Ranjitsingh Premsingh Ahuja, Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 961/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93839 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 961 /PN/201 4 ASSESSMENT YEAR : 20 0 7 - 08 RANJITSINGH PREMSINGH AHUJA, PROP. JEETSONS TRANSPORT COMPANY, NEWASA ROAD, SHRIRAMPUR, AHMEDNAGAR-413709 VS. DY. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR (APPELLANT) (RESPONDENT) PAN NO. AAVPA1877C REVENUE BY: SHRI ACHAL SHARMA ASSESSEE BY: SHRI S.N. DOSHI DATE OF HEARING : 12-05-2015 DATE OF PRONOUNCEMENT : 24-06-2015 ORDER PER VIKAS AWASTHY, JM:- THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-IT/TP, PUNE DATED 18 -03-2014 FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS AS SAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) PRIMARILY ON TWO GROUNDS: 1. AD-HOC DISALLOWANCE OF 2% OF TRANSPORT EXPENSES AMOUNTING TO RS.14,39,315/-. 2. DISALLOWANCE OF RS.2,83,27,080/- U/S. 40(A)(IA) R.W.S. 194C OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A TRANSPORTER AND IS CARRYING ON BUSINESS U NDER THE NAME 2 ITA NO. 961/PN/2014, A.Y. 2007-08 AND STYLE OF M/S. JEETSONS TRANSPORT CO. THE ASSESS EE IS PRIMARILY ENGAGED IN THE TRANSPORTATION OF MOLASSES FROM DIFFERENT SU GAR FACTORIES. THE ASSESSEE OWNS TRUCKS AND ON SEVERAL OCCASIONS HIRES THE TR UCKS FROM OTHER TRUCK OWNERS, AS AND WHEN REQUIRED. THE ASSESS EE HAS BEEN GETTING FORM NO. 15I FROM THE HIRED TRUCK OWNERS, THEREF ORE, ON THE PAYMENTS MADE TO THEM NO TAX WAS DEDUCTED U/S. 194C. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED FOLLOWING EXPENDITURE TOWARD S TRANSPORTATION: I. TRANSPORT EXPENSES AMOUNT RS.2,12,93,888/- II. PAID TRANSPORT CHARGES RS.5,06,71,901/- III. TRANSPORT PAYABLE RS.2,83,27,080/- TOTAL RS.10,02,92,869/- DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED CERTAIN DISCREPANCIES IN FORM NO. 15I FURNISHED B Y THE TRUCK OWNERS. THE DISCREPANCIES AS POINTED OUT BY THE ASSESS ING OFFICER WERE WITH RESPECT TO NON-MENTIONING OF DATE OF REGISTRATION OF V EHICLE AND NON- FURNISHING OF COPY OF REGISTRATION CERTIFICATE. THE ASSESSING OFFICER FURTHER HELD THAT THE TRANSPORT EXPENSES CLAIMED BY THE ASSESSEE WERE NOT SUPPORTED BY DOCUMENTARY EVIDENCE IN THE FORM OF T RIP REGISTER, PURCHASE VOUCHERS FOR DIESEL, TYRE TUBES AND TOLL TAX REC EIPTS ETC. ON THE BASIS OF DISCREPANCIES OBSERVED BY THE ASSESSING OFFICER AN AD-HOC DISALLOWANCE OF 5% OF THE TOTAL TRANSPORT EXPENSES (INCLUD ING FREIGHT PAYMENT) RS.10,02,92,869/- WAS MADE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23-12-2009, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORD ER ENHANCED THE DISALLOWANCE BY MAKING ADDITION OF RS.2,83,27,080 /- 3 ITA NO. 961/PN/2014, A.Y. 2007-08 U/S. 40(A)(IA) R.W.S. 194C FOR DEFECTIVE FORM NO. 15I. AS REGAR DS AD-HOC DISALLOWANCE, THE COMMISSIONER OF INCOME TAX (APPEALS) REDUCE D THE SAME TO 2% OF TRANSPORT EXPENSES PAID I.E. RS.14,39,315/-. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE DISALLOWANCE MADE BY THE COMMISSIONER OF INCOM E TAX (APPEALS). 3. SHRI S.N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THA T THE PAYMENTS MADE BY THE ASSESSEE FOR HIRING OF TRUCK AR E NOT COVERED BY THE PROVISIONS OF SECTION 194C OF THE ACT. THE ASSESSEE HAS NOT ENTERED INTO ANY SUB-CONTRACT WITH THE TRANSPORTERS FOR TRANSP ORTATION OF MOLASSES. THE LD. AR DRAWS OUR ATTENTION TO THE LETTER D ATED 27-02-2006 (AT PAGE 12 OF PAPER BOOK) FROM THE MANAGING DIRECTOR OF ONE OF THE SUGAR MILLS THAT HAD ASSIGNED THE TASK OF TRANSPORTATION OF MOLASSES TO THE ASSESSEE. THE LD. AR SUBMITTED THAT A PERUSAL OF TH E LETTER WOULD SHOW THAT THE RESPONSIBILITY AND LIABILITY OF TRANSPORTATION O F MOLASSES SOLELY LIES ON THE ASSESSEE. THE ASSESSEE USES HIS OWNS TRUCKS AND IN CASE MORE NUMBER OF TRUCKS ARE REQUIRED, THE ASSESSEE HIRES THE TRUCKS FROM OTHER TRANSPORTERS. THE RESPONSIBILITY OF TRANSPORTIN G MOLASSES REMAINS ON THE ASSESSEE AND IS NOT SHIFTED TO THE OWNER OR DRIVERS OF THE HIRED TRUCK. THE LD. AR FURTHER SUBMITTED THAT INCIDENTALLY THE TRUCKS WERE HIRED FROM THE TRUCK OWNERS WHO OWNED LESS THAN T WO TRUCKS. THERE IS NO ORAL OR WRITTEN CONTRACT BETWEEN THE ASSES SEE AND THE OWNER/DRIVER OF THE HIRED TRUCKS FOR TRANSPORTATION OF MO LASSES. THUS, THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED. IN SU PPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. CIT VS. UNITED RICE LAND LTD. 174 TAXMAN 286 (P & H). II. CIT VS. POOMPUHAR SHIPPING CORPN. LTD. 153 TAXMAN 486 (MAD). 4 ITA NO. 961/PN/2014, A.Y. 2007-08 III. R.R. CARYYING CORPORATION VS. ACIT 126 TTJ 240 (CTK). IV. MYTHRI TRANSPORT CORPORATION VS. ACIT 124 TTJ (VISAKHA) 970. 3.1. THE LD. AR SUBMITTED THAT WITHOUT PREJUDICE TO HIS SU BMISSIONS WITH REGARD TO NON-APPLICATION OF SECTION 194C, THE ASSESS EE HAS NOT DEDUCTED TAX AT SOURCE ON THE BASIS OF FORM NO. 15I FUR NISHED BY THE OWNERS OF THE TRUCKS. THE DEFICIENCIES/SHORTCOMINGS POINTE D OUT BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEA LS) ON THE BASIS OF WHICH DISALLOWANCE U/S. 40(A)(IA) HAS BEEN MADE ARE VERY MINOR. MERELY FOR NON-MENTIONING OF PAN AND DATE OF REGISTRATION OF VEHICLE ON FORM NO. 15I DISALLOWANCE U/S. 40(A)(IA) OF THE ACT CANNOT BE MADE. A PERUSAL OF FORM NO. 15I WOULD SHOW THAT MENTIONING OF PAN OF THE OWNER OF THE TRUCK IS NOT MANDATORY AND THERE IS NO REQUIREM ENT TO FURNISH THE COPY OF REGISTRATION CERTIFICATE OF THE TRUCK. DISALLOWANCE U /S. 40(A)(IA) CAN BE MADE ONLY IN THE FOLLOWING TWO CIRCUMSTANCES: I. WHERE THE ASSESSEE IS LIABLE TO DEDUCT TAX HAS NOT DEDU CTED THE TAX; II. WHERE THE ASSESSEE HAS DEDUCTED THE TAX AND HAS NOT DEPOSITED THE SAME WITHIN THE TIME PRESCRIBED UNDER THE PROVISIONS OF ACT. THUS, ANY SHORTCOMINGS IN FORM NO. 15 I CANNOT BE A VA LID REASON FOR MAKING DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. IN SUPPORT OF HIS SUBMISSIONS THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. VALIBHAI KHANB HAI MANKAD REPORTED AS 262 CTR 538 (GUJ). 3.2. WITH RESPECT TO DISALLOWANCE OF 2% THE LD. AR SUBMITTE D THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE BO OKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE ACCOUNTS OF ASSESSEE A RE SUBJECT TO AUDIT AND THE ASSESSING OFFICER HAS NOT REJECTED THE SAM E BEFORE MAKING 5 ITA NO. 961/PN/2014, A.Y. 2007-08 AD-HOC DISALLOWANCE OF 5%. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REDUCED THE SAME TO 2% IN AN ARBITRARY MANNER. TH E COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE DELETED THE DISALLOWA NCE IN THE ABSENCE OF ANY CONCRETE REASON FOR MAKING DISALLOWANCE. 4. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) MADE DISALLOWANCE U/S. 40(A)(IA) R.W.S. 194C AS FOR M NO. 15I FILED BY THE ASSESSEE WERE DEFECTIVE. VITAL INFORMATION W ITH RESPECT TO DATE OF REGISTRATION OF VEHICLE, PAN OF THE OWNER OF THE VE HICLE ETC. WERE NOT MENTIONED IN FORM NO. 15I. THESE DEFECTS WERE POINT ED OUT BY THE ASSESSING OFFICER BUT THE ASSESSING OFFICER DID NOT MAKE DIS ALLOWANCE. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER AFFORDING OPPO RTUNITY OF HEARING TO THE ASSESSEE MADE DISALLOWANCE IN ACCORDANCE WITH THE LAW. THE LD. DR FURTHER SUBMITTED THAT THE PAYMENTS MADE BY THE ASSESSEE FOR HIRING TRUCKS WERE IN THE NATURE OF SUB-CONTRACT. TH EREFORE, THE ARGUMENT OF THE LD. AR THAT THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED, DOES NOT HOLD GOOD. WITH REGARD TO DISALLOWANC E OF 2% ON TRANSPORTATION EXPENSES THE LD. DR SUBMITTED THAT, THE E XPENDITURE CLAIMED BY THE ASSESSEE AS TRANSPORT EXPENSES WERE NO T SUPPORTED BY DOCUMENTARY EVIDENCE. IT IS NOT NECESSARY THAT THE AS SESSING OFFICER HAS TO MENTION ABOUT REJECTION OF BOOKS OF ACCOUNT BEFORE MA KING ADDITION WHERE THE EXPENDITURE CLAIMED IS NOT SUPPORTED BY ANY D OCUMENTARY EVIDENCE. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO EXAMINED THE DECISIONS ON WHICH THE LD. AR HAS P LACED 6 ITA NO. 961/PN/2014, A.Y. 2007-08 RELIANCE. THE ADDITION HAS BEEN MADE IN THE INCOME RETURN ED BY THE ASSESSEE BY MAKING DISALLOWANCE OF RS.2,83,27,080/- U/S. 40(A)(IA ) R.W.S. 194C AND AD-HOC DISALLOWANCE OF 2% OF TRANSPORT EXP ENSES RS.14,39,315/-. AS FAR AS DISALLOWANCE U/S. 40(A)(IA) IS CONCERN ED THE FIRST CONTENTION OF THE ASSESSEE IS THAT THE PAYMENTS MA DE BY THE ASSESSEE TO THE OWNERS OF THE HIRED TRUCKS DOES NOT FA LL WITHIN THE AMBIT OF SECTION 194C AS THERE IS NO SUB-CONTRACT BETWEEN TH E ASSESSEE AND THE OWNERS OF THE HIRED TRUCKS. THE ASSESSEE HAS DRA WN OUR ATTENTION TO THE LETTER AT PAGE 12 OF THE PAPER BOOK VIDE WHICH THE ASSESSEE HAS BEEN ASSIGNED THE WORK OF TRANSPORTATION OF MOLASSES. THE RE LEVANT EXTRACT OF THE TERMS AND CONDITIONS AND JOB ASSIGNED TO THE ASSESSEE ARE AS UNDER: 1. TRANSPORTATION RATE OF RS.435/- PER M.T. WILL BE GIVEN TO DELIVERY OF MOLASSES FROM ABOVE SUGAR FACTORY TO OUR SITE. 2. PAYMENT OF TRANSPORTATION CHARGES WILL BE GIVEN AFTE R EVERY 500/- M.T. MOLASSES DELIVERY BY DEMAND DRAFT. 3. YOU WILL FOLLOWING ALL STATE EXCISE, TRANSPORT DEPARTMEN TS RULES AND REGULATIONS. 4. WE WILL CONSIDER QUANTITY ACTUALLY RECEIVED IN OUR DIST ILLERY UNIT. HENCE ANY WASTAGE, LEAKAGE QUANTITY REDUCED DUE TO AC CIDENT ETC. WILL BE ON YOUR ACCOUNT AND YOU WILL HAVE TO CONTRACT AND COMPLETE ALL THE NECESSARY FORMALITIES OF STATE EXCISE DEPARTMEN T FOR WRITE OFF OR ANY OTHER RELATED WORK IN SUCH CASES, YOUR PAYMEN T CONSIDERING THE NECESSARY DEFAULT AMOUNT WILL NOT BE RELEASED. 5. KARNATKA WILL GIVE DIESEL ON CREDIT TO YOUR TANKER AND AMOUNT WILL BE RECOVERED FROM YOUR RUNNING BILLS. 6. YOU WILL HAVE TO ARRANGE THE NUMBER OF TANKERS, SO A S TO LIFT 250 M.T. PER DAY AND AS PER INSTRUCTION OF OUR DISTILLERY MANAG ER. 7. YOU SHOULD BECOME C CLASS MEMBER OF OUR KARKHANA. 8. 10% DEPOSIT WILL BE DEDUCTED FROM EVERY RUNNING BILL A S SECURITY AND SAME WILL BE RETURNED AFTER THE SATISFACTORY WOR K COMPLETION ONLY. 7 ITA NO. 961/PN/2014, A.Y. 2007-08 6. A PERUSAL OF CLAUSE 4 OF THE TERMS AND CONDITIONS SHOWS THAT IT IS THE RESPONSIBILITY AND LIABILITY OF THE ASSESSEE TO TRANSPORT MOLASSES FROM DESTINATION A TO B. THE ASSESSEE IS RESPONSIBLE FOR COMP LYING WITH THE FORMALITIES UNDER STATE EXCISE DEPARTMENT. A PERUSAL OF CLA USE 6 SHOWS THAT IT IS THE DUTY OF THE ASSESSEE TO ARRANGE FOR THE TANKERS FOR TRANSPORTATION OF 250 M.T. OF THE MOLASSES PER DAY. TH E ASSESSEE IN ORDER TO COMPLY WITH THE TERMS AND CONDITIONS OF THE JO B ASSIGNED TO HIM, IS USING HIS OWN TRUCKS AS WELL AS HIRED TRUCKS. THE R EVENUE HAS NOT BEEN ABLE TO SHOW THAT THERE WAS A CONTRACT/SUB- CONTRACT BETWEEN THE ASSESSEE AND OWNERS OF THE HIRED TRUCKS FOR TRANSP ORTATION OF MOLASSES. THE HIRED TRUCKS WERE ALWAYS UNDER THE CON TROL AND COMMAND OF THE ASSESSEE. THE RESPONSIBILITY AND LIABILITY TO TRANSPORT MOLASSES NEVER SHIFTED TO THE OWNERS/DRIVERS OF THE HIRE D TRUCKS. THEREFORE, IT CANNOT BE INTERFERED THAT THERE WAS ANY WR ITTEN OR ORAL CONTRACT/SUB-CONTRACT BETWEEN THE ASSESSEE AND THE OWNERS OF THE HIRED TRUCKS. 7. THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. POOMPUHAR SHIPPING CORPN. LTD. (SUPRA) WHILE DEALING WITH A S IMILAR ISSUE HELD THAT WHERE THE SHIPS ARE SIMPLY HIRED ON PAYM ENT OF HIRE CHARGES FOR UTILIZING THE SAME IN THE BUSINESS, PAYMENT OF H IRE CHARGES WOULD NOT FALL WITHIN THE PROVISIONS OF SECTION 194C AND HE NCE, NO TAX COULD BE DEDUCTED ON SAID PAYMENTS. IN THE SAID CASE T HE ASSESSEE- COMPANY WAS ENGAGED IN THE BUSINESS OF TRANSPORTATION O F COAL ENTERED INTO A CONTRACT WITH THE STATE ELECTRICITY BOARD FOR TRAN SPORTING COAL. SINCE THE SHIPS OWNED BY THE ASSESSEE WERE NOT SUFFICIENT TO CARRY OUT THE SAID CONTRACT, THE ASSESSEE HIRED SHIPS PERTAINING TO OTHER SHIPPING COMPANIES FOR CARRYING THE GOODS FROM ONE PLACE TO ANOTH ER. THE ASSESSEE PAID HIRE CHARGES TO THOSE SHIPPING COMPANIES BUT IT DID NOT DEDUCT TAX UNDER SECTION 194C BEFORE MAKING PAYMENT OF HIRE CHARGES TO 8 ITA NO. 961/PN/2014, A.Y. 2007-08 THE SHIPPING COMPANIES. THEREFORE, THE ASSESSING OFFICER TREA TED THE ASSESSEE AS IN DEFAULT AND DIRECTED THE ASSESSEE TO PAY THE TAX UNDER SECTION 201 AND ALSO LEVIED INTEREST UNDER SECTION 201(1A). ON APPEAL, THE COMMISSIONER (APPEALS) HELD THAT THE AGREEMENT IN QUE STION WAS FOR MERE HIRING OF SHIPS AND THE PAYMENT OF THE HIRE CHARGES WOULD NOT BE SUBJECT TO TDS OBLIGATION UNDER SECTION 194C. ON FURTHER APPEAL, THE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER (APPEALS). THE HON'BLE HIGH COURT IN THE BACKGROUND OF THESE FACTS HELD: THE HIRED SHIPS WERE UTILISED BY THE ASSESSEE IN T HE BUSINESS OF CARRYING THE GOODS FROM ONE PLACE TO ANOTHER IN PUR SUANCE OF AN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE TAMIL NADU ELECTRICITY BOARD. THERE WAS NO AGREEMENT FOR CARRYING OU T ANY WORK OR TRANSPORT ANY GOODS FROM ONE PLACE TO ANOTHER BE TWEEN THE ASSESSEE AND THE OTHER SHIPPING COMPANIES. THE ASSES SEE-COMPANY SIMPLY HIRED THE SHIPS ON PAYMENT OF HIRE CHARGES AN D IT WAS UTILISED IN THE BUSINESS OF THE ASSESSEE AT THEIR O WN DISCRETION. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE ENTER ED INTO THE SAID CONTRACT WITH THE SHIPPING COMPANY FOR TRANSPORT OF COAL FROM ONE PLACE TO ANOTHER. THE HIRING OF SHIPS FOR THE PURPOS E OF USING THE SAME IN THE ASSESSEES BUSINESS WOULD NOT AMOUNT TO A CONTRACT FOR CARRYING OUT ANY WORK AS CONTEMPLATED IN SECTION 194 C. THE TERM HIRE IS NOT DEFINED IN THE INCOME-TAX ACT. SO, WE HAV E TO TAKE THE NORMAL MEANING OF THE WORD HIRE. NORMAL HIRE IS A CON TRACT BY WHICH ONE GIVES TO ANOTHER TEMPORARY POSSESSION AND USE OF THE PROPERTY OTHER THAN MONEY FOR PAYMENT OF COMPENSATI ON AND THE LATTER AGREES TO RETURN THE PROPERTY AFTER THE EXPI RY OF THE AGREED PERIOD. THEREFORE, IN OUR VIEW, WHEN THE ASSESSEE ENT ERED INTO A CONTRACT FOR THE PURPOSE OF TAKING TEMPORARY POSSES SION OF SHIPS IN THE SHIPPING COMPANY IT COULD NOT BE CONSTRUED AS IF THE ASSESSEE ENTERED INTO ANY CONTRACT FOR CARRYING OUT ANY WORK , AND WHEN THE CONTRACT IS NOT FOR CARRYING OUT ANY WORK, THE REVE NUE CANNOT INSIST THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE U NDER SECTION 194C OF THE ACT. FURTHER, THE OTHER ARGUMENT OF COUN SEL WAS, SECTION 194C WAS AMENDED WITH EFFECT FROM 1-7-1995, INCORPORAT ING THE EXPLANATION AND THE SAID EXPLANATION CLARIFIES THE EXISTING PROVISION OF SECTION 194C OF THE ACT. HENCE, IT WOULD BE APPLIC ABLE 9 ITA NO. 961/PN/2014, A.Y. 2007-08 RETROSPECTIVELY. WE ARE CONCERNED WITH THE ASSESSMENT YEAR 1994-95. IN A RECENT JUDGMENT, THE SUPREME COURT IN TH E CASE OF SEDCO FOREX INTERNATIONAL DRILL INC. V. CIT [2005] 279 ITR 310 , CONSIDERING THE SCOPE OF THE EXPLANATION, HELD THAT TH ERE IS NO PRINCIPLE OF INTERPRETATION WHICH WOULD JUSTIFY READI NG THE EXPLANATION AS OPERATING RETROSPECTIVELY, WHEN THE E XPLANATION COMES INTO FORCE WITH EFFECT FROM A FUTURE DATE. IN T HIS CASE, THE EXPLANATION INTRODUCED IS WITH THE EFFECT FROM 1-7-199 5. HENCE, IT WILL BE APPLICABLE ONLY FOR THE FUTURE ASSESSMENT ORDER S AND IT WILL NOT BE APPLICABLE TO THE ASSESSMENT YEAR IN CONSIDER ATION. THE TRIBUNAL ALSO CONSIDERED THE FACT THAT THE SHIPPING C OMPANIES WHICH RECEIVED THE HIRE CHARGES ARE ALSO INCOME-TAX ASSESS EES AND THEY HAD SHOWN THE HIRE CHARGES IN THEIR RESPECTIVE INCO ME-TAX RETURNS AND PAID THE TAXES ON THE SAME. THE SAID FACT WAS ALSO NOT DISPUTED BY THE REVENUE. SO, WE ARE OF THE VIEW THAT THE PAYM ENT OF HIRE CHARGES FOR TAKING TEMPORARY POSSESSION OF THE SHIP S BY THE ASSESSEE-COMPANY WOULD NOT FALL WITHIN THE PROVISION OF S ECTION 194C AND, HENCE, NO TAX IS REQUIRED TO BE DEDUCTED, AN D THERE IS NO ERROR OR INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN CASE OF R.R. CARYYING CORPORATION VS. ACIT (SUPRA) AND MYTHRI TRANSPORT CORP ORATION VS. ACIT (SUPRA). 8. WE FIND THAT IN THE FACTS OF THE PRESENT CASE, THE RA TIO LAID DOWN BY THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. P OOMPUHAR SHIPPING CORPN. LTD. (SUPRA) IS SQUARELY APPLICABLE. THEREFORE, WE ACCE PT THE CONTENTIONS OF THE ASSESSEE THAT THE PAYMENTS MAD E BY THE ASSESSEE TO THE OWNERS OF THE HIRED TRUCK DO NOT FALL WITHIN THE AM BIT OF SECTION 194C OF THE ACT. SINCE, THE PAYMENTS MADE BY THE ASSES SEE TO THE OWNERS OF HIRED TRUCKS HAVE BEEN HELD OUT OF THE SCOPE OF SECTION 194C, THE DEFECT IN FORM NO. 15I AS POINTED BY LOWER AUTHORITIES WILL HAVE NO CONSEQUENCES. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS.2,83,27,080/- U/S. 40(A)(IA) R.W.S. 194C OF THE ACT. 10 ITA NO. 961/PN/2014, A.Y. 2007-08 9. THE OTHER GROUND RAISED BY THE ASSESSEE IS WITH REG ARD TO DISALLOWANCE OF 2% OF TRANSPORT EXPENSES. WE OBSERVE THA T THE DISALLOWANCE HAS BEEN MADE BY RAISING TRIVIAL OBJECTIONS. IT H AS NOT BEEN DISPUTED BY THE REVENUE THAT THE ASSESSEE IS NOT MAINT AINING BOOKS OF ACCOUNT REGULARLY. THE ACCOUNTS OF THE ASSESSEE ARE S UBJECT TO AUDIT AND NO MATERIAL DISCREPANCY WHATSOEVER HAS BEEN INDICATED BY THE ASSESSING OFFICER. THE AD-HOC ADDITION OF 2% IS MADE MERELY ON SURMIS ES AND CONJECTURES. ACCORDINGLY, THE SAME IS DELETED. 10. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND TH E APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 24 TH DAY OF JUNE, 2015 AT PUNE SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH JUNE, 2015 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - IT/TP, P UNE 4 THE CIT - I, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE