SATISH CARRIERS, MUMBAI V. ITO (TDS) 3(2), MUMBAI

ITA 992/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0161 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: UTTAM CHAND BOHRA
• Section: 143(3); 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.992/MUM/2014 (ASSESSMENT YEAR- 2005-06) M/S SATISH CARRIERS 30, KASTURI BUILDING, POPAT WADI, KALBADEVI ROAD, MUMBAI-400002 PAN: AAAFS7344D VS. ITO (TDS) -3(2), 10 TH FLOOR, K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI-400002. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI UTTAM CHAND BOHRA (AR) REVENUE BY : SHRI V. JUSTIN (SR. DR) DATE OF HEARING : 01.08.2017 DATE OF PRONOUNCEMENT : 04.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-14, MUMBAI DATED 09.12.2013 FOR THE AY 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. THAT THE LD. INCOME TAX OFFICER HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN DETERMINING THE TDS PA YABLE U/S. 194C OF THE INCOME TAX ACT, 1961 AT RS. 16,58,717/-. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN CONF IRMING THE ORDER OF INCOME TAX OFFICER IN DETERMINING THE TDS PAYABLE U/S. 194 OF THE INCOME TAX ACT, 1961 AT RS. 16,58,717/- 3. THAT THE LEARNED INCOME TAX OFFICER HAS ERRED IN LA W AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN CHARGING INTEREST OR R S. 11.19.268/- U/S. 201 (1A) THE INCOME TAX ACT. 1961. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN CONF IRMING THE ORDER OF THE ITA NO.992/M/2014- M/S SATISH CARRIERS 2 INCOME TAX OFFICER IN RESPECT 01' CHARGING OF INTER EST OF RS. 11.19,268/- U/S. 201(1A) OF THE INCOME TAX ACT. 1961. 5. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF TAX IN DETERMINING THE T DS PAYABLE ON TRUCK HIRE CHARGES IN SPITE OF THE FACT THAT PROVISIONS FOR TD S ON HIRE CHARGES WERE NOT APPLICABLE DURING THE ASSESSMENT YEAR 2005-06. 6. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS N OT CONSIDERED THE DETAILS FILED BEFORE HIM DURING THE COURSE OF APPEL LATE PROCEEDINGS. 7. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF TAX IN DETERMINING THE T DS PAYABLE ON TRUCK HIRE CHARGES IN SPITE OF THE FACT THAT PROVISIONS FOR TD S ON HIRE CHARGES WERE NOT APPLICABLE DURING THE ASSESSMENT YEAR 2005-06. 2. BRIEF FACTS OF THE CASE ARE THAT THE INCOME TAX O FFICER -TDS [ITO (TDS)] RECEIVED INFORMATION FROM ACIT-14(1) VIDE LETTER D ATED 11.01.2006 THAT IN THE RETURN OF INCOME FOR AY 2005-06, THE ASSESSEE HAS M ADE A SUO MOTO DISALLOWANCE UNDER SECTION 40A (IA) OF RS. 45,00,000/-. ON RECEI PT OF SUCH INFORMATION THE ITO- TDS ISSUED A NOTICE DATED 25.09.2008 TO THE ASSESSE E ABOUT FAILURE TO COMPLY WITH THE TDS PROVISIONS WITH REGARD TO PAYMENT OF TRUCK HIRE CHARGES OF RS. 6,44,80,006/- , LABOUR CONTRACT CHARGES OF RS. 17,2 1,135/- AND COMMISSION PAYMENT OF RS. 6,25,000/-. THE ASSESSEE WAS ALSO AS KED TO FURNISH THE DOCUMENTARY EVIDENCE REGARDING THE COMPLIANCE OF TD S PROVISION. THE ASSESSEE FILED ITS REPLY DATED 20.10.2008 AND FURNISHED THE COPY OF DETAILS OF TDS IN CASE OF PROVISIONAL CHARGES, BROKERAGE COMMISSION AND LABOU R CONTRACT FOR THE YEAR ENDED ON 31.03.2005. AFTER CONSIDERING THE SUBMISSI ON AND REPLY OF THE ASSESSEE, THE AO CONCLUDED THAT THE PROVISION OF CHAPTER XVII IS APPLICABLE. THE ITO TDS FURTHER OBSERVED THAT THE REAL EXPENDITURE ON T HIS ACCOUNT IS RS.7,39,17,850/- AND NOT RS.6,44,80,005/-. THE ITO-TDS PASSED ORDE R UNDER SECTION 201(1) HOLDING THAT PROVISIONS OF SECTION 194C ARE APPLICA BLE IN RESPECT OF PAYMENT ON ACCOUNT OF TRUCK HIRE CHARGES OF RS. 7,39,17,850/- AND CALCULATED TDS OF ITA NO.992/M/2014- M/S SATISH CARRIERS 3 RS.16,58,717/- ( INCLUDING SURCHARGE AND EDU. CESS) . THE AO FURTHER WORKED OUT THE INTEREST U/S 201(1A) OF RS. 11,19,268/- IN ITS ORDER DATED 29.03.2011. ON APPEAL BEFORE THE LD. CIT(A), THE ORDER OF AO WAS U PHELD. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEA L BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT ASSESSEE OWNED HIS OWN VEHICLE/TRUCK AND ALSO HIRE TRUCK CHARGES. DETA ILS OF ALL THE VEHICLES OWNED BY THE ASSESSEE AND HIRED DURING THE PERIOD WERE PR OVIDED TO THE AO. WITH REGARDS TO DISCREPANCIES IN THE FIGURES OF TRUCK HIRE CHARG ES IT WAS SUBMITTED THAT CHARGES OF RS. 6,44,80,006/- PERTAINS TO THE PERIOD FROM 14 JUNE 2004 TILL 31 MARCH 2005 AND THE AMOUNT OF RS. RS.94,37,844/- PERTAINS FOR T HE PERIOD FROM 1 ST APRIL 2004 TILL 13 JUNE 2004, THUS THE TOTAL AMOUNT MENTIONED IN THE LEDGER ACCOUNT OF TRUCK HIRE CHARGES OF RS.7,39,17,850/- IS CORRECTLY MENTI ONED THEREIN. THIS FACT WAS COMPLETELY OVERLOOKED BY ITO. IT WAS FURTHER ARGUED THAT THERE WAS NO WRITTEN CONTRACT BETWEEN ASSESSEE AND THE TRUCK OWNER WHICH WERE HIRED. THE FREIGHT CHARGES WERE PAID TO THE HIRER IN ACCORDANCE WITH T HE ENGAGEMENT ON SOME DEFINITE TERMS AND CONDITIONS FOR CARRYING THE GOOD S. THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX FROM THE PAYMENT MADE TO OTHER TR ANSPORTER AND THE SAME COULD NOT BE DISALLOWED. IT WAS FURTHER ARGUED THAT IN TH E ASSESSMENT ORDER NO DISALLOWANCE WAS MADE BY THE AO WHILE PASSING THE A SSESSMENT ORDER U/S 143(3) DATED 12.12.2007. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISION: ITA NO.992/M/2014- M/S SATISH CARRIERS 4 1. CIT VS. UNITED RICE LAND LTD. (2008) 217 CTR 0 332 (P&H) 2. R.R.CARRYING CORPORATION VS. ACIT (2009) 126 ITJ 240 (CTK) 3. MRS. KAVITA VS.ITO (2010) 134 ITJ 103 (KOL) 4. ADHARSH TRANSPORT VS. ITO (ITA NO. 161/CTK/201 2) 5. CHANDRAKANT THACKAR VS. ACIT (2010) 129 ITJ ( CTK). 6. BHAIL BULK CARRIERS VS. ITO (2012) 50 SOT 06 22MUM) 7. MYTHRI TRANSPORT CORPORATION VS. ACIT (2009) 124 ITJ 0970(MAD) 8. SAIYAD SAUKATALI SAIYDAMIYA VS.ITO (2013) 15 6 ITJ 19 (AHD) 9. DCIT VS. SATISH AGGARWAL & CO (2009) 124 ITJ ( ASR) 542 10. CIT VS. SHARK ROADWAYS (P) LTD.(2017) 1 NYPCTR 475(ALL) ON THE OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTHER ARGUED TH AT THE ASSESSEE WHILE FILING THE RETURN OF INCOME SUO MOTO MADE THE DISALLOWANCE U/S 40A(IA). FURTHER, THERE WAS A DIFFERENCE IN REAL EXPENDITURE ON ACCOUNT OF LORRY CHARGES. IT WAS FURTHER ARGUED BY LD. DR FOR THE REVENUE THAT THE ASSESSEE HAS NOT PROVIDED PARTY WISE DETAILS DESPITE ASKING REPEATEDLY. THE LD. DR FOR THE REVENUE PRAYED THAT ORDER OF AUTHORITIES BELOW MAY BE UPHELD OR MAY BE RESTORED TO THE FILE OF AO FOR PARTY WISE VERIFICATION. IN REJOINDER ARGUMENT, THE LD. A R OF THE ASSESSEE ARGUED THAT ALL DETAILS WERE FILED BEFORE THE AO AND ALL THOSE DETA ILS ARE AVAILABLE BEFORE THE TRIBUNAL AT PAGE NO. 26 TO 46 OF THE PAPER BOOK (PB ). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ITO-TDS WHILE PASS ING THE ORDER UNDER SECTION 201(1) OBSERVED THAT THE ASSESSEE HAS NOT FILED DOC UMENTARY EVIDENCES REGARDING THE DETAILS OF TDS IN CASE OF PROFESSIONAL CHARGES, COMMISSION AND LABOUR CHARGES DESPITE THE REPEATED OPPORTUNITIES. ON REP EATED PERSUASIONS THE ASSESSEE FILED LEDGER ACCOUNT OF TRUCK HIRE CHARGES. ON PERU SAL OF SUCH LEDGER ACCOUNT THE ITO OBSERVED THAT TRUCK HIRE CHARGES IS SHOWN AT RS .7,39,17,850/- AS AGAINST THE RS. 6,44,80,006/- WHICH IS DEBITED TO P/L ACCOUNT. ACCORDINGLY, THE ITO ADOPTED ITA NO.992/M/2014- M/S SATISH CARRIERS 5 THE FIGURE OF RS. 7,39,17,850/- AS AGAINST THE RS. 6,44,80,006/-. ON THE BASIS OF THE ABOVE OBSERVATION THE ITO CONCLUDED THAT THE PROVIS IONS OF SECTION 194C ARE APPLICABLE ON PAYMENTS MADE ON ACCOUNT OF TRUCK HIR E CHARGES AND PASSED THE ORDER UNDER SECTION 201(1) AND 201(1A) OF THE ACT. THE LD CIT(A) CONFIRMED THE ACTION OF ITO HOLDING THAT FOR THE PURPOSE OF PAYME NT FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT THE DEDUCTION OF TAX A T SOURCE APPLIES UNDER SECTION 194C. THE HONBLE ALLAHABAD HIGH COURT IN CIT VS SHARK RO ADWAY (P) LTD SUPRA HELD THAT WHEN THE ASSESSEE PAID LORRY HIRE CHARGES TO T HE TRANSPORTERS OR TRUCK OWNERS DIRECTLY, WITHOUT THERE BEING ANY WRITTEN OR ORAL C ONTRACT, VIS--VIS ITS PRINCIPLAS; THE PAYMENTS TO LORRY HIRE CHARGES TO INDIVIDUAL TR ANSPORTERS IS THE DIRECT COSTS ATTRIBUTABLE TO THE RECEIPTS OF THE ASSESSEE COMPAN Y; AND SECTION 194C IS THEREFORE NOT APPLICABLE. FURTHER, HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS UNITED RICE LANDS LTD. SUPRA HELD THAT THERE BEING NEITHER ANY ORAL OR WRITTEN A GREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS NOR IT IS PROVED THAT ANY FREIGHT CHARGES WERE PAID TO THEM IN PURSUANCE OF A CONTRAC T FOR A SPECIFIC PERIOD, QUALITY OR PRICE, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX UND ER SECTION 194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS. 5. NOW COMING TO THE FACTS OF THE PRESENT CASE, IT IS NOT IN DISPUTE THAT ASSESSEE IS A TRANSPORTER AND CARRYING ITS BUSINESS BY ITS OWN VE HICLES AS WELL AS BY HIRING THE FROM OTHER PERSONS/ TRUCKS OWNERS. THE ASSESSING OF FICER PASSED THE ORDER UNDER SECTION 201 (1), 201 (1A) HOLDING THAT THE PROVISIO NS OF SECTION 194C IS APPLICABLE ITA NO.992/M/2014- M/S SATISH CARRIERS 6 WITHOUT MAKING ANY INQUIRY FROM THE OWNERS, WHOSE V EHICLES WERE HIRED. THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY CONTRACT EXEC UTED BETWEEN THE ASSESSEE AND THE SO-CALLED PERSONS FROM WHOM THE TRUCK WERE HIRE D. THE ITO-TDS HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THERE WAS A WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE PERSONS FROM THEM THE TRUCKS W ERE HIRED. THUS, WE MAY CONCLUDE THAT THE REVENUE HAS NOT BROUGHT ANY MATER IAL ON RECORD TO ESTABLISH THAT THE HIRING OF TRUCK BY THE ASSESSEE TRANSPORTER FRO M THE TRUCK OWNER AND THE PAYMENTS THEREOF WERE IN CONSEQUENCES OF ANY WRITTE N OR ORAL AGREEMENT, HENCE, THE PROVISION OF SECTION 194C IS NOT APPLICABLE. SI MILAR VIEW WAS TAKEN BY HONBLE ALLAHABAD HIGH COURT IN CIT VERSUS SHARK RO ADWAYS (P)LTD AND HONBLE PUNJAB AND HARYANA HIGH COURT IN UNITED RIC E LAND LTD. THUS, RESPECTFULLY FOLLOWING THE ABOVE REFERRED DECISIONS THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DAY OF SEPTEMBER 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 04/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/