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TMI Blog2012 (7) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the contract agreement and that the contract agreement is merely for carriage of the petroleum and petroleum products and nothing more - in favour of assessee. - ITA Nos.423 & 424/Agr/2011 - - - Dated:- 22-6-2012 - SHRI BHAVNESH SAINI, MEMBER SHRI A.L. GEHLOT, JJ. Appellant by : Shri R.K. Jain, Jr. D.R. Respondent by : Shri Deependra Mohan, C.A. ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: These are appeals filed by the Revenue against two different orders both dated 29.08.2011 passed by the ld. CIT(A), Ghaziabad for the Assessment Year 2008-09 2009-10 respectively. 2. The effective common ground raised in both the appeals pertains to deduction of tax at source on hiring of buses, whether section 194C of the Income Tax Act, 1961 ( the Act hereinafter) Act is applicable or 194-I of the Act. 3. The brief facts of the case are that a survey was conducted to verify proper decoction of tax at source and deposit in to Central Government Account for F.Y. 2007-08 2008-09. During the course of inspection of records, it was noticed that the assessee was deducting tax at source @ of 2% under section 194C on the payment of vehicle hire. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Singh/Hathras 907020 93423 20555 72868 4. Tilak Raj Bedi 534840 55089 12122 42967 5. Vivekchandola 216390 22288 4460 17828 6. Secular Travels, Aligarh 1698060 192390 38482 153908 Total 6737551 746284 152241 594043 4. The CIT(A) allowed the appeal of the assessee observing that the basic issue involved in the present case is similar to the case of Apeejay School and Kothari School wherein he has decided the issue in favour of the assessee. The CIT(A) following his own order in the case of Apeejay School and Kothari School held that the payment made to bus owner is covered by the provisions of section 194C of the Act and not the provisions of section 194-I of the Act. 5. At the outset, the Ld. Authorised Representative submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cheque or draft or any other mode, whichever is earlier, deduct an amount equal to the percentage specified thereunder of such sum as income tax. The term work defined in clause (iv) of the explanation to the sec. 194C of the Act includes in sub-clause(c) carriage of goods or passengers by any mode of transport other than by railways. On the other provisions of sec. 1941 of the Act falling under the same chapter bear the heading Rent . The provisions of the said section stipulate that any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent on account of land, building, furniture or fittings, machinery, plant or equipment, shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or any other mode, whichever is earlier, deduct income tax thereon at the rate specified thereunder. 5.1 Exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in their decision dated 27.2.2009 in CR3997/1998 in the context of deduction of tax u/s 27(a) of the Assam General Sales Tax Act, 1993, after analyzing the terms of a similar agreement in the case of the assessee observed that the said agreement obliged the contractor to operate the vehicles for the purpose of carrying petroleum and petroleum products, as per the directions of the assessee company, from one place to another. If the vehicle remained off the road and, consequent thereupon, the assessee company sustained any loss, the contractor was liable to make good the loss. If, in certain circumstances, the contractor was unable to carry the petroleum and/or petroleum products in a particular vehicle, wherein he had undertaken to carry, he could carry the products in drums in stake-trucks . Similarly, the contractor was also liable to make good the loss, which the assessee company might sustain due to short delivery of its products or due to confiscation thereof during the course of carriage. In the light of various terms and conditions of the agreement, the Hon'ble High Court, observed that;- 54. Thus, when the contract agreement is read clause-by-clause, it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the sub-contractors, who only provided services of shifting of goods from one place to another place. It was noted that evidence in support of above was submitted to the Assessing Officer during assessment proceedings. In the background of the aforesaid findings of fact recorded by him, the Commissioner (Appeals) was of the view that when the. transportation, contract was in the nature of shifting of goods from one place to another, such contracts would be covered as works contracts and provisions of section 194C would be applicable, According to the Commissioner (Appeals), since the assessee had given sub-contracts for transportation of goods and not for the renting out of machineries or equipments, such payments could not be termed as rent paid for the use of machinery and the provisions of section 194-I of the Act would not apply to such contracts. The Commissioner (Appeals) accordingly held that the assessee has rightly deducted TDS under section 194C of the Act; that there was no default no the part of the assessee under the TDS provisions and as such there was no short deduction of tax and set aside the levy of interest under section 201 (1A) of the Act. ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had given sub-contracts for transportation of goods. In the circumstances, the said transactions would fall within the purview of section 194C of the Act as the assessee was responsible for paying the amount in question for carrying out work in pursuance of contracts between the assessee and the transporters and as such was required to deduct tax at source at the rate prescribed under the said section. The Commissioner (Appeals) was, therefore, justified in holding that the assessee was not an assessee in default within the meaning of the said expression as contemplated under section 201 of the Act and consequently, the Tribunal was justified in confirming the order passed by the Commissioner (Appeals). 8. Apart from circular nos. 558 and 681 issued by the CBDT, clause 49.3 of the explanatory notes to Finance (No.2) Act, 2009 points out that tax is required to be deducted at source in terms of provisions of sec. 194C of the Act on payments to transport contractors engaged in the business of plying, hiring or leasing goods carriages and amended provisions would exempt payments to transport operators if operator furnishes its PAN to the deductor. 9. We also find that the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue are dismissed. As a corollary, grounds raised in the six COs become academic and do not survive for our adjudication. 7. Ld. Departmental Representative, however, relied upon the order of the Assessing Officer but he did not dispute that the facts of the case of Delhi Bench and facts of the case under consideration are identical. 8. Since on identical set of facts the issue has been decided by the I.T.A.T., Delhi Bench in assessee s own case vide order dated 16.11.2011, in the light of the facts, we set aside the order of CIT(A) and the order of the Assessing Officer. Under the facts and circumstances of the case which are identical to the facts of the case decided by I.T.A.T., Delhi Bench (supra), we hold that the payments paid or payable to operators of the tanker truck owners by the assessee company is subject to deduction of tax at source under section 194C of the Act @ 2%. The Assessing Officer is directed accordingly. Thus, the appeals of the assessee for A.Ys. 2009-10 2008-09 are allowed and the appeals of the Revenue for F.Ys. 2008- 09 2007-08 are dismissed. 7. Following the above order of I.T.A.T., Agra Bench, we confirm the order of the CIT(A). 8. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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