OF THE YEAR. HOWEVER, THIS ISSUE STANDS COVERED AGAINST THE APPELLANT BY THE DECISION OF THE JURISDICTIONAL TRIBUNAL, WHICH IS BINDING ON ME. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE TRIBUNAL IN CASE OF SAROJ KR. MISHRA IN ITA NO.1 95/CTK/2C10 DTD.17 - 06 - 2011 AND IN THE CASE OF CUTTACK CENTRAL COOP. BANK LTD., IN ITA NO.182/C TK/2012 DTD.14 - 09 - 2012 FOR ASST. YR.2009 - 10. IT MAY BE MENTIONED HERE THAT THE DECISION IN THE CASE OF CUTTACK CENTRAL COOP. BANK LTD. HAS BEEN PASSED BY THE JURISDICTIONAL TRIBUNAL MUCH AFTER THE DECI SION IN THE CASE OF M/S MERYLIN SHIPPING AND TRANSPORT REFERRED TO BY THE ID. A/R. FURTHER, THE DECISION IN THE CASE OF M/S MERYLIN SHIPPING HAS BEEN SUSPENDED BY THE HON'BLE ANDHRA PRADESH HIGH COURT VIDE THEIR ORDER DTD.08 - 10 - 2012 IN ITTA MP 908 OF 2012 IN ITA NO.384 OF 2012. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO INFIRMITY IN THE ACTION OF THE AO AND, THEREFORE, DISALLOWANCE OF RS.1,76,55,030/ - U/S.40(A)(IA) IS SUSTAINED. THE GROUNDS ARE THUS DISMISSED. 5. BEFORE US, L D A.R. OF THE ASSESSEE RELIED ON THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF SRI CHARANJIT SINGH GREWAL VS JCIT IN ITA NO.310/CTK/2012 FOR THE ASSESSMENT YEAR 2008 - 09 ORDER DATED 20.7.2012 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT THE RECIPIENTS HAD AGREED TO RECEIVE THE AMOUNT IN CA SH AND T HAT THE AMOUNTS PAID DID 7 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 NOT EXCEED RS.20,000/ - IN A DAY TO EACH PERSON AND, THERE, DELETED THE ADDITION OF RS.84,64,588/ - U/S.40A(3) OF THE ACT. 6. FURTHER, HE RELIED ON THE ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF NABIN KUMAR SAHOO VS DCIT IN ITA NO.143/CTK/2011 FOR THE ASSESSMENT YEAR 2006 - 07 ORDER DATED 21.4.2011 AND SUBMITTED THAT THE TRIBUNAL HELD THAT SECTION 194C (2) OF THE ACT IS ATTRACTED WHEN THE FOLLOWING CONDITIONS ARE SATISFIED: A) THE ASSESSEE SHOULD BE A CONTRACTOR, (B) THE ASSES SEE, IN HIS CAPACITY AS A CONTRACTOR, SHOULD ENTER INTO A CONTRACT WITH A SUB - CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR; (C) THE SUB - CONTRACTOR SHOULD CARRY OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN B Y THE CONTRACTOR; (D) PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK. 7. THE STRINGENT CLAUSES IN THE WORK ORDER SUGGEST THAT THE ASSESSEE IS SOLELY RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS BY THE ASSESSEE AND/OR ITS EMPLOYEES. IT IS NOT ESTABLISHED BY THE REVENUE THAT OTHER LORRY OWNERS, FROM WHOM THE VEHICLES WERE HIRED, HAVE ALSO BEEN FASTENED WITH ANY OF THE ABOVE SAID LIABILITIES . THEREFORE, THE TRIBUNAL HELD THAT IT CANNOT BE SAID THAT PAYMENTS MADE FOR HIRED VEHICLES WO ULD FALL IN THE CATEGORY OF PAYMENT TOWARDS A SUB - CONTRACT WITH THE LORRY OWNERS. HENCE, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S.194C(2) OF THE ACT. 8 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 8. HE ALSO RELIED ON THE DECISION OF THE VISAKHAPANAM BENCH OF THE TRIBUNAL IN THE CASE OF MYTHRI TRANSPORT CORPORATION VS ACIT, 124 ITD 40(2009), WHEREIN, IT WAS HELD THAT THE ASSESSEE, A TRANSPORT CONTRACTOR, HAVING ITSELF EXECUTED THE WHOLE OF THE CONTRACT FOR TRANSPORTATION OF BITUMEN BY HIRING LORRIES FROM OTHER LORRY OWNERS WHO SIMPLY PL ACED THE VEHICLES AT THE DISPOSAL OF THE ASSESSEE WITHOUT INVOLVING THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE, IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRING OF VEHICLES FELL IN THE CATEGORY OF PAYMENTS TOWARDS SUB - CON TRACTORS AND, THEREFORE, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194C(2) FROM THE PAYMENTS MADE TO THE LORRY OWNERS AND CONSEQUENTLY PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE TO SUCH PAYMENTS. 9. LD A.R. ALSO RELIED ON THE DECISION S OF CUTTACK BENCH OF THE TRIBUNAL IN THE CASE OF R.R.CARRYING CORPORATION VS ACIT, 126 TTJ 240 AND IN THE CASE OF SANJAY KUMAR PRADHAN VS ACIT IN ITA NO.450/CTK/2011 FOR THE ASSESSMENT YEAR 2008 - 09 ORDER DATED 16.12.2011. 10 . ON THE OTHER HAND, THE LEARNED DR ARGUED AND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE PAYMENTS WERE MADE IN VIOLATION OF SECTION 40A(3) OF THE ACT. 1 1 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE 9 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS.1,76,55,030/ - TO INDIVIDUAL TRUCK OWNERS/ DRIVERS IN VIOLATION OF SECTION 40A(3) OF THE ACT. FURTHERMORE, TDS AS REQUIRED U/S.194C OF THE ACT HAS ALSO NOT BEEN MADE IN RESPECT OF SUCH CASH PAYMENTS. BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE PAYMENTS WERE MADE TO VARIOUS TRUCK DRIVERS THROUGH AGENTS AND, THEREFORE, THERE WAS N O OBLIGATION FOR THE ASSESSEE TO DEDUCT 194C OF THE ACT. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER ON THE GROUND THAT AS PER BOARD CIRCULAR NO.487 DATED 18.,6.19896 WHICH PROVIDES T HAT AN ORAL AGREEMENT CAN BE A VALID CONTRACT, AS PER WHICH, THE TRUCK OWNERS WERE RECEIVING CONSIDERATION BY WAY OF MONETARY PAYMENTS. THE ASSESSING OFFICER ALSO HELD THAT AS PER AMENDED PROVISIONS U/S 40A(3) OF THE ACT, W.E.F. 1.4.2009, THE AGGREGATE PA YMENTS MADE DURING A DAY TO A PARTY SHALL BE CONSIDERED FOR THE PURPOSE OF THE PRESCRIBED LIMIT. HENCE, HE DISALLOWED THE AMOUNT OF RS.1,76,55,030/ - . 12 . ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER OBSERVING THAT THE AMENDMENT BROUGHT ABOUT BY FINANCE ACT, 2008 W.E.F. 1.4.2009 IS APPLICABLE FROM ASSESSMENT YEAR 2009 - 2010 ONWARDS AND AS PER THE AMENDED PROVISIONS, THE AGGREGATE PAYMENTS MADE DURING A DAY TO A PARTY SHALL BE CONSIDERED FOR THE PURPOSE OF SECTION 40A (3) OF THE ACT. SINCE THE PAYMENTS EXCEEDED RS.20,000/ - , THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS JUSTIFIED. IN THIS CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS MADE CASH PAYMENTS TO THE TRUCK DRIVERS THROUGH 10 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 AGENTS. THE REVENUE HAS DISPUTED THAT THE PAYMENTS WERE MADE IN CONTRAVENTION OF SECTION 40A(3) OF THE ACT AND THERE IS EXISTING OF ORAL AGREEMENT BETWEEN THE ASSESSEE AND THE TRUCK DRIVERS/OWNERS. HE FURTHER HELD THAT THE ARGUMENTS THAT IN THIS CASE T RUCK DALALS ARE ENGAGED AND HAS RELIED ON CERTAIN CASE LAWS TO CONTEND THAT NO TDS WAS REQUIRED TO BE DEDUCTED U/S.194C OF THE ACT IS AN AFTERTHOUGHT. HE OBSERVED THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF SMT. J RAMA VS CIT, 344 ITR 608 (KAR) HAS HELD THAT THOUGH A GROUND IS TAKEN THAT TRANSPORTATION CHARGES PAID TO VARIOUS OWNERS OF THE VEHICLES IS NOT IN EXCESS OF RS.20,000/ - AND, THEREFORE, THERE IS NO OBLIGATION TO DEDUCT TDS, THE MATERIAL ON RECORD DISCLOSES THAT TOTAL AMOUNT PAID TOWARDS TRAN SPORTATION CHARGES WAS APPROXIMATELY RS.79,45,225/ - AND IN ABSENCE OF ANY PARTICULARS, IT CANNOT BE SAID THAT THERE IS NO LIABILITY TO DEDUCT TDS ON THAT SCORE. 13. WE FIND THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF R.R.CARRYING CORPORATION (SUPRA) HA S HELD AS UNDER: 7. THE STAND OF THE ASSESSEE IS THAT DISALLOWANCE HAS BEEN MADE BECAUSE OF NON - DEDUCTION OF TAX AT SOURCE AND DEPOSIT TO THE GOVERNMENT EXCHEQUER. WHILE COMING TO THE SAID CONCLUSION FOR DISALLOWANCE, THE AO HAS CONSIDERED THE PAYMENTS MADE TO THE CONTRACTOR AS A SUB - CONTRACTOR WHICH IS NOT THE FACT. IN FACT, THERE WAS NO SUB - CONTRACTOR AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTER. ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS IN HIS FAVOUR. HENCE, HE REQUESTED THAT PROVISIONS OF S. 40(A)(IA) IS NOT APPLICA BLE TO FACTS OF ASSESSEES CASE. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 11 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 8. WE FIND IT UNDISPUTED THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND IN ADDITION TO ITS OWN, IT HAS ENGAGED OTHER TRUCK - OWNERS TO EXECUTE THE TRANSPORTATION WORK ON AS AND WHEN BASIS WITHOUT ANY PRIVITY OF CONTRACT. THE ASSESSEE HAS NOT ASSIGNED ANY PARTICULAR PORTION OF THE WORK. NO SUB - CONTRACT AGREEMENT, EITHER WRITTEN OR ORAL, EXISTS BETWEEN THE ASSESSEE AND THE O UTSIDE TRUCK OWNERS. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS FLOATED ANY TENDER TO THAT EFFECT. THUS, THERE IS NO OFFER AND ACCEPTANCE WHICH ARE THE MAIN INGREDIENTS FOR VALID CONTRACT. THEREFORE, THE ASSESSEE WAS NOT HELD LIABLE TO DED UCT TAX UNDER S. 194C FROM PAYMENTS MADE TO THE TRANSPORTERS. IN VIEW OF THE ABOVE, THE LEARNED AUTHORISED REPRESENTATIVE REQUESTED TO DELETE THE ADDITION IN QUESTION. 9. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. UNITED RICE L AND LTD. (2008) 217 CTR (P&H) 332 : (2008) 8 DTR (P&H) 305 HELD AS UNDER : 'THERE BEING NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS NOR IT IS PROVED THAT ANY FREIGHT CHARGES WERE PAID TO THEM IN PUR SUANCE OF A CONTRACT FOR A SPECIFIC PERIOD, QUANTITY OR PRICE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX UNDER S. 194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS.' DISALLOWANCE IN QUESTION HAS BEEN MADE BY INVOKING PROVISIONS OF S. 40(A)(IA) OF THE IT ACT, ACCORDING TO WHICH, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SS. 30 TO 38, THE AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR FOR CARRYING OUT ANY WORK, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED, SH ALL NOT BE ALLOWED TO BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE ESSENTIAL INGREDIENTS FOR NOT ALLOWING THE DEDUCTION IS THE EXISTENCE OF CONTRACT OR SUBCONTRACT AGREEMENT. 10. WE FIND O N SIMILAR ISSUE IN ITA NO. 95/CTK/2008 IN THE CASE OF NATIONAL TRANSPORT, THE TRIBUNAL VIDE PARAS 8 AND 8.1 HELD AS UNDER : '8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD AND THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE, KEEPING IN VIEW OF THE FACT THAT THE REVENUE COULD NOT ESTABLISH THAT PAYMENTS MADE TO THE TRANSPORTERS FOR ARRANGING TRUCKS, THERE WAS NEITHER ANY ORAL 12 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 OR WRITTEN AGREEMENT BE TWEEN THE ASSESSEE AND THE TRANSPORTERS FOR THE CARRIAGE OF GOODS. IN OUR CONSIDERED OPINION, THE CASE LAWS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE CIT VS. UNITED RICE LAND LTD. (2008) 217 CTR (P&H) 332 : (2008) 8 DTR (P&H) 305 IS SQUARELY APPLIC ABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID ORDER, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS CONCLUDED AS UNDER : THERE BEING NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS NOR IT IS PROVED TH AT ANY FREIGHT CHARGES WERE PAID TO THEM IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD, QUANTITY OR PRICE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX UNDER S. 194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS.' 8.1 RESPECTFULLY FOLLOWING THE ORDER OF THE H ONBLE PUNJAB & HARYANA HIGH COURT, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE EXPENDITURE CLAIMED BY THE ASSESSEE WITHOUT APPLYING THE PROVISIONS OF S. 40(A)(IA) OF THE IT ACT, 1961.' 11. WE FIND THAT I N ITA NO. L34/CTK/2008 IN THE CASE OF ANUKUL BHANDAR, THE TRIBUNAL, VIDE PARA 9 HELD AS UNDER : '9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAV E ALSO CONSIDERED THE PP. 12 TO 37 OF THE PAPER BOOK, WHICH ARE THE COPIES OF THE BILLS, RECEIPTS AND THE FORWARDING LETTERS GIVING THE DETAILS OF TRANSPORTATION OF GOODS FROM NAGPUR TO CUTTACK. WE OBSERVE THAT THE SAID GOODS WERE TRANSPORTED BY DIFFERENT TRUCKS, AS PER THE DETAILS GIVEN THEREIN. THE DEPARTMENT HAS NOT BROUGHT ANY CONTRACT ON RECORD THAT THE SAID GOODS WERE TRANSPORTED THROUGH M/S KARN FREIGHT CARRIERS UNDER AN ARRANGEMENT BETWEEN THE ASSESSEE AND M/S KARN FREIGHT CARRIERS. ON PERUSAL OF T HE SAID PAGES OF THE PAPER BOOK, VIZ. 1 TO 37, WE OBSERVE THAT THE GOODS WERE TRANSPORTED BY DIFFERENT TRUCKS. THE ASSESSEE MADE PAYMENTS TO THE DRIVERS OF THE TRUCKS TOWARDS COST OF TRANSPORTATION AS PER THE BILLS. THERE IS NO MATERIAL ON RECORD THAT THE ASSESSEE MADE THE PAYMENTS FOR TRANSPORTATION OF GOODS TO M/S KARN FREIGHT CARRIERS. THEREFORE, WE FIND SUBSTANCE IN THE SUBMISSION OF THE ASSESSEE THAT THE SAID PAYMENT MADE BY THE ASSESSEE AGGREGATING RS. 4,37,388 TOWARDS TRANSPORTATION OF GOODS WAS NOT UNDER A CONTRACT BUT TOWARDS COST OF TRANSPORTATION OF GOODS FROM NAGPUR TO CUTTACK. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE PROVISION OF S. 194C IS NOT APPLICABLE 13 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 IN RESPECT OF THE PAYMENT, MADE BY THE ASSESSEE TO THE TRANSPORTER. ACCORDINGLY, THE P ROVISION OF S. 40(A)(IA) OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. HENCE, WE DELETE THE SAID DISALLOWANCE OF RS. 4,37,388 AS CONFIRMED BY THE LEARNED CIT(A). ACCORDINGLY, GROUND NO. 2(I) OF THE APPEAL IS ALLOWED.' 12. WE FIND THAT IN ITA NO. 248/CTK/2008 IN THE CASE OF SAVE SEA FOOD, THE TRIBUNAL, VIDE PARAS 8 AND 8.1, HELD AS UNDER : '8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD AND THE DECISION OF THE HONBLE PUNJ AB & HARYANA HIGH COURT RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE, KEEPING IN VIEW OF THE FACT THAT THE REVENUE COULD NOT ESTABLISH THAT PAYMENTS MADE TO THE TRANSPORTERS FOR ARRANGING TRUCKS, THERE WAS NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR THE CARRIAGE OF GOODS. IN OUR CONSIDERED OPINION, THE CASE LAWS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE CIT VS. UNITED RICE LAND LTD. (2008) 217 CTR (P&H) 332 : (2008) 8 DTR (P&H) 305 IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID ORDER, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS CONCLUDED AS UNDER : THERE BEING NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS NOR IT IS PROVED THAT A NY FREIGHT CHARGES WERE PAID TO THEM IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD, QUANTITY OR PRICE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX UNDER S. 194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS. 8.1 RESPECTFULLY FOLLOWING THE ORDER OF THE HONB LE PUNJAB & HARYANA HIGH COURT, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE EXPENDITURE CLAIMED BY THE ASSESSEE WITHOUT APPLYING THE PROVISIONS OF S. 40(A)(IA) OF THE IT ACT, 1961' 13. WE ALSO FIND THAT I N ITA NO. 201/CTK/2008 IN THE CASE OF GURUDEO SINGH, THE TRIBUNAL, VIDE PARA NOS. 8 AND 8.1, HAS TAKEN THE SIMILAR VIEW IN FAVOUR OF THE ASSESSEE. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE REVENUE REGARDING THE. LEGAL PROPOSITION. FACT S BEING THE SAME, SO, FOLLOWING THE SAME REASONING, WE DO NOT AGREE WITH THE FINDINGS OF THE AUTHORITIES BELOW. 14. THUS, WE FIND IT UNDISPUTED THAT THE ASSESSEE IS A TRANSPORTER EXECUTING VARIOUS CONTRACTS BY ENGAGING ITS OWN VEHICLES AND 14 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 TRANSPORTERS VEHICLES. THE AO DISALLOWED THE PAYMENTS BY OBSERVING THAT PAYMENTS MADE TO THE. TRANSPORTER AS SUB - CONTRACT. THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY CONTRACT EXISTED BETWEEN THE ASSESSEE AND THE ALLEGED TRANSPORTER AS SUB - CONTRACTOR. THERE IS NEITH ER WRITTEN NOR ORAL AGREEMENT IN THIS REGARD. THERE IS NO DISPUTE TO THE SETTLED LEGAL PROPOSITION THAT WRITTEN AGREEMENT IS NOT COMPULSORY. EVEN ORAL AGREEMENT CAN BE INFERRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO HAS NOT MADE OUT THE CASE TH AT ON THE BASIS OF THE CONTRACT OF THE BUSINESS BY THE ASSESSEE, THERE EXISTED CONTRACTOR AND SUB - CONTRACTOR RELATIONSHIP BETWEEN THE ASSESSEE AND THE ALLEGED SUB - CONTRACTOR. THE AO HAS NOT MADE OUT THE CASE THAT THE ALLEGED SUB - CONTRACTOR HAS BEEN ENGAGED ON SOME DEFINITE TERMS AND CONDITIONS FOR EXECUTING THE WORK OF THE ASSESSEE. BASICALLY, THE ASSESSEE HAS ENGAGED DIFFERENT TRANSPORTERS FOR EXECUTING ITS. DIFFERENT WORK. EVEN, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS ASSIGNED ANY PART ICULAR PORTION OF WORK TO A PARTICULAR TRANSPORTER. SO, THE AO WAS NOT JUSTIFIED IN MAKING DISALLOWANCE BY INVOKING THE PROVISIONS OF S. 40(A)(IA). ACCORDINGLY, THE DISALLOWANCE IN QUESTION IS CANCELLED. 14. IN THE CASE OF NABIN KUMAR SAHOO (SUPRA), IT HAS BEEN HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT THE FACTS AND CIRCUMSTANCES ARE CLEARLY LEAD TO A FINDING THAT THE ISSUE STANDS COVERED BY PLETHORA OF JUDGMENT S WHICH COMPILATION HAS BEEN SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK. SEC. 194C(2) IS ATTRACTED IF ALL THE FOLLOWING CONDITIONS ARE SATISFIED : (A) THE ASSESSEE SHOULD BE A CONTRACTOR; THE ASSESSEE, IN HIS CAPACITY AS A CONTRACT OR, SHOULD ENTER INTO A CONTRACT WITH SUB - SUB - CONTRACTOR FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR; (C) THE SUB - CONTRACTOR SHOULD CARRY OUT THE WHOLE ''OR ANY PART OF THE WORK UNDERTAKEN BY T HE CONTRACTOR; (D) PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK. THE STRINGENT CLAUSES IN THE WORK ORDER SUGGEST THAT THE ASSESSEE IS SOLELY RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS COMMITTED BY THE ASSESSEE AND/OR ITS EMPLOYEES. IT IS NOT ESTABLISHED BY THE REVENUE THAT OTHER LORRY OWNERS, FROM WHOM THE VEHICLES WERE HIRED, HAVE ALSO BEEN FASTENED WITH ANY OF THE ABOVE SAID LIABILITIES. IN A SUB - CONTRACT, A PRUDENT CONTRACTOR WOULD INCLUDE ALL THE LIABILITY CLAUSES IN THE AGREEMENT ENTERED INTO BY HIM WITH THE SUB CONTRACTOR. THE ASSESSEE HAS ALSO CLAIMED BEFORE THE TAX AUTHORITIES THAT THE RESPONSIBILITY IN THE WHOLE PROCESS LIES WITH IT 15 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 ONLY. THOUGH THE PASSING OF LIABILITY IS NOT THE ONLY CRITERIA TO DECIDE ABOUT THE EXISTENCE OF SUB - CONTRACT, YET TH IS CONTENTION OF THE ASSESSEE READ WITH THE LIABILITY CLAUSES OF THE WORK ORDER SUPPORTS ITS SUBMISSION THAT THE INDIVIDUAL VEHICLE OWNERS ARE SIMPLE HIRERS OF THE VEHICLES. AS PER THE PROVISIONS OF S. 194C(2), THE SUB - CONTRACTOR SHOULD CARRY OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE DICTIONARY MEANING OF THE WORDS 'CARRY OUT' IS TO 'CARRY INTO PRACTICE'; 'TO EXECUTE'; 'TO ACCOMPLISH'. IT SIGNIFIES A POSITIVE INVOLVEMENT IN THE EXECUTION OF THE WHOLE OR ANY PART OF THE MAIN WORK BY SPENDING HIS TIME, MONEY, ENERGY, ETC. AND FURTHER TAKING THE RISKS IN CARRYING ON THE SAID ACTIVITY. IN THE INSTANT CASE, THERE IS NO MATERIAL TO SUGGEST THAT THE OTHER LORRY OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME, ENERGY AND BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT WORK. IN THE ABSENCE OF THE ABOVE SAID CHARACTERISTICS ATTACHED TO A SUB - CONTRACT IN THE INSTANT CASE, THE PAYMENT MADE TO THE LORRY OWNERS STANDS AT PA R WITH THE PAYMENTS MADE TOWARDS S A1ARIES, RENT, ETC. HENCE THE REASONING OF THE TAX AU THORITIES TO HOLD THAT THE PAYMENT MADE FOR HIRED VEHICLES IS A SUB - CONTRACT PAYMENT IS NOT CORRECT AND NOT BASED ON RELEVANT CONSIDERATIONS. HENCE, IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRED VEHICLES WOULD FALL IN THE CATEGORY OF PAYMENT TOWARDS A SUB - CONTRACT WITH THE LORRY OWNERS. IN THAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE, AS PE R THE PROVISIONS OF S. 194C(2), ON THE PAYMENTS MADE TO THE LORRY OWNERS FOR LORRY HIRE. CONSEQUENTLY, THE PROVISIONS OF S. 40(A)(IA) SHALL NOT APPLY TO SUCH PAYMENTS. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY PLETHORA OF DECISIONS AS CITED AT THE BAR. THE APPEAL OF THE ASSESSEE IS, THEREFORE, ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE U/S.40(A) (IA) . 15. IN THE INSTANT CASE ALSO, IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A TRANSPORTER EXECUTING VARIOUS CONTRACTS BY ENGAGING TRANSPORTER S VEHICLES. THE ASSESSING OFFICER DISALLOWED PAYMENTS BECAUSE THEY WERE MADE TO TRANSPORTER AS SUB - CONTRACT . TH ERE IS NOTHING ON RECORD TO SUGGEST THAT ANY CONTRACT EXISTED BETWEEN THE ASSESSEE AND THE ALLEGED TRANSPORTER AS SUB - CONTRACTOR. THERE IS NEITHER WRITTEN NOR ORAL 16 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 AGREEMENT IN THIS CONNECTION. THERE IS NO QUARREL ABOUT THE SETTLED LEGAL PROPOSITION THAT WRITTEN AGREEMENT IS NOT COMPULSORY. EVEN ORAL AGREEMENT CAN BE INFERRED FROM THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSING OFFICER HAS NOT MADE OUT THE CASE THAT ON THE BASIS OF THE CONTRACT OF THE BUSINESS OF THE ASSESSEE, THERE EXISTED CONTRA CTOR AND SUB - CONTRACTOR RELATIONSHIP BETWEEN THE ASSESSEE AND THE ALLEGED SUB - CONTRACTOR. THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT THE ALLEGED SUB - CONTRACTOR HAS BEEN ENGAGED ON SOME DEFINITE TERMS AND CONDITIONS FOR EXECUTING THE WORK OF THE AS SESSEE. THE ASSESSEE HAS ENGAGED DIFFERENT TRANSPORTERS FOR EXECUTING ITS DIFFERENT WORK. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS ASSIGNED ANY PARTICULAR PORTION OF WORK TO A PARTICULAR TRANSPORTER. THEREFORE, THE ASSESSING OFFICER W AS NOT JUSTIFIED IN MAKING DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISIONS OF THIS BENCH OF THE TRIBUNAL (SUPRA), WE DELETE THE DISALLOWANCE OF RS.1,76,55, 030/ - MADE U/S.40(A)(IA) OF THE ACT. 16. REGARDING DISALLOWANCE U/S.40A(3) OF THE ACT, WE FIND THAT THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF RAKESH KUMAR VS ACIT IN ITA NO.102/ASR/2014 FOR THE ASSESSMENT YEAR 2010 - 2011 ORDER DATED 9.3.2016 HAS HELD AS UNDER: .7. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE CASE OF THE ASSESSEE WAS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF HON'BLE 17 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT, BATHINDA, 63 TAXMAN. 289 AND IN THIS RESPECT FILED A COPY OF THE ORDER. THE LEARNED AR SUBMITTED THAT THE HON'BLE PUNJAB & HARYAN HIGH COURT UNDER SIMILAR CIRCUMSTANCES HAS HELD THAT WHERE GENUINENESS OF TRANSACTIONS IN EXCESS OF RS.20,000/ - WAS NOT DISBELIEVED BY AUTHORITIES ASST. YEAR:2010 - 11 THEN THE PAY MENTS IN EXCESS OF RS.20,000/ - CANNOT BE DISALLOWED U/S 40A(3). 8. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT (SUPRA), UNDER SIMILAR FACTS AND CIRCUMSTANCES HAS HELD THAT WHERE THE GENUINENESS OF PAYMENTS IS NOT DISBELIEVED THE DISALLOWANCE U/S 40A(3) CANNOT BE MADE. WE FIND FROM THE ORDER OF HON'BLE PUNJAB & HARYANA HIGH COURT THAT IN THIS CASE ALSO THE ASSESSEE WAS ENGAGED IN TRADING OF PROPERTIES AND HAD PAID CASH IN EXCESS OF RS.20,000/ - FOR PURCHASE OF PROPERTIES. THE HON'BLE PUNJAB & HARYANA HIGH COURT H AS EXHAUSTIVELY DEALT WITH THE ISSUE AND HAS FRAMED QUESTION NO.1 AS BELOW. 'RE: QUESTION NO.1 3. THE APPELLANT IS ENGAGED INTER ALIA IN TRADING IN PROPERTIES IN HIS INDIVIDUAL NAME. AS NOTED IN THE ASSESSMENT ORDER, DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE DETAILS OF THE CLOSING STOCK AS ON 31.03.2009 ALONGWITH DETAILS OF SALES/PURCHASES WERE PLACED ON RECORD. THE CONSIDERATION, WHICH IN RESPECT OF EACH OF THE TRANSACTIONS WAS ADMITTEDLY IN EXCESS OF RS.20,000/ - , WAS PAID IN CASH. PAYMENT BY DEMAND DRAFT WAS MADE ONLY IN RESPECT OF ONE OF THE TRANSACTIONS. THESE PAYMENTS IN CASH WERE DISALLOWED BY THE ASSESSING OFFICER AND THE ORDER IN THIS REGARD WAS UPHELD BY THE TRIBUNAL. THE CIT (APPEALS) HAD ALLOWED THE DEDUCTIONS.' THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE ABOVE CASE HAS CONSIDERED THE SUPREME COURT DECISION IN THE CASE OF ATTAR SINGH GURMUKH SINGH V/S. ITO (SUPRA) AS RELIED UPON BY AUTHORITIES BELOW. THE FINDINGS OF THE COURT ARE CONTAINED IN PARA 7 TO 10. THE RELEVANT FINDINGS OF THE HON 'BLE HIGH COURT ARE REPRODUCED BELOW. '7. THE RESPONDENT/ASSESSEE'S CASE IS SUPPORTED BY SEVERAL JUDGMENTS. THE RAJASTHAN HIGH COURT IN SMT. HARSHILA CHORDIA V. ITO [2008]298 ITR 349 HELD AS UNDER: 18 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 '14. ABOUT THIS CLAUSE, MANY DOUBTS WERE RAISED AND ENQUIRIES WERE DIRECTED TO THE BOARD AS TO WHAT SHALL CONSTITUTE EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES WITHIN THE MEANING OF CLAUSE (J). THAT LED TO ISSUANCE OF CIRCULAR BY THE BOARD ON MAY 31, 1977 ([197 7] 108 1TR (ST.) 8), WHICH IS PUBLISHED IN TAXMANN, VOL. 1, 1988 EDITION. SIGNIFICANTLY PARAGRAPH 4 OF THE AFORESAID CIRCULAR WAS VERY CLEARLY THAT ALL THE CIRCUMSTANCES IN WHICH THE CONDITIONS LAID DOWN IN RULE 6DD(J) COULD BE APPLICABLE CANNOT BE SPELT O UT. HOWEVER, SOME OF THEM WHICH WILL SEEM TO MEET THE REQUIREMENTS OF THE SAID RULE ARE AS FOLLOWS: (A) THE PURCHASER IS NEW TO THE SELLER; OR (B) THE TRANSACTIONS ARE MADE AT A PLACE WHETHER EITHER THE PURCHASER OR THE SELLER DOES NOT HAVE A BANK ACCOUNT; OR (C) THE TRANSACTIONS AND PAYMENTS ARE MADE ON A BANK HOLIDAY; OR (D) THE SELLER IS REFUSING TO ACCEPT THE PAYMENT BY WAY OF CROSSED CHEQUE/DRAFT AND THE PURCHASER'S BUSINESS INTEREST WOULD SUFFER DUE TO NON - AVAILABILITY OF GOODS OTHERWISE THAN FROM THI S PARTICULAR SELLER ; OR (E) THE SELLER, ACTING AS A COMMISSION AGENT, IS REQUIRED TO PAY CASH IN TURN TO PERSONS FROM WHOM HE HAS PURCHASE THE GOODS; OR (F) SPECIFIC DISCOUNT IS GIVEN BY THE SELLER FOR PAYMENT TO BE MADE BY WAY OF CASH. 15. IT WAS FURTHER CLARIFIED IN PARAGRAPH 6 THAT THE ABOVE CIRCUMSTANCES ARE NOT EXHAUSTIVE BUT ILLUSTRATIVE. 16. THEREFORE, IN OUR OPINION, THE TRIBUNAL WAS CLEARLY IN ERROR IN NOT TRAVELLING BEYOND THE CIRCUMSTANCES REFERRED TO IN PARAGRAPH 4 OF THE CIRCULAR AND TO CONSID ER THE EXPLANATION SUBMITTED BY THE ASSESSEE ON ITS OWN MERIT. 17. SIGNIFICANTLY PARAGRAPH 5 REPRODUCED HEREIN BELOW GIVES A CLEAR INDICATION THAT RULE 6DD(I) HAS TO BE LIBERALLY CONSTRUED AND ORDINARILY WHERE THE GENUINENESS OF THE TRANSACTION AND THE PAY MENT AND IDENTITY OF THE RECEIVER IS ESTABLISHED, THE REQUIREMENT 19 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 OF RULE 6DD(I) MUST BE DEEMED TO HAVE BEEN SATISFIED. PARAGRAPH 5 OF THE CIRCULAR READS AS UNDER [1977] 108 ITR (ST.) 8, 9: 5. IT CAN BE SAID THAT IT WOULD, GENERALLY, SATISFY THE REQUIREMEN TS OF RULE 6DD(J), IF A LETTER TO THE ABOVE EFFECT IS PRODUCED IN RESPECT OF EACH TRANSACTION FALLING WITHIN THE CATEGORIES LISTED ABOVE FROM THE SELLER GIVING FULL PARTICULARS OF HIS ADDRESS, SALES TAX NUMBER/PERMANENT ACCOUNT NUMBER, IF ANY, FOR THE PURP OSES OF PROPER IDENTIFICATION TO ENABLE THE INCOME - TAX OFFICER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE TRANSACTION. THE INCOME - TAX OFFICER WILL, HOWEVER, RECORD HIS SATISFACTION BEFORE ALLOWING THE BENEFIT OF RULE 6DD(J). 18. IT APPEARS THAT FULFIL LMENT OF THE CONDITIONS OF PARAGRAPH 5 OF THE CIRCULAR HAS CLEARLY ESCAPED THE ATTENTION OF THE TRIBUNAL. THE CIRCULAR CLEARLY INDICATES THAT ORDINARILY WHERE THE INCOME - TAX OFFICER IS SATISFIED ABOUT THE GENUINENESS OF THE TRANSACTION AND PAYMENT AND IDE NTIFICATION OF THE CASH PAYMENT IS ESTABLISHED, THE INCOME - TAX OFFICER SHALL RECORD HIS SATISFACTION ABOUT THE FULFILMENT OF THE CONDITIONS FOR ALLOWING THE BENEFIT OF RULE 6DD(J). APPARENTLY, SECTION 4 0A(3) WAS INTENDED TO PENALIZE THE TAX EVADER AND NOT THE HONEST TRANSACTIONS AND THAT IS WHY AFTER FRAMING OF RULE 6DD (J), THE BOARD STEPPED IN BY ISSUING THE AFORESAID CIRCULAR. 19. THIS CLARIFICATION, IN OUR OPINION, IS IN CONFORMITY WITH THE PRINCIPLE ENUNCIATED BY THE SUPREME COURT IN CTO V. SWASTIK ROADWAYS AS NOTICED ABOVE. 20. IN THIS CASE, THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE TRANSACTIONS AND THE PAYMENT AND IDENTITY OF THE RECEIVER ARE ESTABLISHED. THEREFORE, THE CASE CLEARLY FELL WITH IN THE PARAMETERS OF PARAGRAPHS 4 AND 5 OF THE AFORESAID CIRCULAR READ TOGETHER.' 8. THE RESPONDENT'S CASE IS ALSO SUPPORTED BY THE JUDGMENT OF THE SUPREME COURT IN ATTAR SINGH GURMUKH SINGH V. ISO [1991] 191 1TR 667/59 TAXMAN 11. AFTER REFERRING TO RULE 6 DD, THE SUPREME COURT HELD: - '7. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CONTENTION. SECTION 40 - A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION OF RULE 6 - DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF READ TOGETHER, IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES. SECTION 40 - A (3) ONLY EMPOWERS THE ASSESSING OFFICER TO DISALLOW THE DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT 20 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT BY CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED ON TO ENABLE THE ASS ESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. THE TERMS OF SECTION 40 - A(3) ARC NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIE NCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYM ENT IN THE MANNER PRESCRIBED IN SECTION 40 - A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6 - DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40 - A(3) AND RULE 6 - DD THAT THEY ARC INTENDED TO REGULATE THE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS. [SEE: MIIDIAM OIL COMPANY V. ITO [(1973) 92 ITR 519 (API] ]. IF THE PAYMENT IS MADE BY A CROSSED CHEQUE DRAWN ON A BANK OR A CROSSED BANK DRAFT THEN IT WILL BE EASIER TO ASCERTAIN, WHEN DEDUCTION IS CLAIMED, WHETHER THE PAYMENT WAS GE NUINE AND WHETHER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. IN INTERPRETING A TAXING STATUTE THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULATION IN OUR COUNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY SHOULD NOT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS.' 9. AT THE COST OF REPETITION, THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR THE GENUINENESS THEREOF. NOR HAS IT DISBELIEVED THE FACT O F PAYMENTS HAVING BEEN MADE. MORE IMPORTANT, THE REASONS FURNISHED BY THE APPELLANT FOR HAVING MADE THE CASH PAYMENTS, WHICH WE HAVE ALREADY ADVERTED TO, HAVE NOT BEEN DISBELIEVED. IN OUR VIEW, ASSUMING THESE REASONS TO BE CORRECT, THEY CLEARLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. 10. IN THE CIRCUMSTANCES, THE ORDER OF THE TRIBUNAL IN THIS REGARD IS SET ASIDE. THE PAYMENTS CANNOT BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT.' IN THE PRESENT CASE, TH E GENUINENESS OF PAYMENT HAS NOT BEEN DOUBTED AS ASSESSING OFFICER HIMSELF HAS 21 ITA NO.378 /CTK/2013 ASSESSMENT YEAR : 2009 - 2010 HELD THAT SALE DEEDS OF PROPERTIES WERE REGISTERED WITH THE REVENUE DEPARTMENT OF GOVT. THEREFORE, THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE ABOVE DECISION OF HON'BLE PUN JAB AND HARYANA HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE GROUND OF APPEAL FILED BY ASSESSEE. 17. IN THE INSTANT CASE ALSO, WE FIND THAT THE GENUINENESS OF PAYMENT HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. THEREFORE, THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISION OF THE ABOVE QUOTED DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL AND AL SO THE DECISION OF P&H HIGH COURT IN THE CASE OF GURDAS GARG VS CIT, 63 TAXMAN. 289 (P&H). FOR THE ABOVE REASONS ALSO, NO DISALLOWANCE UNDER SECTION 40A(3) OF THE AC T CAN BE MADE OUT OF TRANSPORT CHARGES PAID BY THE ASSESSEE. HENCE, WE SET ASIDE THE ORD ERS OF LOWER AUTHORITIES AND ALLOW THIS PART OF THE GROUND OF APPEAL ALSO. 18. IN THE RESULT, APPEAL FI LED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 09 /0 10 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 09 /10 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. SUBHASHREE ENTERPRISES, C/O. SHRI RAMESH KUMAR AGARWAL, AT/PO: RENGALI, DIST: SAMBALPUR. 2. THE RESPONDENT. ACIT, CIRCLE - 1(1), SAMBALPUR 3. THE CIT(A) - BERHAMPUR 4. CIT, SAMBALPUR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//