The ITO, TDS-2, RAJKOT-GUJARAT V. M/s Siddhartha Const.Co., Keshod

ITA 625/RJT/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1102 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Section: 194C; 201(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI , ACCOUNTANT MEMBER . ITA. NO S . 625 & 626 / RJT /20 14 (ASSESSMENT YEAR S : 200 9 - 1 0 & 20 1 0 - 11 ) INCOME - TAX OFFICER, TDS - 2, RAJKOT APPELLANT VS. M/S. SIDDHARTHA CONSTRUCTION CO. 1 T.P. SHOPPING CENTER, AIRPORT ROAD, KESHOD. RESPONDENT PAN: AAHFS4592E / BY REVENUE : SHRI AVINASH KUMAR, D.R. / BY ASSESSEE : SHRI D. M. RINDANI , C.A. / DATE OF HEARING : 2 6 .0 5 .2015 / DATE OF PRONOUNCEMENT : 29 .0 5 .2015 ORDER PER BENCH THE SE TWO APPEALS FILED BY REVENUE PERTAIN TO SAME ASSESSEE ARE ARISING OUT F R OM THE ORDER S OF CIT(A) - II , RAJKOT , DATED 07 . 0 8 .20 14 . SO, THEY ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I T A NO S . 625 & 626 /RJT/ 14 A.Y. 09 - 10 & 10 - 11 [ I TO VS. M/S. SIDDHARTHA CONST. CO. ] PAGE 2 2. IN ITA NO. 625 / RJT /20 14 FOR A.Y. 2009 - 10 , REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND S : 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ORDER PASSED U/S 201(1) OF THE I.T. ACT OF RS.5,80,529/ - AND INTEREST CHARGED UNDER SECTION 201(LA) OF THE IT ACT OF RS. 70,064 / - . EVEN THOUGH, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S. 194 - I OF THE ACT INSTEAD OF 194C OF THE ACT. 2. THE LD. CIT(A) HAS CRIED IN LAW AS WELL AS ON FACTS BY DELETING THE IMPUGNED ADDITIONS BY OV ERLOOKING THE FACT THAT PAYMENTS WERE MAD E BY THE ASSESSEE FOR TRANSPORTATION OF GOODS, W H EREIN DUMPERS /JCB AND TRACTORS WERE IN THE CONTROL OF THE ASSESSEE IN TERMS OF THE AGREEMENT MADE IN THIS REGARD. 3. THE LD. CIT(A) ERRE D IN IGNORING THE AGREEMENT OF SERVICES ENTERED INTO BY THE ASSESSEE AND THE SERVICE PROVIDERS WHICH LAID THAT THE LOADING AND UNLOADING OF THE DUMPERS/JC B AND TRACTORS HAS TO BE DONE BY THE ASSESSEE AND DUMPERS / JCB AND TRACTORS WERE THE RESPONSIBILITY OF THE ASSESSEE DURING THE TRANSIT AND ANY DAMAGE THERETO WAS TO BE COM PENSATED BY THE ASSESSEE ONLY. 4. THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITIONS BY OVERLOOKING THE FACTS THAT AFTER AMENDMENT IN SECTION 194 - I V IDE TAXATION LAW (AMENDMENT) ACT 2006 , W.E.F. 13.07.2006 TDS ON PAYMENT MADE HI RING OF VEHICLE COVERED U/S.194 - I OF THE ACT. SIMILAR GROUND S HA VE BEEN RAISED BY REVENUE IN A.Y.20 1 0 - 11 . 3 . ISSUE BEFORE US REGARDING TDS LIABILITY OF RS.5,80,529/ - IN RESPECT OF DUMPERS/JCB & TRACTORS HIRE CHARGES. IT WAS OBSERVED BY ASSESSING OFFIC ER THAT ASSESSEE HAS PAID I T A NO S . 625 & 626 /RJT/ 14 A.Y. 09 - 10 & 10 - 11 [ I TO VS. M/S. SIDDHARTHA CONST. CO. ] PAGE 3 RS.53,30,000/ - AS DUMPER HIRE CHARGES TO THREE PARTIES. IT HAD DEDUCTED @ 2.06% U/S.194C. ASSESSING OFFICER HELD THAT TAX SHOULD HAVE BEEN DEDUCTED @ 10.3% AS REQUIRED U/S.194I. ASSESSING OFFICER COMPUTED DEFAULT BY WAY OF SHOR T DEDUCTION OF TAX AT RS.4,39,192/ - . SIMILARLY, ASSESSEE PAID TRACTOR HIRE CHARGES OF RS.17,20,000/ - ON WHICH IT HAD DEDUCTED TAX AT SOURCE @ 2.06% U/S. 194C. ASSESSING OFFICER HELD THAT TAX SHOULD HAVE BEEN DEDUCTED @ 10.3% AS REQUIRED U/S. 194I. ASSESS ING OFFICER COMPUTED DEFAULT BY WAY OF SHORT DEDUCTION OF TAX AT RS.1,41,278/ - . 3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) HAS GRANTED RELIEF TO ASSESSEE. SAME HAS BEEN OPPOSED ON BEHALF OF ASSESSEE INTER ALIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE ORDER PASSED U/S. 201(1) OF THE ACT OF RS.5,80,529/ - AND INTEREST CHARGED U/S.201(1A) OF THE ACT OF RS.70,064/ - . EVEN THOU GH, ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S.194I OF THE ACT INSTEAD OF 194C. ACCORDINGLY, ORDER PASSED BY CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 3.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT ASSESSEE HAS MADE PAYMENT FOR COMPOSIT AMOUNT OF WORK ON HOURLY BASIS, THERE WAS NO TRANSFER OF I T A NO S . 625 & 626 /RJT/ 14 A.Y. 09 - 10 & 10 - 11 [ I TO VS. M/S. SIDDHARTHA CONST. CO. ] PAGE 4 POSSESSION AND VEHICLES WOULD GO BACK TO THE OWNERS AFTER WOR K WAS DONE, COST OF FUEL, MAINTENANCE, SALARY WAS DONE BY THE OWNER OF VEHICLES AND ASSESSEE HAD ONLY AVAILED OF THEIR SERVICES BY WAY OF GETTING WORK DONE FOR DIGGING AND TRANSPORATION. THIS SORT OF ARRANGEMENT DOES NOT AMOUNT TO RENTING OF VEHICLE BUT I S A CONTRACTUAL ARRANGEMENT FOR GETTING SPECIFIED WORK DONE BY DUMPERS AND OTHER VEHICLES AND THUS, COVERED U/S.194C AND NOT UNDER THE PROVISIONS OF SECTION 194I AS HELD BY ASSESSING OFFICER. HON BLE GUJARAT HIGH COURT IN CASE OF CIT(TDS) VS. SHRI MAHALAX MI TRANSPORT CO. 339 ITR 484 HAS HELD AS UNDER: THE COMMISSIONER (APPEALS) UPON APPRECIATION OF THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD GIVEN SUB - CONTRACTS OF TRANSPORTATION OF GOODS FROM ONE PLACE TO ANOTHER. TO PROVE THE NATURE OF CONTRAC TS, THE ASSESSEE HAD PRODUCED VARIOUS BILLS ISSUED BY SUCH SUB - CONTRACTORS TO SHOW THAT THE CONTRACTS WERE MAINLY CARRIED OUT FOR SH IFTING OF GOODS FROM ONE PLACE T O ANOTHER. THE COMMISSIONER (APPEALS) ALSO FOUND THAT THE CHARGES WERE COLLECTED BY SUB - CON TRACTORS ON THE BASIS OF THE QUANTITY OF GOODS TRANSPORTED AND THE NUMBER OF TRIPS CARRIED OUT; THE ASSESSEE HAD NOT AC QUIRED DUMPERS ON RENT OR LEASE; AND THAT THE POSSESSION AND CONTROL OF VEHICLES WAS WITH THE SUB - CONTRACTORS, WHO ONLY PROVIDED SERVICE S OF SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER PLACE. IT WAS NOTED THAT EVIDENCE IN SUPPORT OF THE ABOVE WAS SUBMITTED TO THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. IN THE BACKGROUND OF THE AFORESAID FINDINGS OF FACT RECORDED BY HIM, THE COMMIS SIONER (APPEALS) WAS OF THE VIEW THAT WHEN THE TRANSPORTATION CONTRACT WAS IN THE NATURE OF SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER, SUCH CONTRACTS WOULD BE COVERED AS WORKS CONTRACTS AND THE PROVISIONS OF SECTION 194C WOULD BE APPLICABLE. ACCORDING T O THE COMMISSIONER (APPEALS), SINCE THE ASSESSEE HAD GIVEN SUB - CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENT, SUCH PAYMENTS COULD NOT BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECT ION 194 - I OF THE ACT WOULD NOT I T A NO S . 625 & 626 /RJT/ 14 A.Y. 09 - 10 & 10 - 11 [ I TO VS. M/S. SIDDHARTHA CONST. CO. ] PAGE 5 APPLY TO SUCH CONTRACTS. THE COMMISSIONER (APPEALS) ACCORDINGLY HELD THAT THE ASSESSEE HAS RIGHTLY DEDUCTED TDS UNDER SECTION 194C OF THE ACT; THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE UNDER THE TDS PROVISIONS AN D AS SUCH THERE WAS NO SHORT DEDUCTION OF TAX AND SET ASIDE THE LEVY OF INTEREST UNDER SECTION 201 ( I A) OF THE ACT . . 9. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY PROVISIONS, FROM THE FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) IT IS APPARENT THAT THE ASSESSEE HAS NOT TAKEN THE DUMPERS ON HIRE/RENT FROM THE PARTIES IN QUESTION. THE ASSESSEE HAS GIVEN CONTRACTS TO THE SAID PARTIES FOR THE TRANSPORTATION OF GOODS AND HAS NOT TAKEN MAC HINERIES AND EQUIPMENT ON RENT. IN THE CIRCUMSTANCES, THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE TRANSACTIONS IN QUESTION BEING IN THE NATURE OF CONTRACTS FOR SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER WOULD BE COVERED AS WORKS CONTRACTS , THEREBY ATTRACTING THE PROVISIONS OF SECTION 194C OF THE ACT. THAT SINCE THE ASSESSEE HAD GIVEN SUB - CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENT, SUCH PAYMENTS COULD NOT BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECTION 194 - I OF THE ACT WOULD NOT BE APPLICABLE. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN UPHOLDING THE ORDER PASSED BY THE COMMISSIONER (APPEALS).' IN THIS BACKGROUND, CIT(A) WAS JUSTIFIED IN HOLDING THAT ASSESSEE HAD PROPERLY DEDUCTED TAX AS PER PROVISIONS OF SECTION 194C INSTEAD OF SECTION 194I. THUS, THERE WAS NO DEFAULT COMMITTED BY ASSESSEE REGARDING TDS IN RESPECT OF THESE PAYMENTS. THUS, CIT(A) WAS JUSTIFIED IN GRANTING RELIEF TO ASSESSEE. THIS REASONED LE GAL AND FACTUAL FINDING OF CIT(A), NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. SIMILAR ISSUE RAISED IN ITA NO. 626/RJT/2014 FOR A.Y. 2010 - 11. FACTS BEING SIMILAR, SO, FOLLOWING SAME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FIND ING OF CIT(A) WHO HAS I T A NO S . 625 & 626 /RJT/ 14 A.Y. 09 - 10 & 10 - 11 [ I TO VS. M/S. SIDDHARTHA CONST. CO. ] PAGE 6 DELETED THE ORDER PASSED U/S.201(1) OF THE ACT OF RS.83,569/ - AND INTEREST CHARGED U/S.201(1A) OF THE ACT OF RS.3,343/ - . SAME IS UPHELD. 5 . IN THE RESULT, APPEAL S FILED BY REVENUE FOR BOTH YEARS ARE DISMISSED . PRONOUNCED IN THE OP EN COURT ON THIS THE 29 TH DAY OF MA Y , 201 5 . SD/ - SD/ - (N. S. SAINI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT : DATED 29 /0 5 /2015 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO: - 1. THE A PPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, RAJKOT 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT