Associated Road ways (P) Limited, Hyderabad V. Dy.CIT, Circle-1(1), Hyderabad

ITA 63/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2968 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMISH S GUPT
• Assessee Lawyers: K C DEVADAS
• Keywords: Reopening of assessment; Audit objection; Retrospective amendment; Non compliance; Procedural lapse
• Section: 43B; 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 63/HYD/2013 ASSESSMENT YEAR: 2009-10 ASSOCIATED ROADWAYS (P) LTD., ... APPELLANT HYDERABAD. (PAN AABCA7122R) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT CIRCLE 1 (1), HYDERABAD. APPELLANT BY : SHRI K.C. DEVADAS RESPONDENT BY : SMT. AMISH S. GUPT DATE OF HEARING : 21/03/2013 DATE OF PRONOUNCEMENT : 20/05/ 2013 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, HYDERABAD DATED 11/02/2012 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPE AL IS PERTAINING TO REOPENING OF ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE IT ACT. 2 ND GROUND IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF RS. 3,94,28,546/- ON THE REASON THA T THE ASSESSEE HAS NOT OBTAINED FORM 15-I AND ALSO HAD NOT FILED F ORM NO. 15-J, THOUGH PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPL ICABLE IN THE ASSESSEES CASE. 2 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY FILED ITS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL INCOME OF RS. 85,39,865/- FOR THE AY 2009-10, WHICH WAS PROCE SSED U/S 143(1) OF THE IT ACT. SUBSEQUENTLY, A NOTICE U/S 14 8 WAS ISSUED ON 04/02/2011 AND IN RESPONSE TO THIS NOTICE, THE A SSESSEE FILED A LETTER DTED 12/03/2011 STATING THAT THE RETURN OF I NCOME ALREADY FILED U/S 139(1) OF THE ACT ON 30/09/2009 MAY BE TR EATED AS THE ONE FILED U/S 148 OF THE IT ACT. THE ASSESSEE IS A TRANSPORT CONTRACTOR AND RECEIVED FREIGHT CHARGES AT RS. 16.9 4 CRORES AND ON THIS THE ASSESSEE DECLARED INCOME OF RS. 85.39 L AKHS. FOR CARRYING OUT THIS BUSINESS, THE ASSESSEE OWNED TRUC KS AND ALSO ENGAGED OUTSIDE TRUCKS FOR WHICH AN AMOUNT OF RS. 1 3.89 CRORES WAS DEBITED AS HIRE CHARGES AND THE SAME WAS CLAIME D. THE AO NOTED THAT IN THE TAX AUDIT REPORT IN FORM NO. 3CD, THE TAX AUDITOR HAS MADE THE FOLLOWING OBSERVATIONS: 'THE ASSESSEE HAS ALSO INCURRED A TOTAL AMOUNT OF RS.3, 94,28,546/- AS LORRY FREIGHT PAYMENT TO DRIVERS WHO HAD UNDERTAKEN TO SUBMIT FORM 15-I. HOWEVER, ON VERIFICATION, IT IS OBSERVED THAT FORM 15-1 WAS RECEIVED TO THE EXTE NT OF RS.3, 06, 79,523/- ONLY, OUT OF WHICH IN SOME CASES, AGGREGATING TO RS.16, 76, 700/- THE FORM IS INCOMPLETE. IN OTHER CASES WHEREVER: TDS LIABILITY WAS THERE, THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AND PAID TO THE GOVERNME NT. IN ALL CASES WHERE FORM 15-I HAS BEEN RECEIVED BY THE COMPANY, IT HAS NOT FILED THE PRESCRIBED FORM 15-J TO THE DEPARTMENT. AS PER PROVISIONS OF SEC. 194-C OF THE ACT, WHEREVE R THE HIRE CHARGES EXCEEDS RS.50,000/- PER PARTY, THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE. HOWEVER AS OBSERVED BY THE TAX AUDITOR IN FORM 3CD, ON AN AMOU NT OF RS. 3, 94,28,546/-, THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ALLEGEDLY ON THE GROUND THAT THE LORRY OWNER S HAD UNDERTAKEN TO SUBMIT FORM 15-I. THE TAX AUDITOR FUR THER OBSERVED THAT THE ASSESSEE HAD RECEIVED FORM15-1 TO THE EXTENT OF RS.3,06,79,523/- ONLY OUT OF WHICH IN SOM E CASES, AGGREGATING INTO RS.16,76,700/- THE FORMS ARE INCOMPLETE/DEFECTIVE. FROM THE OBSERVATION OF THE T AX 3 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. AUDITOR, IT IS CLEAR THAT THE ASSESSEE HAS NOT OBTA INED FORM 15-1 BEFORE ACTUAL TIME OF PAYMENT. IN FACT THERE I S NO EVIDENCE OF OBTAINING THE SAME EVEN BEFORE THE CLOS URE OF ACCOUNTING YEAR. AS PER IT RULE 290, THE ASSESSEE W AS UNDER OBLIGATION TO SUBMIT THE FORM 15-1 RECEIVED BY HIM ALONG WITH FORM 15-J TO THE COMMISSIONER OF INCOME TAX BE FORE 30T H JUNE OF THE FOLLOWING YEAR, WHICH IN THIS CASE HAP PENS TO BE 30.6.2007. HOWEVER, IT IS NOTICED THAT THE AS SESSEE HAS NOT SUBMITTED THE SAME TO THE CIT WITHIN THE PR ESCRIBED TIME LIMIT OR AT LEAST BEFORE THE DUE DATE FOR FILI NG OF THE RETURN OF INCOME AS REQUIRED UNDER THE LAW. THE ASSESSEE SUBMITTED A BUNCH OF COPIES OF FORMS 15-1 AND FORM 15-J TO THE CIT ON 7-2-2011 ONLY. IT IS RELEVANT TO NOTE TH AT THE ASSESSEE HAD SUBMITTED THE COPIES OF FORM 15-1 ONLY AFTER RECEIPT OF NOTICE U/S148 OF THE ACT. SINCE THE DUE DATE FIXED UNDER THE RULES WAS 30.6.2007, THE ASSESSEE SHOULD HAVE FILED THE SAME BEFORE THAT DATE. HENCE, IN THE EYES OF LAW, THERE WAS NO VALID FORM 15-I OR FORM 15-J.' 4. WHEN THE ASSESSEE WAS QUESTIONED ON THE ABOVE RE PORT OF THE AUDITOR, IT WAS STATED BY THE ASSESSEE THAT IT WAS ONLY A PROCEDURAL LAPSE AND IT DOES NOT DISTINCT THE ASSES SEE TO CLAIM EXEMPTION AS PER THE SECOND PROVISO TO SECTION 194C (D) OF THE IT ACT. FOR THIS PROPOSITION, THE ASSESSEE RELIED ON T HE DECISION OF THE ITAT, AHMADABAD IN THE CASE OF VALIBHAI KHANBH AI MANDAD VS. DCIT, 56 DTI 89. THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT IT IS NOT A MERE PROCED URAL MISTAKE AS THE ASSESSEE PAID THE HIRE CHARGES WITHOUT HAVING A DECLARATION IN FORM 15-I FROM THE PARTIES AND THEREAFTER THE ASSES SEE HAS TO FILE FORM NO. 15-J WITHIN THE PRESCRIBED TIME LIMIT BEFO RE THE CONCERNED AUTHORITIES. AS THE SAID FORMS WERE FILED ONLY AFTER RECEIPT OF NOTICE U/S 148 AND THE PAYMENTS TOWARDS HIRE CHARGES WERE MADE WITHOUT HAVING FORM NO. 15-I, THERE WAS A DEFAULT U/S 194C OF THE IT ACT, THEREFORE, THE AO DISALLOWED TH E PAYMENT OF HIRE CHARGES TO THE EXTENT OF RS. 3,94,28,546/- WHI LE PASSING ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 148 O F THE IT ACT. HOWEVER, THE AO WAS OBSERVED THAT OUT OF RS. 3,94,2 8,546/- THE 4 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. ASSESSEE HAD FURNISHED 15-I FORM TO THE EXTENT OF R S. 3,06,79,523/- AND NO FORM 15-I FILED REMAINING BALA NCE AMOUNT OF RS. 87,49,023/-, WHICH WARRANTS DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THEREFORE, THE AO DISALLOWED AN AMOUNT OF RS. 87,49,023/- U/S 87,49,023/-. IN THE COURSE OF THE A SSESSMENT, THE AO ALSO WANTED TO EXAMINE THE CORRECTNESS OF TH E FORM NO. 15-I AND SENT LETTERS TO THE PARTIES NAMED IN THE F ORM NO. 15-I TO THE STATED ADDRESSES. ALL THE LETTERS HAVE RETURNED BY THE POSTAL DEPARTMENT WITH REMARKS SUCH AS NO SUCH PERSON, IN SUFFICIENT ADDRESS, UNCLAIMED, INCORRECT ADDRESS, ETC. WH EN IT WAS PUT TO THE ASSESSEE, IT WAS CONTENDED THAT IN THE BUSINESS OF TRANSPORTATION THE LORRIES ARE PURCHASED AND SOLD F REQUENTLY AND IT WAS QUITE POSSIBLE THAT THE PERSON WHO TRANSPORTED GOODS MAY NOT BE THE OWNER OF THE LORRY AFTER SOME TIME AND I N SUCH CIRCUMSTANCES THE CONFIRMATION FROM SUCH LORRY OWNE RS IS PRACTICALLY IMPOSSIBLE. BEING SO, IT WAS NOT DELIVE RED TO THE CONCERNED PERSON TO WHOM THE LETTERS WERE SENT. AC CORDINGLY, THE AO MADE THE DISALLOWANCE TO THE TUNE OF RS. 3,9 4,28,546/-. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE AO. 6. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US S UBMITTED THAT THOUGH THE ASSESSEE RAISED GROUND NO. 1 RELATI NG TO THE REOPENING OF ASSESSMENT U/S 147/148 BEFORE THE CIT( A), THIS GROUND WAS NOT ADJUDICATED BY THE CIT(A), AS SUCH, THIS GROUND MAY BE ADJUDICATED BY THIS TRIBUNAL. THE LEARNED CO UNSEL RELIED ON THE DECISION IN THE CASE OF EASTERN NEWS PAPER S OCIETY VS. CIT, 119 ITR 996 (SWC) WHEREIN IT WAS HELD THAT OPI NION OF THE 5 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. INTERNAL AUDIT PARTY ON A POINT OF LAW DOES NOT CON STITUTE INFORMATION FOR THE PURPOSE OF SECTION 147(B) OF THE IT ACT, BEING SO, REOPENING ON THAT REASON IS BAD IN LAW. H E ALSO SUBMITTED THAT THE ASSESSEE RAISED A GROUND BEFORE THE CIT(A) REGARDING THE ISSUE OF REOPENING, BUT, THE CIT(A) F AILED TO ADJUDICATE THE SAME, THEREFORE, IT SHOULD BE INFERR ED THAT THE CIT(A) DULY CONSIDERED THE GROUND AND DISMISSED THE SAME. FOR THIS PROPOSITION, THE LEARNED AR RELIED UPON THE JU DGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S TEEL CAST CORPORATION [1977] 107 ITR 683 AND ALSO THE JUDGMEN T OF THE HONBLE AP HIGH COURT IN THE CASE OF ADDL. CIT VS. CHEKKA AYYANNA & SONS, [1977] 106 ITR 313. 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT ASSESSMENT WAS REOPENED DUE TO AUDIT OBJECTION. THE LEARNED DR RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COU RT IN THE CASE OF CIT VS. PVS BEEDIES PVT. LTD., 237 ITR 13 ( SC). HE ALSO RELIED ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. FIRST LEASING COMPANY OF INDIA LTD., 241 IT R 248 (MAD.) 9. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. TH IS GROUND WAS RAISED BY THE ASSESSEE BEFORE THE CIT(A) AS GRO UND NO. 1, WHICH READS AS FOLLOWS: 1. THE ORDER PASSED BY THE HONBLE AO U/S 143(3) R. W.S. 47 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009- 10 IS BAD IN LAW, CONTRARY TO THE FACTS AND CIRCUMS TANCES OF THE CASE. 10. THE CIT(A) HAD NOT AT ALL ADJUDICATED THE SAID GROUND AND DECIDED THE APPEAL ON MERITS. BEING SO, IT IS PROPE R TO REMIT THIS REOPENING ISSUE TO THE FILE OF CIT(A) AFTER CONSIDE RING THE ARGUMENT ADVANCED BY THE PARTIES. THIS GROUND IS AL LOWED FOR STATISTICAL PURPOSES. 6 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 11. COMING TO THE MERITS OF THE ISSUE RAISED, THE L EARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROVISIONS OF SECTION 194C(2) ARE NOT APPLICABLE TO THE ASSESSEES CASE A S THE ASSESSEE TOOK THE VEHICLES ON HIRE CHARGES, THEREFORE, THE P ROVISIONS OF SECTION 194C(2) DO NOT ATTRACT TO THE CASE OF THE A SSESSEE. THE PROVISIONS OF SECTION 194C ARE APPLICABLE TO PAYMEN TS FOR CARRYING OUT ANY WORK, MAN POWER IS THE SINE-QUA-NON AND WIT HOUT MANPOWER, IT CANNOT BE SAID THAT WORK HAS BEEN CARR IED OUT. U/S 194C OF THE ACT CARRYING OUT ANY WORK IS THE SUBS TANCE FOR MAKING PAYMENT A PAYMENT RELATING TO SUCH WORK, LIA BLE FOR DEDUCTION OF TAX AT SOURCE. THE PROVISIONS OF SECTI ON 194C ARE ATTRACTED ONLY WHERE ANY SUM IS PAID FOR CARRYING O UT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WOR K. ACCORDING TO THE LEARNED COUNSEL, IN THE PRESENT CASE, THE ASSES SEE ONLY HIRED TRUCKS FOR TEMPORARY PERIOD WITHOUT MANPOWER AS THE RE IS NO CARRYING OUT OF ANY WORK CANNOT AMOUNT TO CARRYING OUT OF ANY WORK. HE RELIED ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. POOMPUHAR SHIPPING CORPORATION LTD. [2006] 282 ITR 3 (MAD) WHEREIN IT WAS HELD THAT HIRING OF SHIP S FOR THE PURPOSE OF USING THEM IN THE ASSESSEES BUSINESS DI D NOT AMOUNT TO A CONTRACT FOR CARRYING OUT ANY WORK AS CONTEMPL ATED IN S. 194C OF THE ACT. AS PER THE EXPLANATION III TO S. 1 94C OF THE ACT, WORK SHALL ALSO INCLUDE CARRYING OUT OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORTATION OTHER THAN RAILWAYS. THE LEARNED AR SUBMITTED THAT IN THE CASE UNDER CONSIDERATION THE ASSESSEE MADE PAYMENTS FOR HIRING OF TRUCKS AND THE ASSESSEE HAD TAKEN TEMPORARY POSSESSION OF THE TRUCKS, WHICH DOES NOT FALL IN THE PROVISIONS OF SECTION 194C AND THERE IS NO QUESTION OF DEDUCTION OF TDS. HE ALSO SUBMITTED THAT THERE WAS AN AMENDM ENT TO SECTION 194-C(6) BY THE FINANCE ACT, 2009 WITH EFFE CT FROM 7 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 01/10/2009 WHEREBY, SUB-SECTION (6) TO 194C HAS BEE N INTRODUCED, WHICH IS AS FOLLOWS: NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOU S YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BU SINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNI SHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM 12. THE LEARNED AR SUBMITTED THAT THIS SECTION WOUL D BE CONSIDERED AS RETROSPECTIVE EFFECT IN VIEW OF THE J UDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM E XTRUSIONS LTD., [2009] 319 ITR 306 (SC) WHEREIN IT WAS HELD T HAT OMISSION OF SECOND PROVISO TO SECTION 43B AND THE AMENDMENT OF FIRST PROVISO BY FINANCE ACT, 2003, BRINGING ABOUT UNIFOR MITY IN PAYMENT OF TAX, DUTY, CESS AND FEE ON ONE HAND AND CONTRIBUTIONS TO EMPLOYEES WELFARE FUNDS ON THE OTHER ARE CURATIV E IN NATURE AND THUS EFFECTIVE RETROSPECTIVELY WITH EFFECT FROM 1988, I.E. THE DATE OF INSERTION OF PROVISO. FURTHER, THE LEARNED AR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD. ETC. VS. CIT [1977] 224 ITR 677. 13. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED AR SUBMITTED THAT NON-FILING OF FORM NO. 15-I IS NOT FATAL AND I F THE ASSESSEE IS ABLE TO FILE THE SAME BEFORE THE AUTHORITIES BY THE TIME OF ASSESSMENT, WHICH COULD BE CONSIDERED AS DUE COMPLI ANCE OF THE IT ACT. IT IS SUBMITTED THAT THE ASSESSEE HAS DULY FILED THESE FORM 15-I BEFORE THE AO AND THE CIT(A) AND EVEN AFTER F ILING THE SAID FORM FINDING ERRORS, WHICH ARE NOT MATERIAL AND FOR M NO. 15-J HAS TO BE ACCEPTED. IT IS SUBMITTED THAT WHAT ARE THE I NFORMATION REQUIRED TO GRANT RELIEF TO THE ASSESSEE ARE VERY M UCH AVAILABLE IN THE FORMS AND THE ASSESSEES CASE TO BE CONSIDERED FOR ALLOWING OF DEDUCTION CLAIMED BY THE ASSESSEE. 8 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 14. THE LEARNED AR SUBMITTED THAT AS SOON AS THE AS SESSEE IS IN POSSESSION OF THE FORM NO. 15-I RECEIVED FROM THE T RUCK OWNERS, THE ASSESSEE NOT REQUIRED TO DEDUCT TAX FROM SUCH P AYMENTS. ONCE DEDUCTIBILITY OF TAX DEPENDS UPON SUBMISSION O R NON- SUBMISSION OF FORM 15-I FROM THE TRUCK OWNERS TO TH E ASSESSEE, THEN NON COMPLIANCE OF THIRD PROVISO BECOMES MERELY TECHNICAL WITHOUT AFFECTING IN SUBSTANCE THE DEDUCTIBILITY OR NON- DEDUCTIBILITY OF TAX ON PAYMENTS MADE BY THE ASSESS EE TO THE TRUCK OWNERS. THEREFORE, NON COMPLIANCE OF THIRD P ROVISO BECOMES MERELY A TECHNICAL DEFAULT, WHICH EVEN IF, REMAINED NON COMPLIED WOULD NOT AFFECT THE OPERATION OF SECTION 40(A)(IA) OF THE ACT. 15. ACCORDING TO THE LEARNED AR NON-FILING OF FORM 15-J BEFORE THE AO IS ONLY A PROCEDURAL LAPSE AND IN NO WAY TAK E INTO ELIGIBILITY OF EXEMPTION TO THE ASSESSEE, WHICH IS PROVIDED IN SECOND PROVISO TO SECTION 194C(3) OF THE IT ACT. FO R THIS PURPOSE, HE RELIED ON THE DECISION OF THE AHMEDABAD BENCH IN THE CASE OF VALIBHAI KHANBHAI MANKAD VS. DCIT, 56 DTR 89. FURTH ER, THE LEARNED AR SUBMITTED THAT AS PER THE SECOND PROVISO TO SECTION 194C(3) AS APPLICABLE DURING THE RELEVANT AY, NO DE DUCTION WAS REQUIRED TO BE MADE FOR ANY PAID AMOUNT PAID TO SUB -CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING, LE ASING GOODS CARRIAGE, IN CASE THE SUB-CONTRACTOR MAKES A DECLAR ATION IN THE PRESCRIBED FORM NO. 15-I. ACCORDING TO THE LEARNED AR, THE ASSESSEE MADE PAYMENTS TO LORRY OWNERS BY NOT DEDUC TING TAX AT SOURCE SINCE THE ASSESSEE HAD COLLECTED DECLARATION FROM THE TRUCK OWNERS TO WHOM THE PAYMENTS HAS BEEN MADE IN FORM N O. 15-I. ACCORDING TO THE LEARNED AR, FORM NO. 15-I IS A SEL F-DECLARATION FROM THE TRUCK OWNERS AND THAT INFORMATION GIVEN IN THE 9 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. DECLARATION TO BE CONSIDERED AS COMPLETE AND CORREC T AND THE ASSESSEE HAS IN NO WAY REQUIRED TO VERIFY THE GENU INENESS OF THE FORM NO. 15-I. IF THE ASSESSEE IS IN POSSESSION OF FORM NO. 15-I, THERE IS NO NECESSITY OF DEDUCTION OF TDS FROM THE SAME. 16. THE LEARNED AR RELIED ON THE PARA 6 OF THE JUDG MENT OF COORDINATE BENCH IN THE CASE OF ACIT VS. SRI SAI RO AD WAYS IN ITA NOS. 819 & 820/HYD/2010 FOR AY 2005-06 DATED 30/11/ 2010, WHICH READS AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN A SUB CONTRACT, A PRUDENT CONTRACTOR WOULD INCLUDE ALL TH E LIABILITY CLAUSES IN THE AGREEMENT ENTERED INTO BY HIM WITH T HE SUB CONTRACTOR. THE ASSESSEE HAS ALSO CLAIMED BEFORE T HE TAX AUTHORITIES THAT THE RESPONSIBILITY IN THE WHOLE PR OCESS LIES WITH IT ONLY. THOUGH THE PASSING OF LIABILITY IS N OT THE ONLY CRITERIA TO DECIDE ABOUT THE EXISTENCE OF SUB CONTR ACT, YET THIS CONTENTION OF THE ASSESSEE READ WITH THE LIABI LITY CLAUSES OF THE WORK SUPPORTS ITS SUBMISSION THAT THE INDIVI DUAL VEHICLE OWNERS ARE SIMPLE HIRERS OF THE VEHICLES. W E FIND THAT THE CIT(A) IS CORRECT IN HOLDING THAT IN THE INSTANT CASE, THERE IS NO MATERIAL TO SUGGEST THAT THE OTHE R LORRY OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE BY SPENDING THEIR T IME, ENERGY AND BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT WORK AND THE PAYMENT MADE TO THE LORRY OW NERS STANDS AT PAR WITH THE PAYMENTS MADE TOWARDS SALARI ES, RENT, ETC. WE FIND THAT THE REASONING OF THE ASSESS ING OFFICER TO HOLD THAT THE PAYMENT MADE FOR HIRED VEHICLES IS A SUB CONTRACT PAYMENT IS NOT CORRECT AND NOT BASED ON RE LEVANT CONSIDERATION AND HENCE IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRED VEHICLES WOULD FALL IN THE CATEGORY OF PAYMENT TOWARDS SUB CONTRACT WITH THE LORRY OWNERS. IN THAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194C (2) OF THE AC T AND CONSEQUENTLY THE PROVISIONS OF SECTION 40(A)(IA) SH ALL NOT APPLY TO SUCH PAYMENTS. AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THE FIRST APPELLATE AUTHORITY IS PERFECTLY JUSTIFIED IN DELETING THE ADDITION OF RS.10,42,038 MADE UNDER SECTION 40(A)(I A) OF THE ACT BY THE ASSESSING OFFICER. THEREFORE, WE ARE NOT INCLINED TO ACCEPT THE CONTENTIONS OF THE LEARNED 10 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. DEPARTMENTAL REPRESENTATIVE ON THIS ISSUE AND UPHOL D HIS FINDING. IN VIEW OF THE ABOVE, THE GROUND RAISED B Y THE REVENUE IS DISMISSED. 17. HE FURTHER RELIED ON THE ORDER OF ITAT, KOLKATA IN THE CASE OF ITO VS. M/S MGB TRANSPORT IN ITA NO. 2280/KOL/2010 FOR AY 2007-08 ORDER DATED 15/03/2013 WHEREIN IT WAS HELD AS FOLLOWS: 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET IT IS SEEN THAT ASSESSEE HAS PAID DUMPER HIRE CHARGES AMOUNTIN G TO RS. 36,37,815/- TO TEN DIFFERENT PARTIES. ACCORDING TO THE AO, NO TDS HAS BEEN DEDUCTED ON THESE PAYMENTS, THO UGHT THESE WERE CONTRACTUAL/SUB-CONTRACTUAL PAYMENT IN N ATURE UNDER SECTION 194C OF THE ACT. ACCORDING TO AO SINC E THERE IS DEFAULT IN NOT DEDUCTING TDS, THE PAYMENTS MADE ATTRACT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASS ESSEE COULD NOT EXPLAIN BEFORE AO AS TO WHY TDS WAS NOT D EDUCTED THE AO MADE THE DISALLOWANCE. AGGRIEVED, THE ASSESS EE PREFERRED APPEAL BEFORE THE CIT(A). CIT(A) DELETED THE DISALLOWANCE BY FOLLOWING THE DECISION OF ITAT, A BENCH, KOLKATA IN THE CASE OF M/S SAMANWAYA IN ITA NO. 484/KOL./2008 DATED 23/04/2009 BY STATING THAT THER E WAS NO CONTRACTUAL AGREEMENT BETWEEN THE ASSESSEE AND T HE DUMPER OWNERS AS NOTED BY THE AO IN THE REMAND REPO RT. WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSE SSEE BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SMT. J. RAMA VS. CIT [2010] 236 CTR (KAR.) 105, WHEREIN IT IS HELD THAT LAW DOES NOT STIPULATE THE EXISTEN CE OF A WRITTEN CONTRACT AS A CONDITION PRECEDENT FOR INVOK ING THE PROVISIONS OF SECTION 194C OF THE ACT WITH RESPECT TO PAYMENT OF TDS. HONBLE KARNATAKA HIGH COURT CONCL UDED AS UNDER: IN ORDER TO PROVIDE VEHICLES TO A CUSTOMER AS PER AGREEMENT, ASSESSEE USED TO HIRE VEHICLES FROM OTHE RS AND HIRING OF VEHICLES BY THE ASSESSEE IS IN THE NA TURE OF TRANSPORT CONTRACT AND HENCE, THE DISALLOWANCE UNDER SECTION 40(A)(IA) WAS JUSTIFIED WHEN NO TAX W AS DEDUCTED AT SOURCE FROM PAYMENTS MADE TO THOSE PERSONS FURTHER FOLLOWING SMT. J. RAMAS CASE OF HONBLE KA RNATAKA HIGH COURT (SUPRA), WE HAVE TAKEN A DECISION DATED 17/02/2012 OF ITAT, KOLKATA BENCH IN ITA NO. 199/KO L/2010 IN THE CASE OF DCIT, CIRCLE 9 VS. KAMAL MUKHERJEE & CO. (SHIPPING) (P) LTD. WHEREIN IT IS HELD AS UNDER: 11 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. FROM HEAD NOTES ..UNDOUBTEDLY THESE DECISIONS DO INDICATE THAT THE RE IS A WORKMAN EMPLOYER RELATIONSHIP BETWEEN THE DOCK WORKERS AND THE STEVEDORES LIKE ASSESSEE WHEN THEY EMPLOY THOSE WORKERS, BUT BE THAT AS IT MAY, THE FA CT REMAINS THAT THE ASSESSEE HAS MADE PAYMENTS TO THE CDLB FOR SUPPLY OF LABOUR, EVEN WHEN THIS LABOUR MA Y BE TREATED AS EMPLOYED BY THE ASSESSEE FOR ALL PRAC TICAL PURPOSES, THE PROVISIONS OF SECTION 194C ARE CLEARL Y ATTRACTED. IN SUCH A SITUATION, I.E. WHEN LABOUR HI RED BY THE ASSESSEE THROUGH CDLB IS CONSIDERED TO BE IN ASSESSEES EMPLOYMENT, THE PAYMENTS MADE TO CDLB CANNOT BE TREATED AS PAYMENTS FOR ANY WORK, BUT NEVERTHELESS THESE PAYMENTS COULD STILL BE COVERED BY THE PROVISIONS OF SECTION 194C BECAUSE THESE ARE PAYMENTS MADE FOR SUPPLY OF LABOUR WHICH ARE SPECIFICALLY COVERED BY SECTION 194C(1). CDLB IS AN AGENT OF THE STEVEDORES LIKE THE ASSESSEE IN THE SE NSE THAT THE LABOUR IS RECRUITED BY THE ASSESSEE THROUG H CDLB, BUT WHEN THIS FACT DOES NOT AFFECT THE NATURE OF PAYMENT BY THE ASSESSEE TO THE CDLB WHICH IS ADMITTEDLY IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR. THE REASONING ADOPTED BY THE COMMISSIONER (APPEAL), THOUGH SOMEWHAT IMPRESSIVE AT FIRST GLANC E, IS FALLACIOUS. THERE IS NO CAUSE AND EFFECT RELATIO NSHIP BETWEEN WORKERS ASSIGNED BY THE CDLB HAVING EMPLOYER WORKMAN RELATIONSHIP WITH THE ASSESSEE AND THE PAYMENTS BEING MADE BY THE ASSESSEE TO CDLB BEING NOT IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR. 4. SINCE THE FACTS AND CIRCUMSTANCES ARE EXACTLY IDENTICAL, WHAT WAS BEFORE US IN KAMAL MUKHERJEE & CO. (SHIPPING) P. LTD. (SUPRA) AND ALSO THAT IN THE CAS E OF SMT. J RAMA OF HONBLE KARNATAKA HIGH COURT (SUPRA), RESPE CTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT EVEN OR AL CONTRACT IS SUFFICIENT AND ADMITTEDLY THE ASSESSEE HAS TAKEN DUMPERS ON HIRE AND HE HAS PAID CHARGES FOR THE SAM E. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE DIS ALLOWANCE MADE BY THE AO AND REVERSE THE ORDER OF CIT(A). HOW EVER, AS REGARD TO ALTERNATIVE ARGUMENTS MADE BY LD. COUN SEL FOR THE ASSESSEE REGARDING APPLICABILITY OF THE DECISIO N OF ITAT, SPECIAL BENCH, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADD. CIT (VISAKHAPATNAM) (SB) REPORTED IN [2012] 136 ITD 23 (SB) WHEREIN IT IS HE LD THAT 12 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. THE DISALLOWANCE WILL BE RESTRICTED TO THE AMOUNT P AYABLE AT THE END OF THE YEAR AND NOT ON THE AMOUNT ALREADY P AID DURING THE RELEVANT YEAR. LD. COUNSEL FOR THE ASSES SEE BEFORE US STATED THAT THIS PAYMENT WAS MADE WITHIN THE DUE DATE AND NOTHING REMAINS PAYABLE AND HE RELIED ON T HE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE C ASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (VISAKHAPATNAM) (SB) REPORTED IN (2012) 136 ITD 23 (SB), WHEREIN IT IS HELD THAT THE TDS IS TO BE DEDUCTED O NLY IN RELATION TO PAYMENTS WHICH REMAINS PAYABLE AT THE E ND OF THE YEAR I.E. 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR. IT WAS POINTED OUT TO LD. COUNSEL THAT THE OPERATION OF TH E ORDER OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERIL YN SHIPPING & TRANSPORTS (SUPRA), IS STAYED BY HONBL E ANDHRA PRADESH HIGH COURT IN I.T.T.A.M.P. NO.908 OF 2012 I N I.T.T.A. NO.384 OF 2012 WHEREIN HONBLE HIGH COURT OBSERVED, INTERIM SUSPENSION. NOTICE. VIDE DATED 8 TH OCTOBER, 2012. 5. ON THIS, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT EFFECT OF THE ORDER STAYING A PENDING APPEAL BEFORE ANY HIGH COURT DOES NOT AMOUNT TO ANY DECLARATION OF LAW BUT IS ONLY BINDING UPON THE PARTIES TO THAT PROCEEDINGS AND SU CH INTERIM ORDER DOES NOT DESTROY THE BINDING EFFECT O F THE PRINCIPALS AS LAID DOWN IN THE ORDER AS A PRECEDENT BECAUSE THE INTERIM ORDER HAD NO OCCASION TO LAY DOWN ANY PROPOSITION OF LAW. FOR THIS PROPOSITION, HE RELIED ON THE CASE LAW OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF PIJUSH KANTI CHOWDHURY VS. STATE OF WEST BENGAL & ORS (200 7) 2 CALLT 577 DATED 14 TH MAY, 2007 WHEREIN, AT PARA 10 AND 13, IT HAS BEEN HELD AS UNDER: 10. AFTER HEARING THE LEARNED COUNSEL FOR THE PART IES AND AFTER GOING THROUGH THE AFORESAID PROVISION WE FIND THAT THE SUPREME COURT BY THOSE INTERIM ORDERS HAS NO DOUBT STAYED THE OPERATION OF THE ORDER OF THE DIVI SION BENCH OF THIS COURT BY DIRECTING THE PARTIES TO MAI NTAIN STATUS QUO AND AT THE SAME TIME, EVEN RESTRAINED TH E STATE FROM INDUCTING THIRD PARTIES ON THE LANDS WHI CH WERE THE SUBJECT-MATTERS BEFORE THE APEX COURT. SUC H INTERIM ORDER IS BINDING UPON THE PARTIES TO THE PROCEEDINGS BUT THE LAW IS EQUALLY SETTLED THAT BY MERE PASSING OF AN INTERIM ORDER STAYING THE OPERATION O F A JUDGMENT WITH CERTAIN FURTHER CONDITIONS, THE EXIST ENCE OF THE SAID JUDGMENT IS NOT WIPED OUT AND AT THE SA ME TIME, FOR SUCH INTERIM ORDERS INTER PARTIES, THE AUTHORITY OF A DECISION AS A PRECEDENT IS NEVER 13 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. UNDERMINED. UNLESS A DECISION IS SET ASIDE BY THE SUPERIOR COURT, THE SAID DECISION REMAINS BINDING A S A PRECEDENT THOUGH MAY NOT BE BINDING UPON THE PARTI ES TO THE PROCEEDINGS WHERE THE SUPERIOR COURT HAS GRANTED INTERIM ORDER. MOREOVER, ONCE A PROVISION H AS BEEN DECLARED ULTRA VIRES THE CONSTITUTION OF INDIA , THE STATE CANNOT INVOKE THE SAID ULTRA VIRES PROCEEDING AGAINST THE CITIZENS OF THE COUNTRY SIMPLY BECAUSE AN INTERIM ORDER OF STAY OF OPERATION ORDER DECLARING THE PROVISION AS ULTRA VIRES HAS BEEN PASSED IN AN APPE AL AGAINST SUCH ORDER. THE OBJECT OF GRANTING INTERIM ORDER IS TO SEE THAT THE RELIEF CLAIMED IN THE APPE AL MAY NOT BECOME INAPPROPRIATE OR THE APPEAL DOES NOT BECOME INFRUCTUOUS FOR NOT GRANTING SUCH INTERIM ORDER; BUT BY MERE GRANT OF INTERIM STAY, THE EFFEC T OF A BINDING PRECEDENT IS NOT DESTABILIZED. OVER AND ABOVE, THE INTERIM ORDERS OF THE STAY GRANTED BY TH E SUPREME COURT CLEARLY INDICATE THAT THE SAID COURT NEVER INTENDED THAT NOTWITHSTANDING THE DECISION OF THE HIGH COURT DECLARING A PART OF THE PROVISIONS OF VE STING AS ULTRA VIRES THE STATE WOULD NEVERTHELESS BE FREE TO PROCEED WITH THE PROCESS OF VESTING DURING THE PENDENCY O THE PROCEEDINGS BEFORE THE SUPREME COURT AND THAT IS WHY STATUS QUO AS REGARDS POSSESSION HA S BEEN MAINTAINED AND EVEN, THE STATE HAS BEEN RESTRAINED FROM CREATING ANY THIRD PARTY INTEREST I N THE LANDS IN QUESTION. 13. THEREFORE, THE EFFECT OF THE ORDER OF STAY IN A PENDING APPEAL BEFORE THE APEX COURT DOES NOT AMOUNT TO ANY DECLARATION OF LAW BUT IS ONLY BINDIN G UPON THE PARTIES TO THE SAID PROCEEDINGS AND AT THE SAME TIME, SUCH INTERIM ORDER DOES NOT DESTROY THE BINDING EFFECT OF THE JUDGMENT OF THE HIGH COURT AS A PRECEDENT BECAUSE WHILE GRANTING THE INTERIM ORDER, THE APEX COURT HAD NO OCCASION TO LAY DOWN ANY PROPOSITION OF LAW INCONSISTENT WITH THE ONE DECLAR ED BY THE HIGH COURT WHICH IS IMPUGNED. 6. EVEN, HONBLE SUPREME COURT IN THE CASE SHREE CH AMUND MOPEDS LTD. VS. CHURCH OF SOUTH INDIA TRUST ASSOCIA TION, MADRAS, AIR 1992 SC 1439, 1444 HAS ANALYSED THE DIFFERENCE BETWEEN STAY OF OPERATION OF AN ORDER AND QUASHINGOF AN ORDER AND HELD THAT STAY OF ORDER OF AN APPELLATE AUTHORITY / COURT BY A HIGHER COURT MEANS THAT THE ORDER PASSED BY THE APPELLATE AUTHORITY / LOWER COU RT STILL 14 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. CONTINUES TO EXIST IN LAW INSPITE OF THE STAY AND ITS EXISTENCE IS NOT DESTROYED. BUT WHERE THE ORDER OF THE APPELLATE / LOWER COURT IS QUASHED AND THE MATTER I S REMANDED BACK, IT MEANS THAT THE APPEAL DISPOSED OF BY THE SAID ORDER OF THE APPELLATE AUTHORITY/LOWER COURT W OULD BE RESTORED AND IT CAN BE SAID TO BE PENDING BEFORE TH E SAID AUTHORITY/LOWER COURT. 7. IN VIEW OF THE ABOVE, PARTICULARLY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PI JUSH KANTI CHOWDHURY (SUPRA), AS ALSO IN OBEDIENCE TO DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHREE CHAMUND MOPEDS LTD. (SUPRA), WE ARE OF THE VIEW THAT THE DE CISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF M ERILYN SHIPPING & TRANSPORTS (SUPRA) STILL HOLDS GROUND AN D ACCORDINGLY, TDS PROVISIONS WILL APPLY, FOR THE PUR POSE OF INVOCATION OF THE PROVISIONS OF SECTION 40(A)(IA) O F THE ACT, ONLY ON THE AMOUNTS REMAINED PAYABLE AT THE END OF FINANCIAL YEAR AND NOT ON THE PAID AMOUNTS. HENCE, WE DIRECT THE AO TO RECOMPUTE THE DISALLOWANCE ACCORDINGLY. A PPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 18. THE LEARNED AR FURTHER RELIED ON THE ORDER OF M UMBAI BENCH OF ITAT IN THE CASE OF ACI VS. MUMBAI ROAD CARRIERS IN ITA NO. 800/MUM/2010 FOR AY 2006-07 DATED 30/09/2011. 19. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THE ASSESSEE COLLECTED FORM 15-I FROM TH E PARTIES AS FOLLOWS: THE LEARNED CIT(A), HYDERABAD FAILED TO NOTE THAT T HE SUM OF RS. 3,94,28,546 COMPRISED OF: I) FORM 15-I OBTAINED BUT FROM 15-J NOT FILED BEFORE CIT - 2,90,02,826 II) NOT OBTAINING OF FORM 15-I - 87,49,02 9 III) DEFECTIVE FORM 15-I OBTAINED - 16,76, 700 TOTAL - 3,94,28,546 15 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 21. SINCE THE GENUINENESS OF THE PAYMENT ITSELF WAS AT STAKE, THE CIT(A) ASKED THE AO TO EXAMINE THE ISSUE AS TO THE GENUINENESS OF THE TRANSACTION AND TO SUBMIT A DETA ILED REMAND REPORT. THE AO SUBMITTED HIS REMAND REPORT VIDE LET TER DT. 29/11/2012, WHICH WAS EXTRACTED BY THE CIT(A) IN HI S ORDER AT PAGES 5 TO 6 IS REPRODUCED AS UNDER: 'AS DIRECTED BY THE CIT(A), ENQUIRIES WERE CAUSED B Y ME THROUGH THE ITI. DURING THE ASST. PROCEEDINGS, AN A MOUNT OF RS. 3,94,28, 5461- WAS ADDED TO INCOME RETURNED ULS 40(A)(IA) OFTHE ACT, AS THE FORM 15-1 PRODUCED AT T HE TIME OF ASSESSMENT, WHICH WAS OBTAINED FROM THE OWNERS O F THE TRUCKS, BY THE ASSESSEE ARE DEFECTIVE AND CONFIRMAT ION LETTERS SENT TO THE TRUCK OWNERS, WERE UNSERVED OR NO REPLIES WERE RECEIVED. I HAVE VERIFIED THE EXPENDITURE WITH REGARD TO FORM 15-J AND FORM 15-1. THE ASSESSEE COMPANY IS USING SPECIALIZE D COMPUTER PACKAGE FOR THE TRANSPORT COMPANIES CALLED F- CUBE FOR RECORDING RECEIPTS AND EXPENDITURE WITH TH E DETAILS OF CONSIGNMENT. CONSIGNEE, CONSIGNOR, FROM AND TO, PAID/TO PAY CONSIGNMENT AND DETAILS OF LORRY RECEIPTS, DEBI T VOUCHERS, TRANSPORT CHALLANS AND BILLS. SOME OF THE TRANSACTIONS WERE VERIFIED RANDOMLY WITH THE ENTRIE S MADE IN THE COMPUTER PACKAGE AND FOUND TO TALLY WITH COPIES OF LORRY RECEIPTS, DEBIT VOUCHERS, TRANSPSORT CHALLANS, BILL S AND THE DETAILS OF ADVANCE GIVEN, BALANCE TO BE PAID TO THE TRUCK OWNERS. OTHER EXPENDITURE INCURRED ALSO WAS VERIFIE D. OBTAINED COPIES OF DEBIT VOUCHERS, LORRY RECEIPTS, TRANSPORT CHALLANS (CONTAINING DETAILS QUANTITY TRANSPORTED; CONTENTS, LOADING AND UNLOADING POINTS, LORRY NUMBERS, THE FR EIGHT CHARGED; ADVANCE RECEIVED, DRIVERS NAME AND SIGNATU RE ETC.) AND BILLS FOR 'PAID CONSIGNMENT' AND MONEY RECEIPTS FOR 'TO PAY CONSIGNMENT' RANDOMLY AND FOUND NO DISCREPANCY. WHEN QUESTIONED ABOUT DEFECTIVE FROM 15-1, ASSESSEE REPLIED THAT MOST OF THE DRIVERS WERE UNEDUCATED AN D THEY DOESN'T KNOW HOW TO FILL THE FORM. ASSESSEE WAS ASK ED TO PRODUCE SOME OF THE TRUCK OWNERS FROM WHERE CONFIRM ATION LETTERS WERE RETURNED BACK UNSERVED OR NO CONFIRMAT IONS WERE RECEIVED. HE HAS PRODUCED THE FOLLOWING FOUR T RUCK OWNERS FORM WHOM STATEMENT WAS RECORDED AND OBTAINE D COPIES OF CERTIFICATE OF REGISTRATION OF THE TRUCK, PAN CARD AS IDENTITY PROOF AND CONFIRMATION FOR THE AMOUNT RECE IVED 16 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. TOWARDS HIRE CHARGES FROM THE ASSESSEE. S.NO. NAME AND ADDRESS OF TRUCK TRUCK NO. AMOUNT RECEIVED TOWARDS REMARKS OWNER HIRE CHARGES (RS.) 1. K.K. KEMAGULLAIAH 1.KA01A8723 2,24,500/- 3017/43,5 H MAIN ROAD, 2 ND 2.KA01 B2261 1,73,200/- BLOCK, NANDINI LAYOUT, BANGALORE-96 2. N.V. V.R. SATYANARAYANA AP37Y4321 1,55,400/- 3-8, PUSHPALEELA NAGAR, THANGELLAMUDI (POST) CHINTALLAPUDI ROAD, ELURU- 534005 3. V THIRUPATHAIAH AP12U8374 2,23,312/- 1- 49/A, JULAPALLY VILLAGE, THALLAKONDAPALLY- MDL, KALVAKURTHY- TO, MAHABOOBNAGAR DIST. 4. SYED AHMED AP10T3068 2,51,100 17 -1- 137/2B, RAIN BAZAR, AP3OTAA07 YAKUTHPURA, HYDERABAD SRI K. K. KEMPAGULLAIAH, IN WHOSE CASE THE LETTER W AS RETURNED UNSERVED, WAS ASKED AS TO WHY HE DID NOT ACCEPT THE LETTER. IN REPLY HE STATED THAT, WHILE WORKING IN A TRANSPORT FIRM, HE PURCHASED TWO TRUCKS FOR WHICH C OLLATERAL SURETY WAS GIVEN BY HIS EMPLOYER AND THE EMPLOYER'S ADDRESS WAS SHOWN/STATED IN THE RC BOOK ISSUED BY TRANSPORT DEPARTMENT. SUBSEQUENTLY, ON CLOSURE OF B USINESS BY HIS EMPLOYER, SRI K.K. KEMPAGULLAIAH WAS OPERATI NG ON IS OWN FROM HIS RESIDENCE. HENCE HE COULD NOT RECEIVE THE LETTER. THE ADDRESS ORIGINALLY GIVEN AT THE TIME OF REGISTRATION WAS NOT THE COMMUNICATION ADDRESS OF T HE SELF. HENCE, THE CONFIRMATION LETTERS WERE NOT CLAIMED BY THE ADDRESS. AS THE ASSESSEE COMPANY IS MAINTAINING EVERY RECORD WITH REGARD TO RECEIPTS AND EXPENDITURE ON HIRE CHARGES PAID TO THE TRUCK OWNERS ALONG WITH THE DETAILS OF DEBIT VO UCHERS, LORRY RECEIPTS, TRANSPORT CHALLANS, MONEY RECEIPTS AND BILLS, THE EXPENDITURE INCURRED BY THE ASSESSEE-COMPANY IN LORRY 17 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. HIRE CHARGES CAN BE SAID TO BE GENUINE AND MAY BE A LLOWED. RANDOMLY OBTAINED XEROX COPIES OF DEBIT VOUCHERS, L ORRY RECEIPTS, TRANSPORT CHALLAN, BILLS RAISED BY ASSESS EE- COMPANY ARE SUBMITTED HEREWITH FOR KIND PERUSAL OF THE CIT(A)-I/, HYDERABAD.' 22. AFTER GOING THROUGH THE REPORT, THE CIT(A) OBSE RVED THAT THOUGH THE ASSESSEE RECEIVED FORM 15-I TO THE EXTEN T OF RS. 3,06,79,523/-, WHICH IS COMPLETE IN ALL RESPECTS NO T READY TO ACCEPT THE SAME AS THE ASSESSEE DID NOT FILE FORM N O. 15-J AND THE SAME WAS FILED BELATEDLY ON 07/03/2011. IN OUR OPINION, FILING OF THE FORM 15-J BELATEDLY CANNOT BE A REASON TO DE NY THE DEDUCTION CLAIMED BY THE ASSESSEE. IF THESE FORMS A RE DULY FILLED WITH BASIC DETAILS, SUCH AS, FULL ADDRESS, PAN, FAT HERS NAME, IF ASSESSED TO TAX AND THE JURISDICTION, DATE & PLACE OF VERIFICATION, AND THE SAME SHOULD BE CONSIDERED AS FILING OF THES E FORMS ONLY PROCEDURAL IN NATURE. 23. COMING TO THE OTHER ARGUMENTS OF THE ASSESSEES COUNSEL THAT PROVISIONS OF SECTION 194C IS NOT APPLICABLE I N VIEW OF THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF CI T VS. POOMPUHAR SHIPPING CORPORATION LTD. [2006] 282 ITR 3(MADRAS), WE HAVE CAREFULLY GONE THROUGH THE EXPLANATION III TO SUB-SECTION (3)(C) TO SECTION 194C, WHICH READS AS FOLLOWS: 'FOR THE PURPOSE OF THIS SECTION, THE EXPRESSION W ORK SHALL ALSO INCLUDE (A)............... (B)............... (C) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS.' 24. BEING SO, THE ABOVE JUDGMENT OF THE MADRAS HIGH COURT CANNOT BE APPLIED. IN OUR OPINION, EXPLANATION III TO SECTION 194C BEING APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION AS THE EXPLANATION WOULD BE APPLICABLE PROSPECTIVEL Y FROM 18 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 01/07/1995, ON WHICH DATE IT WAS INTRODUCED. IN TH E PRESENT CASE, ADMITTEDLY, THE ASSESSEE MADE SPECIFIC PLEA B EFORE THE REVENUE AUTHORITIES THAT ASSESSEE HAS COLLECTED FOR M 15-I FROM THE TRUCK OPERATORS BUT HE COULD NOT PRODUCE THEM B EFORE THE AO, HOWEVER, THE SAME WAS PRODUCED BEFORE THE CIT. THE FACT OF NON- PRODUCTION OF FORM 15-I CANNOT BE TAKEN AS DEFAULT COMMITTED BY THE ASSESSEE AND BURDENING THE ASSESSEE FOR HEAVY T AXABLE INCOME. SINCE THE ASSESSEE PRODUCED FORM 15-I BEFOR E THE CIT AND IT WAS DULY FILLED IN, THEREFORE, DUE CREDIT TO BE GIVEN. FOR THIS PROPOSITION, RELIANCE IS PLACED ON THE DECISIO N IN THE CASE OF SHRI CHOUDHARY VS. ITO, 128 TTJ 90 (JODH.) / 33 DTR 553). IN THE CASE OF VALIBHAI KHAN BHAI MANKAD VS. DCIT, 139 TTJ 70 (AHM.)/46 SOT 469 IT WAS HELD THAT ONCE THE ASSESSE E HAS OBTAINED FORM NO. 15-I FROM THE SUB-CONTRACTORS, HE IS NOT LIABLE TO DEDUCT TDS ON THE PAYMENT MADE TO SUB-CONTRACTOR S AND NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA); BELATED FUR NISHING OF FORM NO. 15-J TO THE CIT IS AN ACT OF POSTERIOR IN TIME TO PAYMENTS MADE TO SUB-CONTRACTORS AND, THEREFORE, TH IS CANNOT BE ITSELF UNDONE THE ELIGIBILITY FOR EXEMPTION CREATED IN SECOND PROVISO TO SECTION 194C(3)(1) BY VIRTUE OF SUBMISSI ON OF FORM 15- I BY SUB-CONTRACTORS. ACCORDINGLY, WE ARE OF THE O PINION THAT DUE CREDIT BE GIVEN TO THE CLAIM OF THE ASSESSEE IN TER MS OF FORM 15-I AND 15-J FILED BY THE ASSESSEE. 25. EVEN OTHERWISE, IN OUR OPINION, THE PROVISIONS OF SECTION 194C(6) IS APPLICABLE TO THE ASSESSEES CASE AND TH IS SECTION HAS TO BE CONSIDERED RETROSPECTIVELY IN VIEW OF THE JUD GMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM E XTRUSIONS LTD., [2009] (SUPRA). THIS GROUND OF THE APPEAL IS ALLOWED. 19 ITA NO. 63/HYD/2013 ASSOCIATED ROADWAYS (P) LTD. 25. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20/05/2013. SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT ME MBER HYDERABAD, DATED: 20 TH MAY, 2013. KV COPY TO:- 1) ASSOCIATED ROADWAYS (P) LTD., 201, AALTOS A&M TRAD E CENTRE, 3-6-561, HIMAYATNAGAR, HYDERABAD 2) DCIT, CIRCLE 1(1), HYDERABAD. 3) THE CIT (A)-II, HYDERABAD 4) CIT-I, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D.