M/s CAS Transport Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5291/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7369 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: NAVEEN SINGH
• Keywords: Retrospective amendment
• Section: 194C; 201(1)

Judgement Text

PAGE 1 OF 4 M/S CAS TRANSPORT PRIVATE LIMITED V ITO WARD 3 (2) NEW DELHI ITA NO 5291/DEL/2013 A Y 2008 - 09 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 5291/DEL2013 (ASSESSMENT YEAR: 2008 - 09 ) CAS TRANSPORT PVT. LTD., WZ - 1221, NANGAL RAYA, NEW DELHI PAN:AADC1971E VS. ITO, WARD - 3(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. NAVEEN SINGH, CA REVENUE BY: SH. T. VASANTHAN, SR. DR DATE OF HEARING 04/05/ 2016 DATE OF PRONOUNCEMENT 2 3 / 06 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - VI, NEW DELHI DATED 17.07.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING REVISED GROUNDS OF APPEAL: - 1. THE SECTION 194C IS MADE APPLICABLE TO THE ASSESSEE ON THE BASIS OF CAR TAKEN ON HIRE ON MONTHLY BASIS ON FIXED ROUTES BY THE ASSESSING OFFICER AS PER ASSESSMENT ORDER. YOUR HONOR, WE INFORM THAT NO LINES ARE MENTIONED IN SECTION 194 'C' ABOUT CHARGEABILITY ON THE BASIS OF USE OF PASSENGER CARS ON FIXED ROUTES. THE APPLICATION OF LAW BY ASSESSING OFFICER IS COMPLETELY PERSONAL AND BASED ON ASSUMPTIONS. 2. SECTION 194 'C' IS ATTRACTED WHEN A VEHICLE IS USED FOR CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. OUR CLI ENT ONLY HIRED CARS AND NOT VEHICLES CARRYING GOODS. 3. SECTION 194 'C' IS CHARGED TO OUR CLIENT EVEN THOUGH HE IS NOT COVERED BUT BENEFIT OF SECTION 194 C (3) (I) IS NOT ALLOWED. YOUR HONOR, THIS MEANS THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND COMPL ETELY AND PASSED ASSESSMENT ORDER IN HASTY MANNER. 4. LD. CIT ( APPEAL) HAS PASSED ORDER AFTER APPLYING FINANCE ACT 2009 OF INCOME TAX ACT, 1961 WHERE 194 (C) IS QUOTED AS CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. THE ORDER PASSED BY ID. CIT (A) IS PRAYED TO BE REJECTED. PAGE 2 OF 4 M/S CAS TRANSPORT PRIVATE LIMITED V ITO WARD 3 (2) NEW DELHI ITA NO 5291/DEL/2013 A Y 2008 - 09 FURTHER, THIS ALSO CLARIFIES THAT THE ID. CIT ( A) HAS APPLIED FUTURE LAW APPLICABLE TO OUR CLIENT WITHOUT GOING THROUGH THE CHARGEABILITY OR APPLICABILITY OF SECTION 194'C. 5. THE BENEFIT OF SECTION 40 (A) (IA) SECOND PROVISO OF FINANCE ACT, 2012 IS PRAYED TO YOUR HONOR IN FAVOUR OF THE ASSESSEE AS DECIDED BY HONORABLE COURT OF AGRA BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF RAJEEV KUMAR VS ACIT (I.T.A) NO. 337/AGRA/2013). 3. THE BRIEF FA CTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING CAR RENTAL SERVICES. IT HAS TAKEN CARS ON HIRE FROM VARIOUS PARTIES AND PROVIDED THOSE VEHICLES TO ANOTHER COMPANY ON HIRE. DURING THE YEAR THE ASSESSEE HAS INCURRED VEHICLE HIRE CHARGES RS. 2914071/ - WHERE PAYMENT AR E MORE THAN RS. 20000/ - AND ACC ORDING TO THE LD ASSESSING OFFICER TAX WAS REQUIRED TO BE DEDUCTED U/S 194C OF THE INCOME TAX ACT WHICH HAS NOT BEEN DEDUCTED. ON PERUSAL OF THE BILLS BY THE AS SESSING OFFICER HE NOTED THAT THE CAR RENTAL ARE PAID WHICH ARE TAKEN ON HIRE ON A MONTHLY BASIS AND FIXED ROUTES. BEFORE THE ASSESSING OFFICER ASSESSEE WAS GRANTED AN OPPORTUNITY TO GIVE DETAILS OF TDS ON THESE PAYMENTS TO WHICH THE LD AR FAIRLY CONCEDED THAT NO TAX WAS DEDUCTED. ON FURTHER OPPORTUNITY NONE APPEARED BEFORE THE LD ASSESSING OFFICER AND THEREFORE, INVOKING OF PROVISION OF SECTION 40(A ) ( IA) OF THE ACT DISALLOWED A SUM OF RS. 2914071/ - . AGGRIEVED BY THIS ORDER ASSESSEE APPROACHED LD CIT ( A) W HO IN TURN HELD THAT PAYMENT OF CAR RENT IS COVERED UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND THEREFORE, TAX IS REQUIRED TO BE DEDUCTED. IN TURN THE APPEAL OF THE ASSESSEE IS DISMISSED. 4. LD AR ON APPEAL BEFORE US SUBMITTED THE REVISED GROUNDS OF APPEAL WHICH ARE BEING CONSIDERED IN THIS APPEAL. BEFORE US THE LD AR SUBMITTED THAT THESE VEHICLES ARE TAKEN ON HIRE ON FIXED ROUTE MONTHLY BASIS AND THEREFORE PROVISION OF SECTION 194C DOES NOT APPLY IN THE CASE OF THE APPELLANT. HE FURTHER SUBMITTED THA T IN THE RELEVANT YEAR THE EXPLANATION III TO SECTION 194C WHERE IT IS PROVIDED THAT WORK SHALL INCLUDE CARRIAGE OF GOODS AND PASSENGER BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS IS SUBJECT TO TAX DEDUCTION AT SOURCE. IN THE PRESENT CASE ASSESSEE HAS ONLY CARRIED PASSENGERS AND NO T PASSENGER TOGETHER WITH GOODS, THEREFORE, PROVISION OF SECTION 194C DOES NOT APPLY IN THE CASE OF THE ASSESSEE. HE FURTHER STATED THAT BENEFIT OF SECOND PAGE 3 OF 4 M/S CAS TRANSPORT PRIVATE LIMITED V ITO WARD 3 (2) NEW DELHI ITA NO 5291/DEL/2013 A Y 2008 - 09 PROVISO OF SECTION 40(A ) ( IA) MAY BE ALLOWED TO THE ASSESSEE AS HELD B Y ITAT IN CASE OF RAJIV KUMAR VS. ACIT ITA NO. 337/AGRA/2013. 5. LD DR SUBMITTED THAT LD CIT ( A) HAS NOTED AT PARA NO. 5.7 THAT ASSESSEE HIMSELF HAS ADMITTED BEFORE THE LOWER AUTHORITIES THAT PROVISION OF SECTION 194C APPLIES TO THE ASSESSEE. HE FURTHER RELIE D ON PARA NO. 5 OF THE ORDER OF THE LD CIT ( A) WHEREIN IT IS ESTABLISHED THAT PROVISION OF SECTION 194C APPLIES TO THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS APPARENTLY THE ASSESSEE IS PROVIDING VEHICLES FOR CARRIAGE OF PASSENGER. IT IS NOT AT ALL IMPORTANT THAT THEY ARE PROVIDED ON MONTHLY BASIS ON FIXED ROUTES OR OTHERWISE. IT IS APPARENT THAT THE PROVISION OF CLAUSE C OF EXPLANATION III TO SECTION 194C COVERS CARRIAGE OF GOODS AND PAS SENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS AS WORK ON WHICH TAX IS DEDUCTIBLE U/S 194C. IN VIEW OF THIS THERE WAS A CATEGORICAL FINDING OF ASSESSING OFFICER AS WELL AS LD CIT ( A) ON THIS ISSUE. WE FIND NO INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES IN REACHING AT A CONCLUSION THAT TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE ON VEHICLE HIRE CHARGES AMOUNTING TO RS. 2914071/ - U/S 194C OF THE ACT. IN VIEW OF THIS GROUND NO. 1 TO 4 OF THE APPEAL IS DISMISSED. 7. THE GROUND NO. 5 OF THE APPEAL WAS WITH RESPECT TO PRAYER OF THE APPELLANT THAT BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) DO INSERTED W.E.F. 01.04.2013 BY THE FINANCE ACT 2012 SHOULD BE ALLOW TO THE ASSESSEE IN THE CURRENT YEAR I.E. 2008 - 09. FOR THIS ASSESSEE HAS RELIED ON THE DECISIO N OF THE COORDINATE BENCH IN THE CASE OF RAJIV KUMAR VS. ACIT ( SUPRA). LD DR OBJECT TED SAYING THAT THE PROVISION OF SECOND PROVISO APPLIES W.E.F. 01.04.2013. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS ON APPLICABILITY OF SECOND PROVISO TO SECTION 40(A)(IA) INTRODUCED BY THE FINANCE ACT 2012 W.E.F. 01.04.2013 WHETHER APPLICABLE RETROSPECTIVELY OR NOT. HONOURABLE DELHI HIGH COURT IN COMMISSIONER OF INCOME - TAX - 1 V. ANSAL LAND MARK TOWNSHIP (P.) LTD. [2015] 61 TAXMANN.COM 45 / 34 TAXMAN 825 /[2015] 377 ITR 635 /[2015] 279 CTR 384 (DELHI) HAS HELD THAT SECOND PROVISO TO SECTION 40(A ) ( IA) IS DECLARATORY AND CURATIVE AND IT HAS RETROSPECTIVE EFFECT FROM 1 - 4 - 2005 APPROVING THE DECISION THE DECISION OF THE AGRA BENCH OF ITAT IN RAJIV KUMAR AGARWAL V. PAGE 4 OF 4 M/S CAS TRANSPORT PRIVATE LIMITED V ITO WARD 3 (2) NEW DELHI ITA NO 5291/DEL/2013 A Y 2008 - 09 ACIT [IT APPEAL NO. 337 (AGRA) OF 2013], WHERE IN HON HIGH COURT HAS FURTHER HELD THAT COORDINATE BENCH HAS UNDERTAKEN A THOROUGH ANALYSIS OF THE SECOND PROVISO TO S ECTION 40(A)(IA) AND ALSO SOUGHT TO EXPLAIN THE RATIONALE BEHIND ITS INSERTION . IN VIEW OF THE ABOVE WE ARE OF OPINION THAT ASSESSEE IS ELIGIBLE FOR THE BENEFIT OF THE ABOVE PROVISO FOR THE AY 2008 - 09. IN VIEW OF THIS TO THIS EXTENT THE MATTER IS SET ASIDE TO THE FILE OF LD ASSESSING OFFICER TO DECIDE THIS ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO SATISFY THE CONDITION OF FIRST PROVISO TO SECTION 201(1) OF THE INCOME TAX ACT FOR CLAIMING ABOVE BENEFIT WHICH IS LINKED WITH THE SECOND PROVISO TO SECTION 40A (IA) OF THE ACT . IN THE RESULT THE GROUND NO.5 OF THE APPEAL IS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH ABOVE DIRECTION . 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 2 3 / 06 /2016 . - S D / - - S D / - ( I.C.SUD H IR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 / 06 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI