Ambuja Cements Limited, Mumbai V. ITO (TDS), Solan

ITA 648/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8540 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JATINDER KUMAR
• Assessee Lawyers: HARISH AGGARWAL
• Keywords: Presumptive income; Charitable institution; Opportunity of being heard; Earning of tax free income; Non-deduction of tax
• Section: 2(14); 133A; 12A; 194C; 201(1); 131; 12; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NOS. 648 & 649/CHD/2014 ASSESSMENT YEARS : 2010-11 & 2011-12 M/S AMBUJA CEMENT LIMITED, VS. THE ITO (TDS), MUMBAI SOLAN (H.P.) PAN NO. PTLGI2065E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. HARISH AGGARWAL RESPONDENT BY : SH. JATINDER KUMAR DATE OF HEARING : 28.01.2016 DATE OF PRONOUNCEMENT : 04.02.2016 ORDER PER H.L.KARWA, VP THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE CONSOLIDATED ORDER OF CIT(A), SHIMLA (H.P.) DATED 5.5.2014 RELAT ING TO ASSESSMENT YEAR 2010- 11 AND 2011-12. 2. IN THESE APPEALS COMMON ISSUE IS INVOLVED AND, T HEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 3. THE COMMON GROUNDS OF APPEALS ARE AS UNDER:- 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HERE-IN-AFTER REFERRED TO AS LD, CIT(APPEALS)] WA S NOT JUSTIFIED AND GROSSLY ERRED IN CONFIRMING THE ORDER OF THE INCOME TAX OFFICER {TDS), SOLAN [HERE-IN-AFTER REF ERRED TO AS JTO(TDS)], TREATING THE APPELLANT AS AN ASSESSE E IN DEFAULT FUR NON-DEDUCTION OF TAX U/S 194C ON PAYMEN TS MADE TO THE TRANSPORT COOPERATIVE SOCIETIES FOR CAR RYING OUT TRANSPORTATION WORK. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED AND GROSSLY ERRE D IN CONFIRMING THE ACTION OF THE ITO(TDS) IN TREATING T HE APPELLANT AS ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX U/S 194C ON PAYMENTS MADE TO THE HIMACHAL PRADESH ROAD TRANSPORT CORPORATION (HRTC) WITHOUT APPRECIATING T HE FACT THAT THE SAME IS A TRUST REGISTERED U/S 12A OF THE I.T. ACT. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED, INTER ALIA, IN THE BUSINE SS OF MANUFACTURE AND SALE OF CEMENT AND AS A PART THEREOF IS ALSO ENGAGED IN GENERATION OF POWER AND DEVELOPING, OPERATING AND MAINTAINING INFRASTRUCTUR E FACILITIES. IN THESE CASES, TDS SURVEY / INSPECTION U/S 133A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') U/S 133A OF THE ACT WAS CONDUCTED AGAINST THE ASSESSEE VIDE NOTICE 5.10.2014. THEREAFTER, SPOT INSPECTION / VERIFICAT ION US/ 133A WAS CONDUCTED ON 7.12.2012 AT SULI AND RAURI UNIT. A SUMMON U/S 131 OF THE ACT WAS ISSUED TO THE ASSESSEE REQUIRING IT TO PRODUCE DETAILS AND EV IDENCE OF EXPENSES ON WHICH IT WAS LIABLE TO DEDUCT TAX. SUBSEQUENTLY, A SHOW CAU SE NOTICE WAS ISSUED TO THE ASSESSEE REQUIRING IT TO SHOW CAUSE AS TO WHY IT SH OULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT IN NON-DEDUCTION OF TAX AT SOUR CE U/S 194C ON PAYMENTS MADE TO THE TRANSPORTER COOPERATIVE SOCIETIES. IN RESPON SE TO THE SAME, THE ASSESSEE 3 VIDE LETTER DATED 25.3.2013 SUBMITTED DETAILED REPL Y. DISREGARDING THE REPLY SUBMITTED BY THE ASSESSEE, THE ITO (TDS) SOLAN PASS ED AN ORDER U/S 201(1) AND 201(1A DATED 28.3.2013 AND CREATED A DEMAND OF RS. 1,91,78,200/- AND RS. 3,84,01,159/- FOR THE ASSESSMENT YEARS 2010-11, 201 1-12 RESPECTIVELY. ON APPEAL, THE CIT(A) VIDE HIS SEPARATE ORDERS DATED 3 0.11.2015 CONFIRMED THE ORDER OF THE ITO (TDS), SOLAN DATED 28.3.2013 RELAT ING TO FINANCIAL YEARS 2009- 10 AND 2010-11 RELEVANT TO ASSESSMENT YEARS 2010-11 AND 2011-12, AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, SHRI HARISH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ENTERED INTO AN AGREEMENTS WITH VARIOU S TRANSPORT COOPERATIVE SOCIETIES VIZ. THE SOLAN DISTT. TRUCK COOPERATIVE T RANSPORT SOCIETY LTD, THE BAGHAL LAND LOOSERS TRANSPORT SOCIETY LTD, AMUJA DA RLA KASHLOG TRANSPORT COOPERATIVE SOCIETY LTD AND THE GOLDEN LAND LOOSERS & HOUSELESS COOPERATIVE SOCIETY LTD FOR CARRYING OUT THE TRANSPORT WORK AT ITS DARLAGGHAT UNIT. THE TRANSPORT SOCIETY IS NOTHING MORE THAN A CONGLOMERA TION OF THE TRUCK OPERAORS. SHRI HARISH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REASONS FOR CREATION OF THE SOCIETY WAS ONLY TO ENSURE EQUI TABLE DISTRIBUTION OF WORK AMONGST THE INDIVIDUALS TRUCK OPERATORS. THESE SOC IETIES ARE REGISTERED UNDER HIMACHAL PRADESH COOPERATIVE SOCIETIES ACT, 1968. ONE OF THE OBJECTS OF THESE SOCIETIES IS TO CARRY OUT ALL TYPE OF TRANSPORT BUS INESS FOR TRANSPORTING OF GOODS THROUGH TRUCK, TRAILERS ETC. SHRI HARISH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TERMS OF SUB SECTION(6) OF SECTION 1 94C SUBSTITUTED BY FINANCE (NO.2) ACT, 2009 W.E.F. 1.10.2009, TAX IS NOT REQUI RED TO BE DEDUCED AT SOURCE AGAINST PAYMENTS MADE TO CONTRACTORS DURING THE COU RSE OF BUSINESS OF PLYING, HIRING AND LEASING OF GOODS CARRIAGES. SINCE THE TR ANSPORT SOCIETIES ARE ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS, THE ASS ESSEE W.E.F. 1.10.2009 HAS NOT 4 DEDUCTED TAX ON PAYMENTS MADE TO THE ABOVE SOCIETIE S. SHRI HARISH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BEN CH OF THE TRIBUNAL DATED 29.01.2016 PASSED IN THE CASE OF M/S ACC LIMITED, B ARMANA V ITO, PALAMPUR IN ITA NOS. 634 TO 637/CHD/2014 RELATING TO ASSESSMENT YEARS 2010-11 TO 2013-14 . HE, THEREFORE, SUBMITTED THAT IN VIEW OF THE ORDE R OF THE TRIBUNAL REFERRED TO ABOVE, THE ORDER OF CIT(A) MAY BE SET ASIDE AND THE APPEAL OF THE ASSESSEE BE ALLOWED. 6. ON THE OTHER HAND, SHRI JATINDER KUMAR, LD. DR STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE MAY OBSERVE HERE THAT THIS BENCH HAD OCCASION TO DECIDE A SIMILAR ISSUE IN TH E CASE OF M/S ACC LIMITED, BARMANA VS. ITO, PALAMPUR IN ITA NOS. 634 TO 637/C HD/2014 RELATING TO ASSESSMENT YEARS 2010-11 TO 2013-14 VIDE ORDER DATE D 29.1.2016, OBSERVING AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS RELE VANT TO OBSERVE HERE THAT WE HAD DECIDED A SIMILAR ISSUE IN THE CASE OF ACIT (TDS), CHANDIGARH VS. M/S ACC LIMITED (CHANDIGARH SALES UN IT), CHANDIGARH IN ITA NOS. 651 & 652/CHD/2015 VIDE ORDER DATED 29.10. 2015 FOR THE ASSESSMENT YEARS 2012-13 AND 2013-14 WHEREIN SIMILA R ISSUE WAS INVOLVED. IN THE ABOVE CASE, THE ASSESSING OFFICER PASSED ORDER U/S 201(1) READ WITH SECTION 201(1A) OF THE ACT ON 11.3.2014 C REATING A DEMAND OF RS. 3,54,02,834/- FOR THE ASSESSMENT YEAR 2012-13. THE LD. CIT(A) CHANDIGARH VIDE HIS ORDER DATED 29.04.2015 DELETED THE DEMAND CREATED U/S 201(1) AND 201(1A) OF THE ACT OBSERVING AS UNDE R:- 5. ON APPEAL, THE CIT(A) DELETED THE DEMAND CREATE D U/S 201(1) AND 201(1A) OF THE ACT, OBSERVING AS UNDER:- 5 5. I HAVE CONSIDERED FACTS OF THE CASE. AS THE D EMAND CREATED U/S 201(1)/(1 A) IN RESPECT OF PAYMENTS MAD E TO H.P. EX-SERVICEMEN CORPORATION HAS BEEN REDUCED TO 'NIL', THE DISPUTE REMAINS ONLY IN RESPECT OF PAYME NTS MADE TO BILASPUR DISTRICT TRUCK OPERATORS CO-OPERAT IVE TRANSPORT SOCIETY LTD. FOR APPRECIATING THE ISSUE I N PROPER PROSPECTIVE, IT WOULD BE APPROPRIATE TO REPRODUCE RELEVANT PROVISIONS OF THIS ACT. HENCE, F OR THE SAKE OF READY REFERENCE, PROVISIONS OF SECTION 194C(6) AND EXPLANATION-(II) BELOW SECTION 194C(7), PROVISIONS OF SECTION 44AE{1) AND EXPLANATION BELOW SECTION 44AE(7) OF THE ACT ARE REPRODUCED BELOW: '194C. PAYMENTS TO CONTRACTORS. ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT /HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO --------------- (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. --------------- EXPLANATION - FOR THE PURPOSES OF THIS SECTION, - ---------------- ` (II) 'GOODS CARRIAGE' SHALL HAVE THE MEANING ASSI GNED TO IT IN THE EXPLANATION TO SUB-SECTION (7) OF SECT ION 44AE;' '44AE. SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF BUSINESS OF PLYING, HIRING OR LEASING GOOD S CARRIAGES. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE, W HO 6 OWNS NOT MORE THAN TEN GOODS CARNAGES AT ANY TIME DURING THE PREVIOUS YEAR AND WHO IS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING SUCH GOODS CARRIAGES, THE INCOME OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' SHALL BE DEEMED TO BE THE AGGREGATE OF THE PROFITS AND GAINS, FROM ALL THE GOODS CARNAGES OWNE D BY HIM IN THE PREVIOUS YEAR, COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (2). --------------- EXPLANATION - FOR THE PURPOSES OF THIS SECTION,- (A) THE EXPRESSION 'GOODS CARRIAGE' SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 2 OF THE MOTOR VE HICLES ACT, 1988 (59 OF 1988); (B) AN ASSESSEE, WHO IS IN POSSESSION OF A GOODS CA RRIAGE, WHETHER TAKEN ON HIRE PURCHASE OR ON INSTALLMENTS A ND FOR WHICH THE WHOLE OR PART OF THE AMOUNT PAYABLE IS ST ILL DUE, SHALL BE DEEMED TO BE THE OWNER OF SUCH GOODS CARRI AGE.' 5.1 FROM THE ABOVE PROVISIONS, IT IS EVIDENT TH AT FOR CLAIMING BENEFIT OF PROVISIONS TO SECTION 194C(6), FOLLOWING CONDITIONS HAVE TO BE SATISFIED: THE CONTRACTOR SHOULD BE IN THE BUSINESS OF PL YING, HIRING OR LEASING OF GOODS CARRIAGE. THE TERM 'GOODS CARRIAGE' IS ASSIGNED MEANING AS PER SECTION 2(14) OF THE MOTOR VEHICLES ACT, 1988. SECTION 2(14} OF MOTOR VEHICLES ACT, 1988 DEFINES G OODS CARRIAGE AS - ''GOODS CARRIAGE 1 MEANS ANY MOTOR VEHICLE CONSTRUCTED OR ADAPTED FOR USE SOLELY FOR THE CARRI AGE OF GOODS, OR ANY MOTOR VEHICLE NOT SO CONSTRUCTED OR ADAPTED WHEN USED FOR THE CARRIAGE OF GOODS'. PAN IS FURNISHED BY THE CONTRACTOR TO THE PAYE R I.E. DEDUCTOR. THE DEDUCTOR FURNISHES BEFORE THE INCOME TAX AUTHORITY THE DETAILS PERTAINING TO THE ABOVE CONTR ACTOR IN THE PRESCRIBED FORM. 5.2 IN THE INSTANT CASE, THE APPELLANT HAD OBTA INED PAN FROM THE PAYEE AND FURNISHED THE SAME BEFORE THE PRESCRI BED AUTHORITY. FURTHER, THE GOODS CARRIAGES INVOLVED ALSO SATISFIED 7 THE DEFINITION GIVEN IN THE MOTOR VEHICLES ACT. T HEREFORE, THE ONLY ISSUE TO BE DECIDED IS WHETHER THE PAYEE I.E. BILASPUR DISTRICT TRUCK OPERATORS CO-OPERATIVE TRANSPORT SOC IETY LTD (HEREINAFTER REFERRED TO AS 'SOCIETY 5 ) WAS ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING OF GOODS CARRIAGE. TH E APPELLANT HAS FILED A COPY OF BYE-LAWS OF THIS SOCIETY, A PERUSAL OF WHICH REVEALS THAT THE MAIN OBJECT OF THIS SOCIETY IS TO PROVIDE GOODS AND PASSENGER CARRIAGES ON HIRE AND LEASE TO ANYONE . THIS CLEARLY IMPLIES THAT IT IS ENGAGED IN THE BUSINESS OF PLYING, HIRING AND LEASING OF GOODS CARRIAGE. AS PER CLAUSES OF THE AGREEMENT BETWEEN THE APPELLANT AND THE SOCIETY, IT WAS THE R ESPONSIBILITY OF THE SOCIETY TO HONOUR THE COMMITMENT AND OBLIGAT ION, WHICH AROSE FROM THE SAID AGREEMENT AND TO BEAR ALL RISKS ARISING THEREFROM 5.3 IT IS NOTEWORTHY THAT EXPLANATION--(II) BEL OW SECTION 194C(7) REFERS TO THE DEFINITION OF 'GOODS C ARRIAGE', TO HAVE THE SAME MEANING AS IN EXPLANATION ( A) BELOW SUB- SECTION (7) OF SECTION 44AE AND SO THE REFERENCE IS ONLY IN CONTEXT OF DEFINITION OF GOODS CARRIAGE. EXPLANATIO N-(A) BELOW SECTION 44AE(7) IS APPLICABLE TO SECTION 194C, BUT EXPLANATION- (B) BELOW SECTION 44AE{7) IS APPLICABLE ONLY TO SECTION 44AE. THEREFORE, THE INFERENCE DRAWN BY THE ASSE SSING OFFICER THAT FOR THE PURPOSES OF CLAIMING THE BENEFIT OF SU B-SECTION (6) OF SECTION 194C, THE APPELLANT IS REQUIRED TO SATISFY THE OWNERSHIP CRITERIA MENTIONED IN EXPLANATION-(B) BELOW SECTION 44AE(7) IS NOT CORRECT. 5.4 IN VIEW OF THE ABOVE, IT IS HELD THAT THE A SSESSING OFFICER WAS NOT RIGHT IN TREATING THE PERSON RESPONSIBLE AS 'ASSESSEE IN DEFAULT' FOR NOT DEDUCTING TAX ON THE PAYMENTS MADE TO THE SOCIETY AND THE DEMAND CREATED U/S 201(1)/ (1A) IS ACCORDINGLY DELETED. GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE ALLOWED. 8 6. THE REVENUE CHALLENGED THE ORDER OF CIT(A) CHAND IGARH IN APPEAL BEFORE THIS BENCH OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29.10.2105 UPHELD THE ORDER OF THE CIT(A), OBSERVI NG AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT(A) HAS REPRODUCED THE PROVISIONS OF SECTION 194C(6) RE AD WITH EXPLANATION (II) TO SECTION 194C OF THE ACT IN HIS ORDER. ON PERUSAL OF THESE PROVISIONS IT IS CLEAR THAT FOLLOW ING CONDITIONS ARE REQUIRED TO BE SATISFIED FOR CLAIMIN G THE BENEFIT OF SECTION 194C(6) OF THE ACT:- I) THE CONTRACTOR SHOULD BE ENGAGED IN THE BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGE. II) THE CONTRACTOR SHALL FURNISH ITS PAN NO. TO THE DEDUCTOR III) THE DEDUCTOR FURNISHES BEFORE THE I.T. AUTHORITIES THE DETAILS OF AMOUNT PAID TO THE CONTRACTOR IV) GOODS CARRIAGE SHALL HAVE THE SAME MEANING AS ASSIGNED IN SECTION 2(14) OF THE MOTOR VEHICLE ACT, 1988 BEFORE US, THE ASSESSEE HAS SUBMITTED A PHOTOCOPY O F THE BYE- LAWS OF THE BILASPUR DISTRICT TRUCK OPERATORS CO-OP ERATIVE TRANSPORT SOCIETIES LTD. WHEREIN THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE GOODS AND PASSENGER CARRIAGES ON HIRE OR LEASE. THE TRANSPORT CO-OPERATIVE SOCIETY HAS AL SO FURNISHED ITS PAN NUMBER TO THE ASSESSEE, A COPY OF THE SAME IS AVAILABLE AT PAGE 44 OF THE ASSESSEES PAPER BOO K. IT IS CLAIMED THAT IN TERMS OF RULE 31A(4)(V), THE ASSESS EE HAS ALSO FURNISHED PARTICULARS OF AMOUNT PAID OR CREDITED TO THE TRANSPORT COOPERATIVE SOCIETY ON WHICH TAX HAS NOT BEEN DEDUCTED IN ITS QUARTERLY TDS RETURN. SHRI SOUMEN A DAK, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GOODS C ARRIAGE INVOLVED ALSO SATISFIES THE DEFINITION OF GOODS CA RRIAGE GIVEN IN SECTION 2(14) OF THE MOTOR VEHICLE ACT, 19 88. THE TERM GOODS CARRIAGE MEANS ANY MOTOR VEHICLE CONST RUED OR ADOPTED FOR USE SOLELY FOR THE CARRIAGE OF GOODS OR ANY MOTOR VEHICLE NOT SO CONSTRUCTED OR ADAPTED WHEN USED FOR THE CARRIAGE OF GOODS. 9 7. IN OUR VIEW, THE LD. CIT(A) HAS CORRECTLY OBSERV ED THAT THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT F OR THE PURPOSE OF CLAIMING THE BENEFIT OF SUB SECTION (6) OF SECTION 194C, THE ASSESSEE IS REQUIRED TO SATISFY THE OWNER SHIP CRITERIA MENTIONED IN EXPLANATION (B) BELOW SECTION 44AE(7) IS NOT CORRECT . IN OUR VIEW, REFERENCE OF EXPLANATION TO SECTION 44AE(7) IN SECTION 194C IS ONLY IN THE CONT EXT OF DEFINITION OF GOODS CARRIAGE. CLAUSE (A) OF EXPL ANATION TO SECTION 44AE(7) DEFINES GOODS CARRIAGE AND CLAUSE (B) DEFINES DEEMED OWNERSHIP. THE LD. CIT(A) HAS COR RECTLY HELD THAT CLAUSE (A) IS APPLICABLE TO BOTH SECTIONS I.E. SECTION 194C AND 44 AE, CLAUSE (B) IS APPLICABLE ONLY TO SE CTION 44AE, SINCE FOR THE BENEFIT OF PRESUMPTIVE TAXATION THE ASSESSEE SHOULD NOT OWN MORE THAN TEN GOODS CARRIAG ES. THEREFORE, THE ASSESSEE IS NOT REQUIRED TO SATISFY THE OWNERSHIP CRITERIA AS MENTIONED IN CLAUSE (B) OF EX PLANATION TO SECTION 44AE (7). ON A PERUSAL OF SECTION 194C (6) READ WITH EXPLANATION (II) TO SECTION 194C, IT IS CRYST AL CLEAR THAT THE TRANSPORT CONTRACTOR IS NOT REQUIRED TO BE THE OWNER OF GOODS CARRIAGE FOR APPLICABILITY OF SECTION 194C(6) OF THE ACT. AT THIS STAGE, WE MAY OBSERVE HERE THAT AN AM ENDMENT HAS BEEN MADE VIDE FINANCE ACT, 2015 IN SECTION 194 C (6) WHEREIN IT IS SPECIFICALLY STATED THAT W.E.F. 1.6.2 015, THE BENEFIT OF NON DEDUCTION OF TAX ON PAYMENT MADE TO TRANSPORT CONTRACTORS WOULD BE APPLICABLE ONLY IF THE TRANSPO RT CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGES AT ANY TIME OF THE PREVIOUS YEAR AND A DECLARATION TO THIS EFFECT IS F URNISHED. IN OUR OPINION, THE LEGISLATURE HAS INTENTIONALLY INSE RTED THE OWNERSHIP CONDITION FOR CLAIMING THE BENEFIT OF NON DEDUCTION OF TAX WHICH WAS NOT EXISTING IN THE ERSTWHILE SECT ION 194C(6) OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION, THE AS SESSEE (PERSON RESPONSIBLE) CANNOT BE TREATED AS ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX ON THE PAYMENTS MADE TO THE BILASPUR DISTRICT TRUCK OPERATORS CO-OPERATIVE SOCI ETY THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. THE APPEAL OF THE REVENUE IS DISMISSED. 10 7. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THA T OF M/S ACC LIMIT (CHANDIGARH SALES UNIT), CHANDIGARH. IT IS O BSERVED THAT THE CIT(A) CHANDIGARH WHILE DECIDING THE CASE OF M/S A CC CEMENT LTD (CHANDIGARH SALES UNIT), CHANDIGARH (SUPRA) HAS DE LETED THE DEMAND CREATED BY THE ASSESSING OFFICER U/S 201 AND 201(1A) OF THE ACT. HOWEVER, THE CIT(A), SHIMLA WHILE DECIDING TH E ASSESSEES CASE RELATING TO GAGAL CEMENT WORKS HAS UPHELD THE DEMAND CREATED BY ASSESSING OFFICER U/S 201 AND 201(1A) OF THE ACT. IN FACT, THE DECISIONS OF THE CIT(A), CHANDIGARH AND CIT(A), SHIMLA ON IDENTICAL FACTS AND ISSUE ARE CONTRARY AND THE ASSE SSEE IS COMMON IN BOTH THE CASES. IN VIEW OF THE ORDER OF THE TRIB UNAL DATED 29.10.2015, PASSED IN CASE OF ACIT(TDS), CHANDIGARH VS. M/S ACC LIMITED (CHANDIGARH SALES UNIT), CHANDIGARH (SUPRA) , WE ARE OF THE VIEW THAT THE IMPUGNED ORDER PASSED BY CIT(A), SHI MLA IS NOT BASED ON CORRECT APPRECIATION OF THE FACTS OF THE C ASE AND LAW AND, THEREFORE, THE IMPUGNED ORDER DESERVES TO BE SET A SIDE AND CONSEQUENTLY, WE ALLOW ALL THE APPEALS OF THE ASSES SEE AND DELETE THE DEMAND CREATED U/S 201 AND 201(1A) OF THE ACT. 8. IT IS RELEVANT TO STATE HERE THAT FACTS OF THE P RESENT CASE ARE SIMILAR TO THAT OF M/S ACC LIMITED, BARMANA VS. ITO, PALAMPUR REFER RED TO ABOVE. THE ISSUE INVOLVED IS ALSO IDENTICAL. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE REFERRED TO ABOVE, WE SET ASIDE THE ORDER OF CIT(A) AND ALLOW COMMON GROUND NO.1 OF THE APPEAL. ACCORDINGLY, THE DEMAND OF RS. 1,91,78,200/- AND RS. 3,84,01,159 CREATED U/S 201(1) AND 201(1A) FOR ASSESSMENT YEARS 2010-11 AND 2011-12 ARE HEREBY DELETED. 9. AS REGARDS GROUND NO.2 OF THE APPEAL, THE RELEVA NT FACTS ARE THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH HIMACHAL RO AD TRANSPORT CORPORATION (IN SHORT HRTC ) IN AVAILING BUS SERVICES ON CON TRACT BASIS. THE EMPLOYEES ENGAGED WITH THE ASSESSEE COMPANY INCLUDING THEIR F AMILIES WERE PERMITTED TO TRAVEL IN THE BUSES PROVIDED BY HRTC. THE ASSESSEE DID NOT DEDUCT TAX U/S 194C 11 WHILE MAKING PAYMENT TO HRTC IN VIEW OF THE FACT TH AT HRTC IS REGISTERED AS A TRUST AND ENJOYED THE BENEFIT OF EXEMPT INCOME PROV IDED U/S 11 & 12 OF THE INCOME-TAX ACT, 1961. THE ITO (TDS) IN HIS ORDER PA SSED U/S 201(1) / 201(1A) TREATED THE ASSESSEE AS AN ASSESSEE IN DEFAULT U/S 201(1) / 201(1A) ON THE GROUND THAT REGISTRATION OF HRTC AS A TRUST U/S 12 A IS NOT A PRE-CONDITION FOR NON DEDUCTION OF TAX U/S 194C OF THE ACT. 10. ON APPEAL, THE CIT(A) HELD AS UNDER:- 6.2 I HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BY THE APPELLANT, THE AO NOTED THA T THE APPELLANT DID NOT DEDUCT TAX U/S 194C ON PAYMENTS M ADE TO HRTC. ACCORDINGLY THE AO TREATED THE DEDUCTOR AS AS SESSES IN DEFAULT U/S 201(1). THE APPELLANT SUBMITTED THAT HRTC IS A CHARITABLE INSTITUTION WHICH IS ENTITLED FOR EXEMPT ION U/S 11 AND SINCE THE HRTC INCOME IS EXEMPTED, ON THEIR REQ UEST THE TDS U/S 194C WAS NOT DONE. THE APPELLANT HAS ALSO DRAWN ATTENTION THE PROVISIONS OF SECTION 190 (1) OF THE ACT WHICH CREATES A CHARGE FOR DEDUCTION OF TAX AT SOURCE. TH E APPELLANT SUBMITTED THAT TDS IS REQUIRED TO BE DEDUCTED FROM ANY INCOME ON WHICH THE TAX IS PAYABLE SINCE THE INCOME OF HRTC IS EXEMPT SO THE QUESTION OF DEDUCTION OF TAX DOES NOT ARISES. 6.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS IT IS NOTED THAT THE APPELLANT'S SUBMISSIONS IS CONTRARY TO THE PROV ISIONS OF SECTION 190(1) AND MISPLACED, THE SECTION NOWHERE P ROVIDES THAT TAX IS NOT DEDUCTIBLE AT SOURCE IN CASE OF ANY EXEMPT INCOME. THE PROVISION U/S 190(1) IS THAT THE TAX ON INCOME SHALL BE PAYABLE BY DEDUCTION AT SOURCE. IT DOES N OT SAY THAT TAX IS TO BE DEDUCTED ON 'TAXABLE INCOME'. FURTHER, THE TAXABILITY OF INCOME OR EXEMPTION U/S 11 IS SUBJECT TO VARIOUS CONDITIONS AND SUBJECT TO ASSESSMENT OF INCOME BY T HE ASSESSING OFFICER. SO THE DEDUCTOR CANNOT ASSUME TH AT SINCE HRTC IS REGISTERED AS A TRUST FOR CHARITABLE PURPOS E ITS INCOME IS NON-TAXABLE. THE ONLY PROVISION AVAILABLE FOR LOWER 12 RATE OF DEDUCTION OR NO TAX DEDUCTION IS ACCORDING TO CERTIFICATE OBTAINED FROM ASSESSING OFFICER AS PER PROVISIONS OF SECTION 197 OF THE ACT. SO THE AO WAS JUSTIFIED IN TREATING THE DEDUCTOR AS ASSESSEE IN DEFAULT FOR NO DEDUCTIO N OF TAX ON PAYMENTS MADE TO HRTC. HOWEVER, THE DIRECTIONS GIVE N AS IN PARA 5.18 TO THE AO IN VIEW OF BOARD'S CIRCULAR NO. 275 (SUPRA) IS APPLICABLE ON THE PRESENT GROUND ALSO. ACCORDINGLY, THE RELIEF IS AVAILABLE TO THE APPELLA NT SUBJECT TO VERIFICATION BY A.O. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THE ABO VE FINDINGS, THE LD. CIT(A) HAS GIVEN CERTAIN DIRECTIONS TO THE ASSESSIN G OFFICER AS PER PARA 5.18 OF THE ORDER. THESE ARE AS UNDER;_ 5.18 IN VIEW OF THE AFORESAID DECISION IT IS FOUND THAT EVEN THOUGH THE DEDUCTOR HAS BEEN HELD AS ASSESSEE IN DE FAULT, TAX CANNOT BE RECOVERED FROM THEM TO THE EXTENT IF THE SAME HAS BEEN PAID BY THE RECIPIENT. THERE ARE NO FINDINGS B Y THE ITO (TDS ) REGARDING THE PAYMENT OF TAXES BY THE DEDUCT EES. THEREFORE, THE ITO (TDS) IS DIRECTED TO FIND OUT TH E EXTENT AND QUANTUM OF TAX PAID BY THE DEDUCTEES. IF THE EN TIRE AMOUNT AS CLAIMED FROM THE DEDUCTOR HAS BEEN PAID B Y THE DEDUCTEES THEN FOR THAT AMOUNT THE DEDUCTOR CANNOT BE TREATED AS ASSESSEE IN DEFAULT. ACCORDINGLY THE RELIEF IS A VAILABLE TO THE APPELLANT SUBJECT TO VERIFICATION BY ASSESSING OFFICER. 12. AFTER CONSIDERING THE ENTIRE FACTS OF THE PRESE NT CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS TAKEN A CORRECT VIEW THAT THAT THERE IS NO PROVISION IN THE INCOME TAX ACT, 1961 TO THE EFFECT THAT TAX IS DEDUCTABLE AT SOURCE IN CASE OF EXEMPT INCOME. THE ASSESSEE CLAIMED THAT THE DEDUCT EE HRTC IS REGISTERED AS A TRUST AND ENJOYED THE BENEFIT OF EXEMPT INCOME AS P ER SECTIONS 11 & 12 OF THE INCOME-TAX ACT. IN OUR OPINION, THE TAXABILITY OF INCOME OR EXEMPTIONS U/S 11 & 12 IS SUBJECT TO VARIOUS CONDITIONS AND SUBJECT T O ASSESSMENT OF INCOME BY THE ASSESSING OFFICER. THUS, THE DEDUCTOR (ASSESSEE) C ANNOT ASSUME THAT SINCE 13 HRTC IS A TRUST / CHARITABLE INSTITUTION REGISTERED U/S 12A OF THE ACT AND ITS INCOME IS NON-TAXABLE. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY INFIRMITY TO THE ABOVE EXTENT IN THE ORDER OF THE CIT(A) ON THIS ISSUE AS HE HAS CORRECTLY DIRECTED THE ITO (TDS) TO FIND OUT THE EXTENT OF QU ANTUM OF TAX PAID BY THE PAYEES. THE LD. CIT(A) HAS ALSO DIRECTED THE ITO (TDS) THAT IF ENTIRE TAX AMOUNT HAS BEEN CLAIMED FROM THE DEDUCTOR HAS BEEN PAID BY THE DEDUCTEES, THEN FOR THAT AMOUNT THE DEDUCTOR CANNOT BE TREATED AS A SSESSEE IN DEFAULT. ACCORDINGLY, THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO GIVE RELIEF SUBJECT TO VERIFICATION AS ABOVE. IN OUR OPINION, BEFORE DE CIDING THE ISSUE THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. THE ASSESSING OFFICER IS FURTHER DIRECTED TO DECIDE THE ISSUE KEEPING IN VIEW THE RELEVANT PROVISIONS OF INCOME-TAX ACT, 1961 APPLICA BLE TO THE FACTS OF THE PRESENT CASE. WE, THEREFORE, REMAND THIS ISSUE TO THE ASSESSING OFFICER FOR A FRESH DECISION. ACCORDINGLY, THE ORDER OF THE CIT( A) IS MODIFIED TO THE ABOVE EXTENT. GROUND NO.2 OF THE APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. 13. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE FOLLOWING GROUNDS:- 3. THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, AND WITHOUT PREJUDICE TO GROUND NOS. 1 & 2 TAKEN HE RE-IN- ABOVE, THE LD. CIT(A) WAS NOT JUSTIFIED AND GROSSLY ERRED IN HOLDING THAT THE DEDUCTOR SHALL NOT BE TREATED AS A N ASSESSEE IN DEFAULT IF THE ENTIRE TDS LIABILITY OF THE DEDUCTOR HAS BEEN PAID BY THE DEDUCTEE WITHOUT APPRECIATING THE FACT THAT THE DEDUCTEE IS LIABLE T O PAY ONLY THE AMOUNT OF TAXES DUE ON THE INCOME DECLARED BY H IM IN HIS RETURN OF INCOME. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO GROUND NOS. 1 & 2 TAKEN HERE-IN-ABOVE, NECESSARY DIRECTION MAY PLEASE BE GI VEN TO THE ITO (TDS) TO COMPUTE INTEREST U/S 201(1A) ONLY ON THE 14 AMOUNT OF TAXES WHICH THE DEDUCTEE WAS LIABLE TO PA Y ON THE INCOME DECLARED BY HIM IN HIS RETURN OF INCOME. 14. ACCORDINGLY, THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. 15. IN THE ABOVE TERMS, THE APPEALS ARE ALLOWED PA RTLY AND PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2016 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 4 TH FEBRUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR