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TMI Blog2011 (8) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... stake in quantification made by the AO - Decided against the assessee. - ITA No. 1447(Del)/2011 - - - Dated:- 26-8-2011 - I.P. Bansal, K.G. Bansal, JJ. K. Sampath, Adv., for the Appellant ORDER K.G. Bansal: The assessee has taken up two grounds in the appeal to the effect that on the facts and in law, the ld. CIT(Appeals) erred in upholding the addition of- (i) Rs.8,51,43,744/- by invoking the provision contained in section 40(ia) of the Income-tax Act, 1961; and (ii) Rs.2,82,913/- u/s 40A(3) of the Act. 2. The facts of the case are that the assessee filed his return on 31.10.2007 declaring total income of Rs.8,57,684/-. The return was processed u/s 143(1) on 21.3.2009 at the income returned by the assessee. Subsequently, it was picked up for scrutiny by issuing notice u/s 143(2) on 15.09.2008. The assessee is the proprietor of M/s Satguru Cargo Movers, which is undertaking the business of transportation of cargo. He is also entering into arrangements for transportation of goods through vehicles of other transport companies. The dispute relates to the latter business. The case of the assessee had been that in this business, he is not carrying on the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l maintain accounts in the names of the individual truck/lorry owners and settle their individual accounts after deduction of tax etc. As to the claim of the appellant that he has acted only as a facilitator, I do not find myself in agreement with the same because the manner in which the accounts have been maintained by him do not support the case of the appellant. Otherwise also, it is first between the individual truck owners and the appellant that a broad agreement/understanding is reached as to the providing of trucks/trolleys for transportation/carries of goods/articles and, therefore, the relationship of contractual nature is developed at this stage only. Therefore, in the absence of any evidence to the contrary, it is difficult to accept the assessee's claim that he was acting only as a facilitator and was not responsible for deduction of tax u/s 194C of the Act. During the course of hearing, the ld. counsel for the appellant also attempted to explain that all the truck owners are regular income tax assessees and have paid taxes on the transportation receipts of Rs.8,51,43,744/- and, therefore, there is no loss to the revenue even in the absence of deduction of tax by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the merits of the case, it is submitted that the assessee owns and operate four trucks for transportation of goods. These trucks are not adequate in number to meet the market requirement. Therefore, he arranges trucks of other transport companies for carriage of goods for which he receives commission from them. This commission income is credited to profit and loss account. In respect of this income, the assessee does not undertake the business of carriage of goods and no work is performed by him. The bills are prepared in a manner that net commission income becomes payable by the actual transporter to the assessee. To support this contention, reliance has been placed on bills prepared and accounted for in the books. One set of bills in respect of transportation of goods from Hissar to Kurukshetra has been explained in details. It is found that the goods were carried through the truck belonging to Delhi Assam Roadways Corporation Ltd. and the consideration was fixed at Rs.70,000/-. Advance of Rs.50,000/- was received from the customer, leaving a balance of Rs.20,000/-payable by it. On the same date, i.e., 26.03.2007, the amount of Rs.50,000/- was handed over to the driver Ram K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract between the parties concerned. It has been found as a matter of fact that the contract is between the exporter and the airline and the assessee is merely an intermediary. Accordingly, it has been held that the assessee is not a person responsible for deduction of tax at source u/s 194C of the Act. 5.2 In the case of CIT vs. Grewal Brothers, (2011) 199 Taxman 201 (P and H) (Magazine 11), the facts stated in the head note are that the assessee-firm was engaged in the business of transportation of liquefied petroleum gas ("LPG" for short). It entered into contracts with petroleum companies for carriage of LPG. The companies deducted tax at source from the payments made to it. The assessee passed on the transportation work to its partners and the payments received from petroleum companies were passed on to them after deducting its commission @ 3% of the value of the contract. The AO held that the partners were sub-contractors and the firm was liable to deduct tax at source from the payments made to them. The Tribunal held that provision contained in section 194C was not applicable and, therefore, the provision contained in section 40(ia) was also not applicable. The Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inkers, the assessee acted as an intermediary between the exports and the airlines. It received the amount from the exporter and handed over the same to the airline, who paid commission. These facts are also nearer to the facts of the case at hand. Accordingly, following this decision, it is held that the assessee was not liable to deduct tax at source. In view thereof, no addition could have been made u/s 40(ia). Thus, ground no. 1 is allowed. 6. In respect of ground no. 2, the finding of the AO is that the expenses in respect of "own booking" were furnished and it was found that certain payments in cash exceeding Rs.20,000/- were made. Such payments aggregated to Rs.14,14,564/-. Therefore, 20% of this expenditure was disallowed. The assessee failed to furnish any further submission in this behalf. Accordingly, the action of the AO has been upheld. 6.1 Before us, the ld. counsel wanted the matter to be restored to the file of the AO for making further verification in the matter for which no proper evidence or ground was stated. We are unable to accede to such request for the simple reason that the case is being heard at the insistence of the ld. counsel, which means that h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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