Pioneer personalised hiolidays P.Ltd, Cochin V. DCIT, Ernakulam

ITA 623/COCH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1032 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2011
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA; M ANIL KUMAR
• Assessee Lawyers: VIVEK C GOVIND
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A NO. 623/COCH/2011 ASSESSMENT YEAR: 2007-08 PIONEER PERSONALISED HOLIDAYS PVT. LTD., PIONEER HOUSE, 5 TH CROSS ROAD, W/ISLAND, KOCHI-3 [PAN: AADCP 5711F] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX,CIRCLE-1(3), ERNAKULAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI VIVEK C. GOVIND, CA REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) & SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 08/01/2013 DATE OF PRONOUNCEMENT 11/01/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21-11-2011 PASSED BY LD CIT(A)-II, KOCHI AND IT RELATES TO TH E ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.46,37,834/- MADE U/S 40(A)(IA) OF THE ACT FOR THE FAILURE TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT FROM THE VEHICLE HIRE CHARGES P AID BY THE ASSESSEE. 3. THE FACTS RELATING THERETO ARE STATED IN BRI EF. THE ASSESSEE IS A TOUR OPERATOR AND IN THE COURSE OF CARRYING ON ITS BUSINESS, IT TOOK VEHICLES ON HIRE ACCORDING TO THE BUSINESS NEEDS. ACCORDING TO THE ASSESSEE, IT TOOK THE VEHICLES ON HIRE ON TRIP TO TRIP BASIS. THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FR OM THE HIRE CHARGES PAID BY IT. THE I.T.A. NO. 623/COCH/2011 2 ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDING, NOTICED THAT THE ASSESSEE HAS BEEN ENGAGING THE VEHICLES FROM SAME P ERSONS AND THE HIRE CHARGES PAID TO A PERSON EXCEEDED THE LIMITS PRESCRIBED U/S 194C OF THE ACT. SINCE THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE SAID PAYMENTS, TH E ASSESSING OFFICER DISALLOWED THE CLAIM OF RS.46,37,384/- BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. 4. BEFORE THE LD CIT(A), THE ASSESSEE CONTENDED THAT THE PROVISIONS OF SEC. 194C SHALL NOT APPLY TO IT AND THE PROVISIONS OF SEC. 19 4I SHALL APPLY TO THE HIRE CHARGES PAID BY IT ON HIRING OF VEHICLES. IT WAS FURTHER CONTEN DED THAT THE PROVISIONS OF SEC. 194I WAS APPLICABLE TO ONLY PAYMENT OF RENT FOR USE OF L AND OR BUILDING, BUT IT WAS AMENDED BY THE TAXATION LAWS (AMENDMENT) ACT, 2006 WITH EFF ECT FROM 13.7.2006, BY WHICH THE MACHINERY, PLANT ETC. WERE INCLUDED. ACCORDINGLY I T WAS SUBMITTED THAT THE PROVISIONS OF SEC. 194I SHALL APPLY FROM THE ASSESSMENT YEAR 2008 -09 ONWARDS AND HENCE THE SAID PROVISIONS ALSO SHALL NOT APPLY TO THE YEAR UNDER C ONSIDERATION. HOWEVER, THE LD CIT(A) GAVE A CATEGORICAL FINDING THAT THE PROVISIONS OF S EC. 194I SHALL NOT APPLY TO THE PAYMENT MADE BY THE ASSESSEE ON HIRING OF VEHICLES. THE LD CIT(A) HELD THAT THE PROVISIONS OF SEC. 194C ONLY SHALL APPLY TO THE ASS ESSEE AND ACCORDINGLY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LD CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE MAIN CONTENTION OF THE ASSESSEE IS THAT T HE PROVISIONS OF SEC. 194C SHALL NOT APPLY TO THE FACTS OF THE INSTANT CASE. IT WAS SUBM ITTED THAT THE ASSESSEE HAS SIMPLY HIRED THE VEHICLES FOR THE PURPOSE OF ITS BUSINESS AND IT HAS ONLY CARRIED THE PASSENGERS. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSE SSEE HAS TAKEN THE VEHICLES ON CONTRACT BASIS AND HENCE THE PROVISIONS OF SEC. 194 C SHALL APPLY TO THE PAYMENTS MADE BY THE ASSESSEE. BY INVITING OUR ATTENTION TO THE DEFINITION OF THE WORD WORK GIVEN IN EXPLANATION (IV) OF SEC. 194C, THE LD D.R SUBMITTED THAT THE WORD WORK SHALL INCLUDE CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRA NSPORT OTHER THAN RAILWAYS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. THE CONTENTION MADE BY THE ASSESSEE BEFORE LD CIT(A) THAT THE PROV ISIONS OF SEC. 194I SHALL APPLY TO I.T.A. NO. 623/COCH/2011 3 THE FACTS OF THE INSTANT CASE HAS BEEN REJECTED BY THE FIRST APPELLATE AUTHORITY. WE NOTICE THAT THE REVENUE HAS NOT PREFERRED ANY APPEA L BEFORE US CHALLENGING THE SAID DECISION OF LD CIT(A) AND HENCE WE ARE NOT GOING IN TO THE QUESTION OF APPLICABILITY OF PROVISIONS OF SEC. 194I TO THE FACTS OF THE INSTANT CASE. 7. NOW THE QUESTION THAT ARISES IS WHETHER THE PROVISIONS OF SEC. 194C SHALL APPLY TO THE HIRE CHARGES PAID BY THE ASSESSEE ON THE VEHICL ES HIRED IN. AS PER SUB. SEC. (1) OF SEC. 194C, ANY PERSON RESPONSIBLE FOR PAYING ANY SU M TO ANY RESIDENT (CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK) IN PURSUANCE OF CONTRACT IS REQUIRED TO DEDUCT TAX AT SOURCE AT THE RATES PRESCRIBED IN THAT SECTION. THE WORD WORK HAS BEEN DEFINED IN THE E XPLANATION (IV) TO SEC. 194C, BUT THE SAID EXPLANATION WAS INSERTED INTO THE ACT ONLY WITH EFFECT FROM 01.10.2009. IN THE SAID EXPLANATION THE TERM WORK SHALL INCLUDE CARR IAGE OF GOODS BY ANY MODE OF TRANSPORT OTHER THAN RAILWAYS. IN THE INSTANT CASE , THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE ONLY HAS CARRIED THE PAS SENGERS IN THE COURSE OF CARRYING ON THE BUSINESS OF THE TOUR OPERATOR. THE VEHICLE OWN ERS FROM WHOM THE VEHICLES WERE TAKEN ON HIRE, HAVE SIMPLY HIRED OUT THE VEHICLE TO THE ASSESSEE AND HENCE IT CANNOT BE SAID THAT THE SAID VEHICLE OWNERS CARRIED THE PASSE NGERS. 8. A CAREFUL PERUSAL OF THE PROVISIONS OF SEC. 1 94C WOULD SHOW THAT THE SAID PROVISIONS SHALL APPLY ONLY TO THOSE TYPES OF CONTR ACT WHICH INVOLVE CARRYING OUT ANY WORK AND NOT TO ALL TYPES OF CONTRACT. FOR EXAMPL E, THE EMPLOYMENT OF A PERSON ALSO FALLS IN THE CATEGORY OF CONTRACT, BUT THE P ROVISIONS OF SEC. 194C SHALL NOT APPLY TO EMPLOYMENT CONTRACT. 9. AN IDENTICAL QUESTION WAS CONSIDERED BY THIS BENCH IN THE CASE OF SHRI REEZ KARAKKATTIL RAGHAVAN IN ITA NO.312/COCH/2011 AND TH E TRIBUNAL, IN ITS ORDER DATED 16.11.2012, HAS EXPLAINED THE SCOPE OF PROVISIONS O F SEC. 194C AS UNDER IN PARAGRAPH 5 OF ITS ORDER:- I.T.A. NO. 623/COCH/2011 4 5. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 194C OF THE ACT. SECTION 194C OF THE ACT WOULD BE APPLICABLE WHEN A PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENTS FOR CARRYING OUT A NY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT AT THE TIME OF PAYMENT OR CREDITING THE SAID AMOUNT. THE LEGISLAT URE WITH EFFECT FROM 01-04- 1995 INSERTED EXPLANATION 4(C) TO INCLUDE THE TERM WORK CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. THEREFORE, THE CONTRACT SHALL BE FOR CARRIAGE OF GOODS OR PASSENG ERS OTHER BY RAILWAY. IN THIS CASE, ADMITTEDLY, THE CARRIAGE OF GOODS WAS NOT EN TRUSTED WITH THE LORRY/TRUCK OWNERS FROM WHOM THE TAXPAYER HAS HIRED THE LORRI ES/TRUCKS OR WITH THE TAXPAYER HIMSELF. ADMITTEDLY, THE RESPONSIBILITY OF CARRIA GE OF GOODS REMAINS WITH M/S. LOGOS LOGISTICS PVT. LTD. NO WORK OF CARRIAGE OF GOODS WAS ENTRUSTED EITHER WITH THE TAXPAYER OR WITH THE LORRY/TRUCK OWNERS FROM WHOM THE TAX PAYER HIRED THE LORRIES/TRUCKS. THEREFORE, THERE IS NO CONTRA CT FOR CARRIAGE OF GOODS BETWEEN THE TAXPAYER AND THE LORRY/TRUCK OWNERS FROM WHOM THE TRUCKS/LORRIES WERE HIRED. AS SUCH, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT PROVISIONS OF SEC. 194C ARE NOT APPLICABLE TO THIS TRANSACTION. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE AR E UNABLE TO AGREE WITH THE DECISION TAKEN BY LD CIT(A) AND THE ASSESSING OFFICER. ACCO RDINGLY, WE HOLD THAT THE PROVISIONS OF SEC. 194C SHALL NOT APPLY TO THE PAYMENTS MADE B Y THE ASSESSEE TOWARDS HIRE CHARGES OF VEHICLES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE U/S 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TDS U/S 194C OF THE ACT ON THE HIRE CH ARGES PAYMENTS. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. PRONOUNCED ACCORDINGLY ON 11-01-2013 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 11TH JANUARY, 2013 GJ COPY TO: 1. PIONEER PERSONALISED HOLIDAYS PVT. LTD., PIONEER HOUSE, 5 TH CROSS ROAD, W/ISLAND, KOCHI-3. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1( 3), ERNAKULAM. I.T.A. NO. 623/COCH/2011 5 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COCHIN