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TMI Blog2012 (4) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract agreement with the said company and terms and conditions given therein, the appellant was solely responsible for the transportation of oils from one destination to other. This contractual liability was discharged by transporting the oils mostly through appellant's own tankers and also from the tankers hired from outside parties. During the course of the assessment proceedings, the Assessing Officer noted that in the profit and loss account, freight charges of Rs. 1,79,03,198/- has been paid to various parties. From the details submitted by the appellant, he noticed that in some of the cases the appellant has not deducted TDS u/s.194C for the freight charges paid to them. The summary of such details as given in the assessment order are as under:- S. No. Name of the party Amount TDS 1. Shri Lakha Singh 1,81,937 Nil 2. Shri Swarn Singh 1,61,294 Nil 3. Shri Sakkatar Singh Gill 17,23,890 21,293 4. Shree Datta Carriers 3,99,211 4,757 5. Shri Pratap Singh Pawar 26,21,399 21,672 6. Shri Hardeep Singh Pawar 33,93,504 27,576 7. Shri Baldev Singh Joginder Singh 41,61,984 25,139 8. Shri Salvinder Singh Pawar 52,59,979 Nil Total 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and liabilities provided in the contract agreement was never passed on to the persons whose trucks were taken on hire by the appellant. Various clauses of contract with BPCL particularly clauses 9 and 10 provide various liabilities/responsibilities on the appellant. As such it was not a case of subcontract. The ld. AO came to the conclusion that the appellant has given the sub contract to those parties and therefore TDS on subcontract was required to be deducted. He held that since no TDS was made on the subcontract given to these three parties as mentioned above the disallowance u/s.40(a)(ia) was warranted. He, therefore, disallowed the sum of Rs. 56,03,210/- u/s.40(a)(ia) and added to the total income." 4.1 The appellant also relied upon the decisions of Mythri Transport Corpn. v. Asstt. CIT [2010] 1 ITR (Trib.) 290/124 ITD 40 (Vishakapatnam) and Kavita Chug v. ITO [2010] 45 DTR 146/[2011] 44 SOT 95 (Kol) (URO) in support of the contention that such a hiring of tankers from outside parties does not amount to sub-contract within the meaning of section 194C. The appellant also submitted the original copy of contract documents showing terms and conditions especially the liability c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and only in the case of 3 persons, TDS have not been deducted for which disallowance u/s.40(a)(ia) has been rightly made by the authorities below. 7. In the rejoinder, the learned counsel submitted that the provisions of law will not override the conduct of the assessee and, therefore, even if TDS has been deducted in five cases it will not tentamount to hold that the provisions of TDS will not be applicable in such kind of payments. 8. We have heard the parties at length and also gone through the findings of the authorities below and the case laws as have been referred in the appellate order as well as relied upon by the learned counsel. The relevant facts for adjudication of the issue are that the appellant is carrying out the business of transportation of oil through tankers. It entered into a contract with various companies (here mainly BPCL) for transporting the oils to various destinations as per the agreement entered into by the said company. The appellant was solely responsible for executing the contract on behalf of its principal. For fulfilling its transportation commitment, the appellant besides using its own tankers was also hiring the tankers from outside par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecuted with the Tamil Nadu Electricity Board. The assessee owned three ships. Since three ships were not sufficient to carry out the contracts entered into with Tamil Nadu, the assessee hired ships belonging to other shipping companies and paid hire shipping charges for using the ships. The assessee, however, did not deducted tax under section 194C before the making payment of hire charges to the shipping companies. The Assessing Officer directed the assessee to pay tax u/s.201(1) and levied interest u/s.201(1A) on the ground that TDS should have been deducted u/s.194C of the Act. On the these facts, the Hon'ble High Court observed and held as under :- "We heard the arguments of learned counsel. Under section 194C, the tax is to be deducted when a contract was entered into for carrying out any work in pursuance of a contract between the contractor and the entities mentioned in sub-section (1) of section 194C. In the present case, there was no contract between the assessee and the shipping companies to carry out any work. On the other hand, the assessee-company hired the ships belonging to other shipping companies for a fixed period on payment of hire charges. The hired ships were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the assessment year in consideration. The Tribunal also considered the fact that the shipping companies which received the hire charges are also income-tax assessees and they had shown the hire charges in their respective income-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 payment of hire charges for taking temporary possession of the ships by the assessee-company would not fall within the provision of section 194C and hence no tax is required to be deducted, and there is no error or infirmity in the order of the lower authorities. Hence, no substantial question of law arises for consideration of this court. Hence, we dismiss the above tax case. No costs. Consequently, the connected TCMP No. 1253 of 2005 is closed. 8.3 Thus in view of the findings given above and the law laid down by the Hon'ble High Court as above, we are of the considered opinion that the appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted. The appellant thus gets relief of Rs. 56,03,210/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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