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TMI Blog2015 (10) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the Tribunal. 3. The substantial questions of law that arise for consideration in the above appeal are as follows: 1. Whether in the facts and circumstances of the case, the ITAT is right in law in deleting the addition made under Section 40(a)(ia) ignoring the facts that there was oral contract with transporters which was evident from the fact that, payments made to each lorry owner exceeded Rs. 50,000? 2. Whether the ITAT is right in deleting the addition made ignoring Explanation-III to Sectiion 194C defining "Work" as only carriage of goods and not sub-contract of entire work as held by ITAT and also ovelooking Uttaranchal High Court decision in 290 ITR 530 wherein, it is held that once agents are appointed by contractor liability to TDS arises under Sectiion 194C? 3. Whether the ITAT is right in deleting the addition made on the ground that entire work undertaken by contractor was not sub-contracted to transporters ignoring provisions of Section 194C(2) which clearly provides that, even sub-contracting part of work by contractor also attracts T.D.S.? 4. The brief facts of the case are as follows: The assessee, who is the respondent herein claims to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les under different voucher numbers and thus arrived at the conclusion that the amounts expended was indeed freight charges and not hire charges. Though, it was the specific case of the assessee that the amounts paid reflect only the hire charges. No material has been placed to demonstrate the same either before the Assessing Officer or before the Commissioner (Appeals). Hence, the Commissioner (Appeals) by a detailed and reasoned order was pleased to conclude that the amounts allegedly paid are indeed freight charges and not hire charges and rejected the contention of the assessee that the entry "freight paid" is on account of the mistake committed by the accountant and in fact such amount represent the hire charges only. It is the admitted case of the assessee that there are no written contract nor bills issued by the transporters and the entire case is sought to be demonstrated and supported only by the vouchers maintained by the assessee. 6. The other undisputed fact is that the asseessee has described the payments in the vouchers as "freight charges" (though it is alleged to be the result of error by the assesseee's accountant) in its books of accounts. 7. In the above backg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the Tribunal. 12. The appellant counsel would submit that the reasoning of the Tribunal that the Revenue failed to place any material to controvert "oral statement" of the assessee is not only perverse but also contrary to all known canons of evidence. He would submit that the reasoning of the Tribunal calling upon the revenue to disprove or controvert, unsubstantiated and uncorroborated self serving statement of the assessee is not only whimsical but highly illegal. He would state that no burden is caste upon a person to disprove anything that has not been proved. 13. The learned counsel for the appellant would submit that the vouchers and entries in the books of accounts are the evidence of contract entered into and executed on behalf of the assessee. He would submit that it is the case of the assessee that he owned only five trucks and that the trucks of third party has been used to transport the materials, that is to execute the contract entered into between the assessee and his principal. He would submit that the same are evidence of an implied agreement and agreements include oral agreement also. He would state that it is an undisputed fact that no material has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.02.2011 on the substantial questions of law as framed by the revenue. Apart from the same, this Court would also deem it necessary to frame an additional issue, which has arisen incidentally as a result of the approach adopted by the Tribunal, the same is as follows: Whether in the facts and circumstances of the case, the income tax appellate Tribunal was right in allowing the appeal by merely relying on broad principles without reference to the critical facts of the case? 17. For the sake of brevity and convenience the provisions of Section 194C of IT Act, are culled out for reference purpose only. "194C. [(1) Any person responsible for paying any sum to any resident (hereinafter 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) XXXXX (b) XXXXX (c) XXXXX (d) any company; or (e) XXXXX (f) XXXXX (g) XXXXX (h) XXXXX (i) XXXXX (j) XXXXX (k) XXXXX 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, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of business or profession",- (a) in the case of any assessee- [(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,- (A) outside India; or (B) in India to a non-resident, not being a company or to a foreign company, Provided XXXXX (ia) any interest, commission or brokerage, [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200:" 19. A perfunctory reading of the provisions of Section 194C of the Act obviates the necessity for any interpretational exercise as the provisions are unambiguous. A reading of the provisions of Section 194C mandates that any person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no written contracts with the lorry owners and who ever was available had been employed by them and paid hire charges and that as the lorry owners are not fleet owners and possess one or two trucks, the question of making TDS from hire charges did not arise. With reference to the explanation offered under the letter dated 19.11.2007, a further query was addressed by the Assessing Officer on 12.12.2007. It was pointed out to the assessee that his explanation vide letter dated 19.11.2007 was self contradictory. It was pointed out that in one breath he has stated that the amounts paid to the lorry owners is not freight charges but hire charges and in next breath, he admits that there are no contracts. It was further pointed out that there is no hire agreement presented before the Assessing Officer. It was further pointed out that except for a few cases, the aggregate of amounts paid to each lorry owners was in excess of Rs. 50,000/- and as noted supra only those payments of aggregate which do not exceed Rs. 50,000/- are exempted under sub-section 3 of Section 194 of the Act and where no single payment of Rs. 20,000/-, the same are exempted from the purview of sub-section 3 of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Authority. 24. The dispute in a nutshell is as to whether the provisions of Section 194C of the Act can be invoked only if any single payment exceeds Rs. 50,000/- or can be invoked if the aggregate of payment in an assessment year exceeds Rs. 50,000/-. As stated supra there is no controversy regarding the said contention, the provision is clear and unambiguous and the word aggregate has been specifically used. In that view of the matter, the assertion on behalf of the assessee, that only in respect of payment which exceeds Rs. 50,000/- is liable to be deducted at source is liable to be rejected and is accordingly rejected. Accordingly, the substantial questions of law as framed by the appellant/revenue is answered in favour of the revenue. 25. The simple issue has been approached by the Tribunal in an erroneous manner. The Tribunal under the guise of broad principles has misdirected itself resulting in adjudication of the dispute on the basis of inferences and assumption, contrary to law. The Tribunal has rendered a finding without reference to the basic and critical facts which were necessary for adjudication. The Tribunal has gravely erred in trying to adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions with the lorry owners/transporters is within the purview of the provisions of the Act as it amounts to carriage of goods other than the railways. 26. The finding that the appeal requires to be allowed in view of the decision by the Co-ordinate Bench and that of the Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. United Rice Land Limited reported in (2010) 322 ITR 594 (P&H) is erroneous. Therein the finding of fact, that the amounts paid to the transporter is by way of hire charges, was rendered on the basis of evidence furnished by the alleged transporters. The assessee therein was in the manufacturer and export of rice and there was an identified route, quantity etc., in view of which certain facts could be easily identifiable. The transportation of goods was from its premises to the port and in the course of its export. In the present case, the facts and details are not only hazy but are obfuscated due to lack of clarity. Apart from stating that the ore was required to be transported from point (a) to point (b), no details are provided as to whether the point (b) was a licenced or registered place, where minerals could be stored there, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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