ITO (TDS), Patiala V. M/s S.A. Singh & Co., Bhawanigarh

ITA 986/CHANDI/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9305 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-10-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 133(6); 12A; 194C; 201(1)

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “बी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 986/Chd/2019 िनधाᭅरण वषᭅ / Assessment Year : 2016-17 The ITO (TDS), Patiala बनाम M/s S.A. Singh & Co. Shop No. 59, Randhawa Bros. & Co., Bhawanigarh ̾थायी लेखा सं./TAN NO: PTLS19524B अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Tejmohan Singh, Advocate राज᭭व कᳱ ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 17/10/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 01/01/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Revenue against the order of the Ld. CIT(A), Patiala dt. 04/04/2019 pertaining to Assessment Year 2016-17. 2. In the present appeal, the Revenue has raised the following revised grounds of appeal: (1) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in ignoring the fact that while making payment of freight charges the assessee deductor failed to deduct TDS u/s 194C of the Truck Union (M/s Shree Teg Bahadur Truck Operator Union, Bhawanigarh)who actually carried out the work. (2) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in ignoring the fact that the assessee has claimed refund of the TDS deducted by PIH u/s 194C on the payment received as freight charges but the same was not shown in the profit and loss account of the assessee. 2 (3) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in not upholding the order u/s 201(1)/201(1A) of the Income Tax Act, 1961 ignoring the fact that the tripartite agreement between the PIH (PepsiCo India Holding Pvt. Ltd.), the truck union and the assessee was constituted on 25.04.2016 i.e. after the completion of F.Y. 2015-16. Moreover, as per Column 1.2 of the agreement, the agreement is effective from 01.01.2016 and is therefore not applicable for first nine months of the F.Y. 2015-16. (4) The appellant craves leave to amend, add, alter or delete any of the aforesaid grounds till the disposal.” 3. Briefly, the facts of the case are that a survey action under section 133A(2A) of the Act was carried out at the business premises of the assessee on 15/12/2016 and on examination of the assessee’s records, it was noticed by the Survey Team that the assessee has made freight payment of Rs. 29,13,79,552/- to M/s Shree Guru Teg Bahadur Truck Operator Union Bhawanigarh for transport of goods of M/s Pepsico India Holding Pvt. Ltd. However, while making the payment or crediting the same to the account of the payee, the assessee has failed to deduct TDS @ 2% under Section 194C of the Act. 3.1 Thereafter, the proceedings under section 201(1) of the Act were initiated. During the course of proceedings, information was sought under section 133(6) from M/s Guru Teg Bahadur Truck Operator Union. As per the AO, on perusal of the reply and information furnished by the Truck Operator Union, it reveals that the Truck Operator Union has done the business of plying, hiring or leasing goods carriage having 892 trucks of its members and has not shown freight receipts received from the assessee in its books of account as well as not offered the same to tax in its return of income. 3.2 It was stated by the AO that the Truck Operator Union has filed its return of income for A.Y. 2016-17 in the status of Association of Persons (AOP) and has only shown commission and interest income, however the freight receipt from the assessee company has not been shown in the return of income as well as in the P&L Account. 3 3.3 Further the submission of the Truck Operator Union that it was just an association of truck owners for the purpose of securing equal work for all the truck owners and to avoid competition amongst the truck owners, it carries out necessary activities and the payment received on account of transportation is distributed among the truck owner was also not accepted. 3.4 As per the AO, the Truck Operator Union has filed its return of income in the status of AOP which falls in definition of person under section 2(31) of the Act and therefore all the necessary provisions of the Income Tax Act are applicable and in the said background, it was held that the assessee should have deducted TDS on freight payment made to the Truck Operator Union on which it has failed to do so. 3.5 As per the AO, the income of the Truck Operator Union is not exempt under section 12A or under section 10(24) of the Act and even provision of Section 194C(6) are not applicable as the Truck Operator Union uses 892 trucks of its members way beyond the prescribed limit of ten trucks. 3.6 Further the Truck Operator Union has not submitted any certificate from the Chartered Accountant under first proviso to Section 201(1) of the Act reflecting the freight receipt in the return of income. 4. Thereafter, a show cause was issued to the assessee as to why it shouldn’t be treated as assessee in default under section 201(1) r.w.s 201(1A) of the Act on account of non deduction of TDS under section 194C on freight payment of 29,13,79,552/-. 4.1 In response, the assessee submitted that it has not entered into any verbal or written contract for hiring of trucks with the Truck Operator Union and it is only acting as a transport commission agent for carriage of goods and no freight charges were paid to Truck Operator Union in pursuance of the contract for 4 specific period, quantity or price. It was further submitted that M/s Pepsico India Holding Pvt. Ltd. paid commission to the assessee for rendering its services and the commission income has been duly reflected in the P&L Account. It was submitted that the assessee firm does not own any truck or vehicles and was merely working as a commission / liaison agent between M/s Pepsico India Holding Pvt. Ltd. who wishes to send its goods to the dealers located at different places and the Truck Operator Union who transport the goods. 4.2 It was submitted that only the payment is routed through assessee company and it is the M/s Pepsico India Holding Pvt. Ltd. who is responsible for paying the freight charges to the Truck Operator Union and it is just that the payment is routed through the assessee company and therefore provision of Section 194C are not applicable. 5. The submissions so filed by the assessee were considered but not found acceptable to the AO. As per the AO, there is infact a Tripartite Agreement executed on 25/04/2016 among M/s Pepsico India Holding Pvt. Ltd., M/s Shree Guru Teg Bahadur Truck Operator Union and the assessee company for transportation of goods and therefore the contention of the assessee company that there is no verbal or written contract cannot be accepted. It was held by the AO that as per the provisions of Section 194C, the assessee company should have deducted TDS on freight payment made to the Truck Operator Union and which it has failed to do so. Accordingly, the assessee was held to be in default for failure to deduct TDS under section 201(1) and demand of Rs. 58,27,591/- was determined under section 201(1) on account of non deduction of TDS and interest for late payment of Rs. 9,83,310/- under section 201(1A) of the Act. 6. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The submissions made before the AO were reiterated. Further detailed written submission were filed which found mention in para 5.6 of the impugned 5 order and besides that as part of the assessee’s paper book, the audited financial statement, copy of Tripartite Agreement dt. 25/04/2016, copy of the Minutes of Meeting between M/s Pepsico India Holding Pvt. Ltd. and the Truck Operator Union dt. 12/12/2015 and copies of sample bills / invoices raised by the assessee on M/s Pepsico India Holding Pvt. Ltd. were submitted. 6.1 The Ld. CIT(A) referred to the terms of the tripartite agreement which was signed on 25/04/2016 and stated to have been effective from 01/01/2016 and after analyzing various clauses of the tripartite agreement as well as the rate revision agreement negotiated directly between M/s Pepsico India Holding Pvt. Ltd. and Truck Operator Union recorded a finding that the goods being transported belongs to M/s Pepsico India Holding Pvt. Ltd. and the work was carried out by the Truck Operator Union / Truck owners. The assessee is required to raise the invoice and received the fright payment agreed between M/s Pepsico India Holding Pvt. Ltd. and Truck Operator Union and pass on this payment to the Truck Operator Union as per the tripartite agreement. 6.2 It was held by the Ld. CIT(A) that the role of the assessee company is largely as a monitoring and reporting agent and therefore the assessee company has merely acted as an agent of M/s Pepsico India Holding Pvt. Ltd. receiving commission for its services and not as a actual transporter and therefore the primary responsibility to deduct TDS for payment made to the Truck Operator Union is that of the M/s Pepsico India Holding Pvt. Ltd. and not that of the assessee company. 6.3 Further, the Ld. CIT(A) relied on the order of the Hon’ble Delhi High Court in case of CIT Vs. Hardarshan Singh (2013) 350 ITR 427 stating that the facts in the instant case are similar as in the case before the Hon’ble Delhi High Court where it was held that where the assessee acted as a mere facilitator or intermediary as per contract, there is no liability to deduct tax at source u/s 194C and 6 therefore following the same, it was held that the assessee is not liable to deduct TDS on the payment made to Truck Operator Union and the order passed under section 201(1) read with 201(1A) was directed to be quashed. 7. Against the said findings and the direction of the Ld. CIT(A), the Revenue is in appeal before us. 7.1. During the course of hearing, the Ld. DR relied on the findings of the A.O. It was submitted that the assessee company has made payment to Truck Operator Union in the nature of freight charges for transportation of goods and therefore the payment of freight charges so made by the assessee company will be subjected to the provision of Section 194C of the Act. It was submitted that even though the assessee does not own the trucks or deal directly with the Truck owners, it is still responsible for close coordination and monitoring as well as arranging of trucks and therefore it cannot be held that the assessee was not responsible for making the payment for carriage of goods as so contended by the assessee before the Ld. CIT(A). 7.2 Further referring to the tripartite agreement, it was submitted that the said agreement was signed on 25/04/2016 which falls in the subsequent assessment year and even if the said agreement has to be read as effective from 01/01/2016, even then the said agreement is not relevant as far as the initial nine months of the current financial year is concerned. It was therefore submitted that the Ld. CIT(A) fell in error in relying on the tripartite agreement and basis the same recorded his findings which therefore deserves to be set aside and the order of the AO be sustained. 8. Per contra, the Ld AR relied on the findings of the Ld. CIT(A) and it was submitted that the Ld. CIT(A) has duly appreciated the facts of the case in the correct perspective. Referring to the contention advanced by the Ld. DR that 7 the tripartite agreement was entered into 25/04/2016, It was submitted that firstly the agreement itself talks about the fact that the same is effective from 01/01/2016 and as far as the remaining initial period of nine months is concerned, it was submitted that it was always the same understanding between the three parties namely M/s Pepsico India Holding Pvt. Ltd., Truck Operator Union as well as the assessee company as may be seen from the minutes of meetings dt. 12/12/2015 which has been signed by the representative of M/s Pepsico India Holding Pvt. Ltd. and the Truck Operator Union, raising of invoices for commission and freight separately, receiving the payment from M/s Pepsico India Holding Pvt. Ltd and making the freight payment to Truck Operator Union and in order to formalize and articulate the same, written agreement was entered into on 25/04/2016. 8.1 It was submitted that all along the understanding has been that the Truck Operator Union will provide the requisite trucks for transport of goods belonging to M/s Pepsico India Holding Pvt. Ltd. and the assessee company will facilitate and provide the necessary coordination and the logistical support as well as raise necessary invoices and collect payment and disburse the same subsequently to the Truck Operator Union. 8.2 It was further submitted that even the AO has referred to the tripartite agreement while giving his operative findings in the assessment order and therefore there is no basis to dispute the applicability of the tripartite agreement for the financial year under consideration. 8.3 It was submitted that the assessee firm was acting as an intermediary between M/s Pepsico India Holding Pvt. Ltd. and the Truck Operator Union and for its activity, it received commission income amounting to Rs. 66,81,696/- from M/s Pepsico India Holding Pvt. Ltd. which has been duly reflected in its P&L Account, as far as the freight receipts are concerned, the same have been 8 received from M/s Pepsico India Holding Pvt. Ltd. and thereafter disbursed to the Truck Operator Union and therefore the same has not entered in its P&L Account. Referring to the provisions of Section 194C(1) of the Act, it was submitted that in the instant case "Person responsible for paying any sum" is PIH and not the Appellant Firm as it is the goods of PIH that are being transported and not of Appellant Firm and the Tripartite Agreement and Minutes clearly justify it. Further, the work is carried out by the Truck Union/Owners in pursuance of Contract between PIH and Union. It is to be noted that the Freight payments are first received by the Appellant Firm and then passed on to the Union on behalf of the PIH which further clarifies that the Appellant Firm is acting on behalf of PIH (Person responsible for paying any sum). So, this case is clearly a case of the Appellant Firm being a Commission Agent and that is why, the Appellant Firm had shown only Commission Income from PIH in its Trading Account. This is a basic difference from the two other Businesses carried out by the Appellant Firm, i.e. Clearing & Forwarding Agency Business and Supply of Labour for Loading & Unloading Services. In these businesses, the Appellant Firm has to incur the expenses on clearing & forwarding and on wages of Labour, whether any advance has been received or not for providing the above Services. So in above two Businesses, the Appellant is not acting as an Intermediary and hence, full Receipts and Expenses of such Businesses are shown by the Appellant Firm in its Trading Account. 8.4 In support of his contention, the ld AR relied on the decision of the Hon’ble Delhi High Court in case of CIT Vs. M/s Cargo Linkers 179 Taxman 151 and the subsequent decision in the case of CIT vs. Hardarshan Singh (2013) 350 ITR 427 (Del) wherein it has been held as under: "TDS—Commission received as an intermediary—No contract of work—TDS not deducted—Liability- Assessee carried on business of a commission agent by arranging for transportation of goods through other transporters—AO stated that assessee was liable to deduct TDS u/s 194C on commission received from lorry business—Held, in case of CIT v. Cargo Linkers; (2009) 179 Taxman 151 (Del) - 9 Pages No. 5 to 7 of the Judgment Set, Tribunal had noted and found as a matter of fact that assessee was nothing but an intermediary between exporters and airlines as it booked cargo for and on behalf of exporters and mainly facilitated contract for carrying goods—Above decision completely covered case in favour of assessee and against respondent—Tribunal had already found as a matter of fact that contract was between assessee's clients and transporters and that assessee had mainly acted as a facilitator or as an intermediary—Revenue's appeal dismissed" 8.5 It was submitted that the facts in the present case are similar to the facts contained in the aforesaid Judgement. In the present case, the Appellant Firm is acting as an intermediary between M/s. Pepsico Holdings India Pvt. Ltd. (PIH) and the Truck Union/Truck Owners which is demonstrated as under: “A. The Accounting Treatment adopted by the Appellant Firm in showing only the Commission Income from Lorry Booking Business (and not the Freight Receipts on behalf of the Transporters/Truck Union) in its Trading Account shows the intention of the Appellant Firm. B. Even the Tripartite Agreement, mentioned by the Ld. AO in the last Para of Page 10 of the Assessment Order, is in favour of the Appellant Firm and shows the intentions of all the Parties to such Agreement to treat the Appellant Firm as an Intermediary/Commission Agent. The above said Agreement has been entered into between M/s Pepsico Holdings India Pvt. Ltd., the Truck Union/Truck Owners and the Appellant Firm and is enclosed at Pages No. 9 to 23 of the Paper Book. The second page of the Agreement, at Point B, clearly states that the Truck Union (Union) has represented to M/s Pepsico Holdings Pvt. Ltd. (PIH) that it is engaged in the Business of providing Trucks for transportation of goods and has offered its services to provide Trucks to PIH. At Point D, it is clearly mentioned that on the representations of the Union. PIH has agreed to engage it as a Truck Provider on the terms and conditions mentioned in this Agreement. At Point C, it is mentioned that the Appellant Firm is engaged in providing Logistics Support, i.e. managing/procuring/arranging Trucks from Union to be used for transportation of goods of PIH. C. The start of the Agreement clearly states that the Union is interested in providing Transport Services to PIH, to which the PIH agreed with the Support/Managerial Services of the Appellant Firm to avoid dealing directly with the Truck Drivers/Owners/Union, mostly of them being Illiterate. Therefore, the Appellant Firm has been engaged as an Intermediary between the main Parties to the Contract, i.e. PIH and Union. D. Point No. 2.2 at Page 3 of the above said Agreement further clarifies the above, as it is written that PIH may appoint any other Transport Contractor instead of the Appellant Firm and deal with the Union through such other 10 Transport Contractor and the word "through" clearly states that the Appellant Firm is an Intermediary to PIH and Union. E. Point No. 2.3 at Page 3 of the above said Agreement further clarifies the above, as it is written that the payments to Union may be made through the Appellant Firm and that the Appellant Firm shall while making a payment to the Union, send a confirmation to PIH and the word "throuqh" and "confirmation" clearly state that the Appellant Firm is an Intermediary to PIH and Union. F. Apart from the above, all the other Clauses in the above said Agreement clearly conclude that the Appellant Firm is acting as an Intermediary. G. The Minutes of the Meeting between PIH and Union with regard to enhancement of the Freight Rate, are enclosed at Pages No. 24 to 27 of the Paper Book. The above Minutes, signed by the Authorized Representatives of the PIH and the Union, clearly states that even the Freight Rates had been decided by the PIH and the Union directly. The engagement of the Appellant Firm is only for the purpose of Logistics Support to deal with the Union, for which it is paid a Commission. H. The Sample Copies of Bills raised by the Appellant Firm to M/s. Pepsico Holdings India Pvt. Ltd. are enclosed herewith at Pages No. 28 & 29 of the Paper Book. It can be seen that two types of Bills had been raised by the Appellant Firm to M/s. Pepsico Holdings India Pvt. Ltd. during the year under consideration. The first type of Bill is related to the total Freight amount to be received by the Appellant Firm on behalf of the Truck Union/Truck Owners with regard to the transportation of goods made by them. The above amount, when received, was passed on by the Appellant Firm to the Truck Union/Truck Owners. The second type of Bill is related to the Commission Amount charged by the Appellant Firm to M/s. Pepsico Holdings India Pvt. Ltd. for acting as an Intermediary in the above said "Lorry Booking Business". I. The List of Fixed Assets shown in the Audited Financial Statements of the Appellant Firm as on 31.03.2016 clearly shows that the Appellant Firm had not owned even a single Truck and that it was just acting as a Commission Agent between PIH and the Union.” 8.6 Further, our reference was drawn to the findings of the Ld. CIT(A) which are contained at para 6 to 12 and our particular reference was drawn to the findings of the ld CIT(A) in para 6.2 to 6.6 after examination of the clauses of the tripartite agreement and thereafter the final findings in para 6.8 to 6.9 of the impugned order and we deem it appropriate to reproduce the whole of the findings of the ld CIT(A) as under: 11 “06. The appellant claims to be carrying out three different lines of business viz. as a Clearing and Forwarding Agent" Contract Work for supplying of Labour for providing Loading and Unloading Services".; and "Lorry Booking Business" on behalf of M/s Pepsico Holdings_Pvt. Ltd. It is the last activity which is the subject matter of the impugned order. The appellant claims that in the first two business activities it has accounted for the entire receipts and expenses thereon; however, with regards to the third activity the appellant claims that it is involved only as a service provider and the Booking Commission is the only receipt relevant to the appellant and the same has been shown in the Trading Account. The rest of the payments received relate only to the Truck Union and that the Appellant has acted only as a Commission Agent, Facilitator or as an Intermediary and are not covered under the provisions of Section 194C(1) as the Person responsible for paying any sum to the Truck Union. As per the appellant the person responsible is Pepsico India Holding Pvt. Ltd. (hereinafter called PIH). 6.1 I have carefully perused the submission of the appellant, the findings of the Ld. AO, the case laws cited and contextualized these to the facts of the case. To understand the nature of the business of the appellant qua PIH, it is important to will be relevant to construct the Tripartite Agreement between the appellant as a "Service Provider, PIH as the party whose goods are to be transported and the Truck Union as the provider of the trucks and also the rate revision agreement mentioned supra. 6.2 The Tripartite Agreement The agreement signed on 25 th April 2016 is said to be effective from 1 st January 2016. On construction of the agreement it becomes evident that vide Point page 2 (page 9 of paper book), Truck Union (Union) has represented to PIH that it is engaged in the Business of providing Trucks for transportation of goods and has offered its services to provide Trucks to PIH. PIH has vide terms Point D page 2 (page 9 of paper book) "On the representation of the Union PIH has agreed to engage it ( the Truck Union) as a Truck Provider." 6.3 It also mentions as per Clause 2.1 that PIH is willing to utilize the services of the appellant "as a service provider" on a non-exclusive basis and as per Clause 2.2 also use any other Service Provider to deal with the Truck Union, or deal with the Truck Union directly, which would be the determined by separate tripartite agreements. 6.4 As per Clause 2.3 the payments may be made through the Service Provider (the appellant) or even directly in the absence of the Service provider and the Service provider is required to intimate a confirmation to PIH on making any such payments. Thereafter Clauses 2.4 to 2.24 spell out the obligations of both the appellant and the Union together vis a vis the PIH as also the terms of the payments. As per Clause 2.7 any debarring of a truck is to be deiced by PIH. Vide Clause 2.10 the appellant is required to monitor the trucks provided by the Union whose drivers have to intimate their progress. The failure of the truck drivers to do the needful would lead PIH to impose a penalty on the trucks. 6.5 Vide Clause 2.13 PIH is required to arrange the Shipping Containers from the Open and provide the same to the Truck Union. Clauses 3.1 to 3.9 are the Covenants relevant to the Truck Union and these spell out the obligations of the Truck Union Truck alone regarding the following: i. Indemnity with regards to the statutory obligations for engaging drivers (Clauses 3.2) ii. The condition of the vehicles/ provide substitutes/ quality (Clauses3.2 to 3.5 ) 12 iii. Monsoon protection; Penalty for non-compliance on the Truck Union (Clause 3.6) iv. Licenses and indemnify PIH against violation of law by the Truck Union. ( Clause 3.7 -3.8) v. Truck Union to Ensure Trucks are bottle sealed and penalty for non compliance (Clause 3.9) 6.6 Clause 5.2 requires the appellant to raise the invoices on PIH on behalf of itself and the Truck Union and that payments shall be made within 60 days after making adjustments as per clause 2.5 and deducting tax at Source. 6.7 The Rate Revision Agreement: The rate revision agreement or rate contract in December is negotiated directly between the PIH and Truck Union and signed between their representative alone. 6.8 The matrix of the facts that emerge on construction of the agreements lead me to a considered view that the goods being transported by the Truck Union belong to PIH. Further work is carried out by the Truck Union/Owners in is largely in terms of the covenants relevant to PIH and Union. That the appellant is required to raise the Invoice and receive the Freight payments agreed between the PIH and the Truck Union and pass these on to the Truck Union as per the Tripartite Agreement along with their role largely as a monitoring and reporting agent provides considerable support to the appellant's submission that the appellant is merely an agent of PIH receiving a Commission as per the agreement and not the actual transporter. That the appellant raises two separate types of Invoices one for the Commission payable contractually to the appellant along with Service Tax thereon and the other the showing the total freight chargeable less shortages and damages is a matter of record. That the amount of Total Freight doses not enter the books of the appellant's as a receipt/ expense and is transferred directly to the Truck Union is a matter of record and not in dispute. That the appellant owns no trucks is also a matter of record and not in dispute. The Ld. AO's finding that the appellant was in earlier years showing the receipts from PIH in its books of accounts is not of consequence as the accounting treatment is as per the Tripartite agreement signed in Aril 2016 that is during the relevant FY of the impugned order. 6.9 It is my considered view that there is considerable merit in the appellant's submission that the primary liability to deduct tax at source for the payments made to the Truck Union is that of PIH. In fact Clause 5.2 of the Tripartite agreement clearly states that payments will be released by PIH after making adjustment for penalties (Clause 2.5) and deduction of tax at source. That the truck Union has not accounted for receipts from the Appellant Firm in its Profit and Loss Account for the FY under consideration is not relevant to the obligation on the appellant to deduct tax at source. That Section 194C(6) of the Act is not applicable in the Case of Truck Union as the Union used/maintain 892 Trucks of its members i.e. exceeding the limit of 10 Trucks as provided under Section 194C(6) of the Act or that the Truck Union has not obtained CA Certificate or the nature of receipts in the hands of the truck Union are also in my considered view, not material to the findings qua the existence or non-existence obligation of the appellant as a person responsible for making payments and deducting tax at source. 6.10 ....... 6.11 ....... 6.12 ....... 6.13 The Ld. AR has cited the decision of the Hon'ble Delhi High Court Judgment in the Case of CIT vs. Hardarshan Singh (2013) 350 ITR 427 (Del) which hold that where the assessee acts as a mere facilitator or intermediary as per contract, there is no liability to 13 deduct tax at source u/s 194C of the Act. In my view the facts of the instant case are similar to those in the case of CIT vs. Hardarshan Singh( supra) 6.14 It is my considered view that the construction of the agreements/ rate revision as discussed supra and the entire matrix of facts and legal provision lead to the clear finding that the appellant is not liable to deduct tax at source on the payments to the Truck Union. The order u/s 201(1)/ 201(1A) is directed to be quashed. It is ordered accordingly.” 9. We have heard the rival contentions and perused the material available on record. The relevant provisions which are under consideration read as under: “Section 194C —(1) 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 such 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— (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family Explanation.—For the purposes of this section,— (i) ....... (ii)....... (iii)....... (iv) “work” shall include— (a) ......... (b) (c) carriage of goods or passengers by any mode of transport other than by railways; (d) ........ (e) ......... 10. The aforesaid provisions have to be applied and appreciated in the context of the contractual understanding between the parties and in this regard, we refer to the tripartite agreement executed on 25/04/2016 between M/s Pepsico India Holding Pvt. Ltd., the Truck Operator Union and the assessee company wherein the scope of services are contained in Clause 2 of the said agreement and the contents thereof read as under: 14 15 16 17 11. Further, the Truck Operator Union’s covenant are contained in Clause 3, matter relating to determination of freight rates and transit time are contained in Clause 5 and M/s Pepsico India Holding Pvt. Ltd.’s convenant are contained in Clause 6 and we deem it appropriate to reproduce the same as under: 18 12. On perusal of various clauses of the aforesaid tripartite agreement, we find that the goods being transported belong to M/s Pepsico India Holding Pvt. Ltd. and the work of carriage of goods through the trucks was carried out by the Truck Operator Union / Truck owners. The freight charges, transit time, etc have been directly negotiated between M/s Pepsico India Holding Pvt. Ltd. and the 19 Truck Operator Union / Truck owners. The role of the assessee company was largely to coordinate and monitor the transportation of goods through the trucks and therefore the assessee company has acted as an agent of M/s Pepsico India Holding Pvt. Ltd. For its services, the assessee company raises separate invoice and received the commission payment which has been duly offered to tax. As far as freight charges are concerned, the assessee is required to raise separate invoices on behalf of Truck Operator Union and received the freight payment agreed between M/s Pepsico India Holding Pvt. Ltd. and Truck Operator Union and pass on this payment to the Truck Operator Union as per the tripartite agreement and to this limited extent of raising the invoices and receiving and subsequently making the payment, it also acted as an agent for the Truck Operator Union/Truck owners. In substance, the assessee basically acted as an intermediary between M/s Pepsico India Holding Pvt. Ltd. and Truck Operator Union/Truck Owners and the person responsible for making the freight payment and the responsibility to deduct TDS for payment made to the Truck Operator Union is that of the M/s Pepsico India Holding Pvt. Ltd. and not that of the assessee company. 12.1 Further, we refer to the decision of Hon’ble Delhi High Court in case of CIT Vs. M/s Cargo Linkers (Supra) wherein briefly the facts of the case were that the assessee was a partnership firm carrying on the business of clearing and forwarding agents (C&F agents) and booking cargo for transportation abroad for various airlines operating in India. It had collected freight charges from the exporters who intended to send the goods through a particular airline and paid the amount to the airline or its general sales agents and for the services rendered, the assessee charged commission from the airlines. According to the Assessing Officer, the assessee was liable to deduct tax at source under section 194C on the payments made to the airlines. On appeal, the assessee contended that its job was mainly to transport goods belonging to exporters 20 and it received a commission from the airlines on the cargo it booked on behalf of the exporters, thus, it was not the 'person responsible' for making payments in terms of section 194C. The Commissioner (Appeals) accepted the assessee's submissions. The Revenue appeal was dismissed by the Tribunal holding that the assessee was an intermediary between the exporters and the Airlines, it booked cargo on behalf of the exporters and mainly facilitated the contract for carrying goods and the principle contract was between the exporter and the Airlines. On further appeal, the Hon’ble High Court held that the Tribunal has rightly decided the nature of the contract between the parties concerned and it has been found as a matter of fact that the contract is actually between the exporters and the Airlines and the assessee is only an intermediary therefore it is not a person responsible for deduction of TDS in terms of Section 194C of the Act. In the instant case as well, the assessee acted as an intermediary between the Pepsico India Holding Pvt Ltd and the Trucker Operator Union/Truck owners and therefore, the ratio of the said decision applies in the instant case. 13. Following the said decision, Hon’ble Delhi High Court in its subsequent decision in case of CIT Vs. M/s Hardarshan Singh (Supra) has taken a similar view. Briefly the facts of the case were that the assessee was engaged in two kind of business, one was the Lorry Booking Business and the other was own booking business. In so far as the own booking business there was no dispute with the payment received by the assessee was after deduction of tax. However as far as the Lorry Booking Business was concerned, it was the stand of the assessee that the contract was between the clients and lorry owners/transporters and the income derived from that business was by way of booking commission and rest all the money received from the clients was passed on entirely to the Lorry owner / Transporter and therefore not subject to Section 194C of the Act. The matter travelled to the Tribunal wherein the Coordinate Bench held that the assessee had no privity of contract for carriage 21 of goods with the clients and that the assessee merely acted as a facilitator or as an intermediary, and therefore was not liable to deduct TDS. The said findings were confirmed by the Hon’ble High Court and the relevant finding read as under: “6. Before us, the learned counsel for the revenue sought to argue that the assessee was the ‘person responsible’ for paying as provided in section 194C read with section 204 of the said Act. However, that would only apply if there was privity of contract of carriage between the assessee and its clients. On facts, the Tribunal has held that the assessee was merely a facilitator or an intermediary and that it did not enter into any contract for carriage of goods with its clients. 7. It is also the case of the assessee that it did not undertake any carriage of goods by itself through its trucks/lorries other than in respect of its ‘own booking’ business which has already suffered TDS at the time of receipt of payments by the assessee. The learned counsel for the respondent/assessee referred to the decision of a Division Bench of this Court in the case of CIT v. Cargo Linkers: [2009] 179 Taxman 151 (Del). We find that the said decision covers the case of the assessee in its favour. In Cargo Linkers (supra), the assessee was a partnership firm carrying on the business of clearing and forwarding agents and booking cargo for the transportation abroad by various airlines operating in India. The assessee collected freight charges from the exporters who intended to send the goods through a particular airline and paid the amount to the airline or its general sales agents and for the services rendered, the assessee charged commission from the airlines. According to the Assessing Officer, in that case, the assessee was liable to deduct tax at source on the payments made to the airlines. As can be noticed, the factual position is somewhat similar to the facts of the present case. Here also, the assessee collects freight charges from the clients who intended to transport their goods through separate transporters. The entire amount collected from the clients is paid to the transporters after deducting commission from the said amount. 8. In Cargo Linkers (supra), it was contended on behalf of the assessee that the assessee was not the ‘person responsible’ for making payment in terms of section 194C of the said Act. In that case, the Tribunal had also noted and found as a matter of fact that the assessee was nothing but an intermediary between the exporters and the airlines as it booked cargo for and on behalf of the exporters and mainly facilitated the contract for carrying goods. The principal contract was between the exporter and the airline. This court, in Cargo Linkers (supra), agreed with the view of the Tribunal which had mainly decided an issue of fact, namely, the nature of the contract between the parties concerned. The Court also observed that it had also been found as a matter of fact that the contract was actually between the exporter and the airline and the assessee was only an intermediary and, therefore, it was not the ‘person responsible’ for deduction of tax at source in terms of section 194C of the said Act. 9. We feel that the decision in Cargo Linkers (supra) completely covers the case in favour of the assessee and against the respondent. The Tribunal has already found as a matter of fact that the contract was between the assessee’s clients and the transporters and that the assessee had mainly acted as a facilitator or as an intermediary. 10. In this view of the matter, no question of law arises for our consideration. The appeal is dismissed.” 14. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, we are in agreement with the contention advanced by the ld AR that in the instant case, the understanding has been that the Truck Operator Union will provide the requisite trucks for transport of goods belonging to M/s Pepsico India Holding Pvt. Ltd. and the assessee company will facilitate and provide the necessary coordination and the logistical support as well as raise necessary invoices on behalf of the Truck Operator Union and collect freight payment and disburse the same subsequently to the Truck Operator 22 Union. In view of the same, we are of the view that the person responsible for making the freight payment and the responsibility to deduct TDS u/s 194C for freight payment made to the Truck Operator Union (through the assessee company) is that of the M/s Pepsico India Holding Pvt. Ltd. and not that of the assessee company. The provisions of Section 194C are not attracted where the assessee subsequently raises the invoices on behalf of the Truck Operator Union and collects and disburse the freight payment received from M/s Pepsico India Holding Pvt. Ltd to the Truck Operator Union. In view of the same, we confirm the findings of the ld CIT(A) where he has set-aside the order so passed by the AO. The order of the ld CIT(A) is hereby affirmed and the appeal of the Revenue is dismissed. 15. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 01/01/2024 Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 01/01/2024 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar