M/s Modern Transport company, Bangalore V. ITO, Bangalore

ITA 817/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51251 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: CHANDRASHEKAR
• Keywords: TDS
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 817/BANG/2010 ASSESSMENT YEAR : 2006-07 M/S. MODERN TRANSPORT CO., # F-1, # 19, C.S.I. COMPOUND, 3 RD CROSS, MISSION ROAD, BANGALORE 560 027. PAN : AAEFM9198F VS THE INCOME TAX OFFICER, WARD 1(4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI CHANDRASHEKAR, ADVOCATE RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADDL.CIT(DR) DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 26.08.2011 O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THE ASSESSEE FIRM HAS FILED THIS APPEAL AGGRIEVE D BY THE ORDER OF THE LD. CIT(A)-I IN ITA NO.41/W-1(4)/A-I/08-09 DATED 9. 4.2010 FOR THE A.Y. 2006-07. 2. THE ASSESSEE HAS RAISED 9 GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE TWIN ISSUES ARE LISTED OUT AS FOLLOWS:- ITA NO.817/BANG/10 PAGE 2 OF 5 (1) THE LD. CIT(A) HAD ERRED IN DISALLOWING THE HIR E CHARGES PAID TO THE EXTENT OF RS.13,96,450/- FOR NOT DEDUCTING TDS IN SPITE OF FURNISHING FORM 15 I FROM THE TRANSPORTER. (2) THE LD. CIT(A) ERRED IN CHARGING INTEREST U/S. 234D OF THE ACT. 3. THE ASSESSEE IS A FIRM CONDUCTING BUSINESS AS TR ANSPORTER FILED ITS RETURN OF INCOME FOR THE A.Y. 2006-07 ON 27.10.2006 DECLARING AN INCOME OF RS.3,55,000/-. INITIALLY THE RETURN WAS PROCESS ED AND SUBSEQUENTLY SELECTED FOR SCRUTINY ASSESSMENT. ASSESSMENT U/S. 143(3) WAS COMPLETED ON 7.8.2008 WITH AN ADDITION OF RS.13,96,450/- SINC E IT RELATES TO THE HIRE CHARGES PAID TO VARIOUS TRUCK OWNERS WITHOUT DEDUCT ING TDS FOR PAYMENT AGGREGATING ABOVE RS.50,000. BEFORE THE LD. CIT(A ), THE ASSESSEE RAISED THE PLEA THAT IT HAD OBTAINED FORM 15 I FROM THE SUB-CONTRACTORS AND THEREFORE IT WAS NOT LIABLE TO DEDUCT TDS. HOWEVE R, LD. CIT(A) OBSERVED THAT FORM 15 I WAS DEFECTIVE AND CANNOT BE CONSIDERED FOR GRANTI NG RELIEF. FURTHER, DRAWING STRENGTH FROM SECTION 194C AND 40( A)(IA) OF THE ACT, LD. CIT(APPEALS) CONFIRMED THE ORDER OF THE LD. AO. HE FURTHER HELD THAT THE APPELLANT HAD TO BE LEVIED INTEREST U/S. 234D OF TH E ACT SINCE EXCESS REFUND WAS GRANTED. 4. LD. AR SUBMITTED BEFORE US THAT THE APPELLANT CO ULD NOT COLLECT FORM 15 I AT THE TIME OF ASSESSMENT PROCEEDINGS, HOWEVER, NOW THE APPELLANT IS IN POSSESSION OF FORM 15 I AS PER THE REQUIREMENTS OF THE ACT AND THEREFORE THEY MAY BE PERUSED AND RELIEF GRANTED. HE FURTHE R ARGUED THAT THE LD. AO HAD NOT ANALYSED THE NATURE OF TRANSACTION OF THE A PPELLANT WITH ITS CLIENTS TO ITA NO.817/BANG/10 PAGE 3 OF 5 ESTABLISH THAT THERE WAS A VALID CONTRACT EXISTING BETWEEN THE TWO PARTIES WHEREBY ATTRACTING SECTION 194C OF THE ACT. LD. A R SUBMITTED BEFORE THE BENCH THAT THE DECISION RENDERED IN THE CASE OF SHRI J. PRASHANT HEGDE FOR THE A.Y. 2006-07 IN ITA NO.665/BANG/2010 DATED 21.0 1.2011 BY THE BANGALORE TRIBUNAL IT WAS HELD THAT A CLEAR FINDING IS REQUIRED AS TO WHETHER THE PAYMENTS ARE FOR THE HIRING OF THE VEHICLES/TRU CKS IN PURSUANCE TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATIO N IN ORDER TO ATTRACT SECTION 194C OF THE ACT. IN THE ABOVE SAID CASE THE ISSUE WAS REMITTED BACK TO THE LD. ASSESSING OFFICER FOR A CLEAR FINDING ON THE NA TURE OF TRANSACTION. THE LD. AR PLEADED THAT THE FACTS OF THE CASE ARE IDENT ICAL TO THE FACTS OF THE CASE MENTIONED SUPRA AND THEREFORE THIS CASE ALSO M AY BE REMITTED BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR SUCH DETE RMINATION. 5. LD. DR VEHEMENTLY OPPOSED TO THE PLEA OF THE LD. AR AND ARGUED THAT THE LD. AO AND THE CIT(A) HAVE ANALYSED THE IS SUE THOROUGHLY AND HAVE COME TO A RIGHTEOUS FINDING AND THE SAME MAY B E UPHELD. LD. DR RELIED ON THE JURISDICTIONAL HIGH COURT ORDER IN TH E CASE OF J. RAMA V. CIT REPORTED IN 236 CTR 105 . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED OVER THE MATERIALS PRODUCED BEFORE US. AS RIGHTLY MENTIONED BY THE LD . AR, THE BANGALORE TRIBUNAL IN THE CASE OF SHRI J. PRASHANT HEGDE FOR THE A.Y. 2006-07 IN ITA NO.665/BANG/2010 DATED 21.01.2011 HAD ANALYZED THE ISSUE AND ARRIVED AT THE FOLLOWING CONCLUSION: 8.10 IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS ANALYZED IN THE PRECEDING PARAGRAPH S WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE ISSUE REQUIRES FRES H AND COMPREHENSIVE CONSIDERATION AS TO WHETHER ASSESSEE WAS REQUIRED ITA NO.817/BANG/10 PAGE 4 OF 5 TO DEDUCT TAX U/S 194C OF THE ACT WHILE MAKING PAYM ENTS OF HIRE CHARGES TO THE DRIVERS OF THE VEHICLES/TRUCKS WHO T RANSPORTED THE BAMBOOS FROM THE FOREST AREA TO THE PAPER MILLS AT BHADRAVATHI AND DANDELI. THE LD. AO IS DIRECTED TO MAKE A CLE AR FINDING AS TO WHETHER THE PAYMENTS MADE ARE FOR HIRING THE VEHICL ES/TRUCKS OR IN PURSUANT TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION. IF IT IS ESTABLISHED THAT THE PAYM ENTS ARE MADE IN PURSUANT TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION, THEN THERE SHOULD BE A FURTHER EXAMINATION AND DETE RMINATION OF THE ACTUAL CONTRACTOR I.E., I) THE OWNER OF THE VEHICLE/TRUCK (REPRESENTED BY THE DRIVER OR SELF). (II) THE DRIVER OF THE VEHICLE/TRUCK WHO MIGHT HA VE TAKEN THE VEHICLE ON HIRE FROM THE OWNER. (III) THE PERSON WHO HAS ACTUAL CONTROL OF THE VE HICLE/TRUCK WHO MIGHT HAVE HIRED THE VEHICLE/TRUCK FROM THE OWN ER. IT IS PERTINENT TO MENTION HERE THAT IF THE ASSESS EE HAD ONLY HIRED OUT THE VEHICLE/TRUCK AND IS IN POSSESSION AND CONT ROL OF THE VEHICLE/TRUCK AND THEREBY CARRY OUT THE WORK OF TRA NSPORTATION HIMSELF, THE PROVISIONS OF SECTION 194C OF THE ACT WILL NOT APPLY. ACCORDINGLY, THE ISSUE IS REMITTED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOOK INTO ALL THESE IS SUES IN TOTALITY AS DELIBERATED UPON SUPRA AND TO TAKE APPROPRIATE A CTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AFTER AFF ORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEA RD. IT IS ORDERED ACCORDINGLY. THE ASSESSEE IS ALSO AT LIBER TY TO FURNISH DOCUMENTS REQUIRED UNDER THE AMENDED SECTION 194C(3 ) OF THE ACT AND CLAIM BENEFIT ACCORDINGLY, IF FOUND ELIGIBL E. 7. ON GOING THROUGH THE FACTS OF THE CASE BEFORE US , WE FIND THE CASE BEFORE US IDENTICAL TO THE CASE OF SHRI J. PRASHANT HEGDE. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED O PINION THAT THE CASE MAY BE REMITTED BACK TO THE FILE OF LD. AO, WHO SHALL A NALYZE THE ISSUE AS PER THE DIRECTION GIVEN IN THE CASE OF SHRI J. PRASHANT HEG DE MENTIONED SUPRA AND PASS APPROPRIATE ORDER AS PER LAW AND MERITS. THE ASSESSEE IS AT LIBERTY TO ITA NO.817/BANG/10 PAGE 5 OF 5 FURNISH ANY RELEVANT DOCUMENTS REQUIRED TO DEFEND I TS CASE. IT IS ORDERED ACCORDINGLY. 8. WITH RESPECT TO LEVY OF INTEREST U/S. 234D OF TH E ACT, THERE CANNOT BE ANY DISPUTE AS IT IS CONSEQUENTIAL BEING INTEREST C HARGEABLE ON EXCESS REFUND. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF AUGUST, 2011. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 26 TH AUGUST, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.