ITO (TDS), Muzaffarnagar V. The Regional Manager, Saharanpur

ITA 5236/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3854 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 30-05-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 24-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Assessee Lawyers: MRADUL AGARW AL
• Section: 194C; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH F DELHI ] BEFORE SHRI RAJPAL YADAV, JM & SHRI K. D. R ANJAN, AM I. T. A. NOS. 5235 & 5236 (DEL) OF 2010 ASSESSMENT YEARS : 2008-09 & 2009-10. THE INCOME-TAX OFFICER, THE REG IONAL MANAGER, T. D. S., VS. U.P. STATE ROAD TR ANSPORT CORPORATION, MUZAFFAR NAGAR. S A H A R A N P U R. P A N / G I R NO. AAA TU 3009 M. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI RAKESH GARG, ADV.; & SHRI MRADUL AGARW AL, C. A.; DEPARTMENT BY : SHRI B. KISHORE, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THESE TWO APPEALS BY THE REVENUE FOR ASSESSMENT YEA RS 2008-09, AND 2009-10 ARISE OUT OF CONSOLIDATED ORDER OF THE LD. CIT (APPEALS), MUZ AFFAR NAGAR. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF, FOR THE SAKE OF CONVENIENCE, BY THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE, WHICH IS COMMON IN BOTH THE APPE ALS, FOR CONSIDERATION RELATES TO DEDUCTION OF TAX AT SOURCE AT THE RATE OF 2 PER CEN T UNDER SECTION 194-C OR 10 PER CENT UNDER SECTION 194I OF THE I. T. ACT, 1961. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT TDS VERIFICATION WAS CARRIED OUT IN THE OFFICE PREMISES OF THE ASSES SEE. DURING THE COURSE OF VERIFICATION OF TDS REGISTERS AND OTHER DOCUMENTS IT WAS GATHERED THAT THE ASSESSEE HIRED BUSES FOR COMMERCIAL PURPOSES FOR A LIMITED PERIOD ON WHICH TDS FOR THE YEARS UNDER CONSIDERATION WAS DEDUCTED AT THE RATE OF 2 PER CENT UNDER SECTION 194-C IN RESPE CT OF PAYMENTS MADE TO HIRED BUSES ON CONTRACT 2 I. T. A. NOS. 5235 & 5236 (DEL) OF 2010 BASIS. THE ASSESSING OFFICER ON THE BASIS OF PROVI SIONS OF SECTION 32 OF THE ACT OBSERVED THAT THE BUSES WERE COMMERCIAL VEHICLES AND CONSEQUENTLY CAM E UNDER THE AMBIT OF MACHINERY / INSTRUMENT / PLANT AND MACHINERY AND, THEREFORE, TD S ON CONTRACTUAL PAYMENT ON HIRED BUSES WAS DEDUCTIBLE AS PER THE PROVISIONS OF SECTION 194I AT THE RATE OF 10 PER CENT. THE ASSESSING OFFICER, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN THE REA SONS FOR SHORT DEDUCTION OF TDS AND LEVY OF INTEREST UNDER SECTION 201(1A) FOR BOTH YEARS. THE ASSESSING OFFICER AFTER HEARING THE ASSESSEE HELD THAT TDS ON PAYMENT OF HIRED BUSES WAS DEDUCTI BLE UNDER SECTION 194I AT THE RATE OF 10 PER CENT AS AGAINST 2 PER CENT DEDUCTED BY THE ASSESSEE UNDER SECTION 194-C OF THE ACT. THE ASSESSING OFFICER ALSO CHARGED INTEREST UNDER SECTI ON 201(1A) FOR BOTH THE YEARS. 3. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED BY THE ASSESSEE THAT PROVISIONS OF SECTION 194-C OF THE ACT WERE APPLICABLE TO THE FACTS OF TH E ASSESSEES CASE. IT WAS SUBMITTED THAT THE EXPRESSION WORK APPEARING IN SECTION 194-C HAS BE EN DEFINED IN EXPLANATION III WHICH INTER ALIA INCLUDES CARRIAGE OF GOODS AND PASSENGERS BY A NY MODE OF TRANSPORT OTHER THAN RAILWAYS. IT WAS ALSO SUBMITTED THAT THERE WAS NO DIRECTION THAT TDS ON TRANSPORT CONTRACT WILL BE MADE UNDER SECTION 194I INSTEAD OF SECTION 194-C. THE ASSESSE E EXPLAINED THE AMENDMENTS MADE UNDER SECTION WITH REFERENCE TO VARIOUS CASE LAWS AND CIR CULARS ISSUED FROM TIME TO TIME. THE LD. CIT (APPEALS) EXAMINED THE PROVISIONS OF SECTION 194C A ND 194I AND VARIOUS CIRCULARS. HE OBSERVED THAT THE ASSESSEES CASE WAS COVERED BY THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRASAR BHARTI (BROADCASTING CORPORATION OF INDIA) 292 ITR 580 (DEL). HE ALSO NOTED THAT THE LD. CIT IN ASSESSEES CASE ON IDENTICAL IS SUE HAS DECIDED IN FAVOUR OF THE ASSESSEE. LD CIT(A) IN VIEW OF SPECIFIC PROVISIONS OF SECTION 19 4-C AS ALSO THE BINDING NATURE OF CBDT CIRCULAR / INSTRUCTIONS, HELD THAT TDS WAS TO BE M ADE UNDER SECTION 194-C AND NOT U/S 194I OF THE ACT. 4. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT ASSESSEE HAD TAKEN BUSES ON HIRE TOGETHER WITH DRIVERS ON PAYMENT ON KILOMETER RUNNI NG BASIS. THE BUSES AS SUCH WERE NOT TAKEN ON RENT. THEREFORE, ASSESSEES CASE IS COVERED BY THE PROVISIONS OF SECTION 194-C AND NOT UNDER SECTION 194I OF THE ACT. HE FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF AHMEDAB AD URBAN DEV. AUTHORITY VS. ACIT IN 3 I. T. A. NOS. 5235 & 5236 (DEL) OF 2010 ITA. NO. 1637 (AHD.) OF 2010 FOR ASSESSMENT YEAR 20 09-10 DATED 10/3/2011. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5.1 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE CASE BEFORE US THE ASSESSEE HAD TAKEN THE BUSES ON HIRE ON PAYMENT MADE ON KILOMETER RUNNING BASIS. THE OWNER WAS RESPONSIBLE FOR RUNNING COST, MAINTENANCE, DRIVER COST AND OTHER INCIDENTAL CHARGES LIKE ACCIDENT ETC. THEREFORE, THE ASSESSEE HAS NOT TAKEN THE PLANT OR MACHINERY ON RENT. UNDER SECTION 194-C OF THE ACT ANY PERSON RESPONSIB LE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BE TWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL AT THE TIME OF CREDIT OF SUCH SUM WITH THE AC COUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE OR DR AFT OR BY ANY MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO 2 PER CENT WHERE SUCH PAY MENT IS BEING MADE OR CREDIT IS GIVEN TO A PERSON OTHER THAN INDIVIDUAL OR A HUF OF SUCH SUM A S INCOME-TAX ON INCOME COMPRISED THEREIN. EXPLANATION III DEFINES THE WORD WORK READS AS UN DER: EXPLANATION III.FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION WORK SHALL ALSO INCLUDE (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCT ION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE O F TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING. 5.2 FROM PLAIN READING OF DEFINITION OF WORD WORK IT IS CLEAR THAT IT INTER ALIA INCLUDES CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRAN SPORT OTHER THAN BY RAILWAYS. ON THE OTHER HAND, SECTION 194I IS APPLICABLE TO SUMS PAID BY WA Y OF RENT. EXPLANATION (I) OF SECTION 194I DEFINES THE TERM RENT AND INTER-ALIA INCLUDES FOR PAYMENT IN RESPECT OF MACHINERY OR PLANT OR EQUIPMENT. IN THE INSTANT CASE, THE ASSESSEE HAS E NTERED INTO AN AGREEMENT FOR HIRING OF BUSES ON KILOMETER SCHEME BASIS. THE PAYMENT THUS MADE WOUL D FALL UNDER THE CATEGORY OF CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN RAILWAYS AND NOT UNDER RENT. THEREFORE, PROVISIONS OF SECTION 194-C OF THE ACT W ILL BE APPLICABLE. 4 I. T. A. NOS. 5235 & 5236 (DEL) OF 2010 6. ITAT, A-BENCH, AHMEDABAD, IN THE CASE OF AHMED ABAD URBAN DEVELOPMENT AUTHORITY (SUPRA) ON IDENTICAL FACTS HAS HELD THAT CLAUSE (C) OF EXPLANATION III TO SECTION 194-C OF THE ACT WOULD APPLY. IN THAT CASE THE ASSESSEE HAD HIRED C ARS ON FIXED RENT PAYMENTS AND DEDUCTED TDS AT THE RATE OF 2 PER CENT TREATING THE SAME AS CONT RACT. SINCE THE CARS WERE ONE TYPE OF MACHINERY AND RENT WAS PAID AT FIXED MONTHLY BASIS ACCORDING TO THE ASSESSING OFFICER, TDS WAS APPLICABLE AT RATES PRESCRIBED UNDER SECTION 194I OF THE ACT. IT WAS HELD THAT THE VEHICLE HIRE CHARGES WERE PAID BY THE ASSESSEE IN CONNECTION WITH PLYING OF E MPLOYEES FROM ONE PLACE TO ANOTHER. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE VEHICLES WE RE OWNED AND MAINTAINED BY THE CONTRACTOR. THE FIXED RENT PAID FOR USE OF HIRING OF CARS WAS L IABLE TO BE DEDUCTION OF TAX UNDER SECTION 194-C AND NOT UNDER SECTION 194I OF THE ACT. FURTHER THE DEFINITION OF RENT AS PROVIDED IN EXPLANATION (I) OF SECTION 194I DOES NOT PROVIDE ANY ITEM FOR V EHICLE HIRE CHARGES. THEREFORE, PROVISIONS OF SECTION 194I WERE NOT APPLICABLE. 7. IN THE CASE BEFORE US THE ASSESSEE HAD TAKEN MOT OR BUSES ON HIRE ALONG WITH THE SERVICES OF DRIVER. THE PAYMENT HAS BEEN MADE ON KILOMETER BASIS. THE EXPENDITURE INCURRED RUNNING VEHICLE AND MAINTENANCE THEREOF TOGETHER WITH THE A TTACHED LIABILITIES ARE OWNED BY THE CONTRACTOR/OWNER OF BUSES. THEREFORE, THE PAYMENTS WOULD FALL UNDER PROVISIONS OF SECTION 194- C AND NOT UNDER SECTION 194I OF THE ACT. IN VIEW O F THE ABOVE, IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING RELIEF TO THE ASSE SSEE IN BOTH THE YEARS. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 31 ST MAY, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MAY, 2011. *MEHTA * 5 I. T. A. NOS. 5235 & 5236 (DEL) OF 2010 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGI STRAR, ITAT.