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TMI Blog2016 (3) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is clear from the facts on record that the risk and responsibility for carrying out the contract work was solely that of the assessee. There is no material to suggest that there was any contract or sub contract written or oral with the outside truck owners and the assessee. It is in these circumstances that when these outside truck owners do not have any responsibility or liability towards the Ambuja Cement or other principals then in absence of any privity the obligation to deduct the tax at source was not that of the assessee. Since we have already held that the provisions of section 40(a)(ia) were not attracted inasmuch as no amount was payable as on the close of the year as well as in absence of any contracts, there was no obligation on the part of the assessee to deduct the tax at source - Decided in favour of assessee - ITA No. 333/Nag/2014 - - - Dated:- 25-2-2016 - Mukul Kr. Shrawat, JM And Shamim Yahya, AM For the Appellant : Shri Narendra Kane For the Respondent : Shri K P Dewani ORDER Per: Shamim Yahya: This appeal by the Revenue is directed against the order of learned CIT(Appeals)-II, Nagpur dated 27-03-2014 and pertains to assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith section 194C of the I.T. Act for assessment year 2007-08 on 29-04-2008. The AO further observed that during the course of spot verification and in consequence to the order passed by the ITO(TDS) Ward 2(3), Chandrapur, the assessee has deposited the amount of TDS deductible against the aforesaid payment of ₹ 24,44,379/- made to the different transporters and interest u/s 201(1A) as under: Amount of TDS Interest u/s 201(1A) Date of Deposit ₹ 2,00,000 - 10.03.2008 ₹ 1,00,000 - 13.03.2008 ₹ 70,00,000 - 29.03.2008 ₹ 4,38,587 4,44,272 07.06.2008 The AO observed that it is clear from the above fact that the aforesaid payment of ₹ 24,14,44,379/- made to different transporters was liable for TDS u/s 194C of the I.T. Act. He further found that the dates of deposit of TDS amounts as mentioned above also show that the amount of TDS deductible was deposited by the assessee bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract for hiring of trucks for continuous transportation of various goods with various persons whose trucks are being used for transportation of goods. Such trucks are procured on a daily basis from the local transport mandi and no evidence of any contractual relationship between the appellant and the said truck owners has been brought on record. Admittedly each of the payment made is less than ₹ 20,000/- and the appellant makes the payment to various drivers/owners of the trucks on each trip basis. Thus clearly the appellant has not entered into any contract with the said drivers/owners for carrying out the whole or any part of the work undertaken by the contractor. 6.4 I have also perused the contracts entered into by the appellant with its Principals viz. M/s Ambuja Cement, Manikgarh Cement, Maratha Cement etc. Perusal of the said contracts clearly shows that the appellant is burdened with and solely responsible for a range of actions in pursuance to the contract. The appellant is required to comply with all existing rules and regulations related to labour/traffic and transport. The appellant Is liable for losses, damages, thefts, pilferage, fire/road accidents, br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proved that any freight charges were paid to them in pursuance of a contract for specific period, quantity or price in the present case and clearly therefore, the. appellant was not liable to deduct tax u/s 194C from the payments made to the transporters. The above view is supported by several judicial pronouncements wherein it has been held on identical facts that the payment made by the transporters to hired vehicle owners are not hit by provision of section 194C. Learned CIT(Appeals) further referred to several case laws from the Tribunal wherein similar additions were deleted. Learned CIT(Appeals) concluded as under : 8. On perusal of the above findings and applying the same to the facts of the appellant's case, it is clearly established that the appellant's case is not covered by the provisions of section 194C(2) of the Act. In the case of the appellant, it is not disputed that the contract for carrying out the work has been entered into between the appellant and various others parties and it is the appellant alone who is responsible for carrying out the contract work as per the terms of agreement entered into with its Principals. The Ld. AO has not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ambuja Cement, Manikgarh Cement and Maratha Cements etc. for transporting of goods of the said companies. The assessee for rendering the services has entered into agreements and aforesaid contracts provide for various stipulations which are to be strictly adhered by assessee being terms and conditions of contracts. The payment received by the assessee are contract payments as envisaged in section 194C of the I.T. Act. Learned counsel further submitted that on certain occasions assessee has to hire trucks from open market in the vicinity of various factories located for transportation of goods. The assessee has no regular contract of hiring of trucks for continuous transportation of various goods and in fact assessee has no oral or written agreement for hiring trucks for transportation of goods to perform contractual obligation undertaken by virtue of various agreements with corporate clients. The assessee alone under its control and supervision has executed whole of contract. The individual lorry owners have not carried out any part of the work undertaken by assessee. The payments made by assessee to various drivers of trucks are on each trip basis. In view of above facts payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt) CIT vs. M/s Vector Shipping Services (Pvt) Ltd. dated 02/07/2014, 2. CIT vs. Vector Shipping Services (P) Ltd. (23013) 357 ITR 642 (All). 3. ITAT order in ITA No. 465/Nag/2014 in the case of M/s Acharya Brothers vide order dated 28/12/2015. 4. ITAT Mumbai in ITA No. 1919/Mum/2013 in the case of M/s Halani Shipping Pvt. Ltd. vide order dated 13/02/2015. 5. ITAT order in ITA No. 1871/Mum/2013 in the case of M/s Arcadia Share Stock Brokers Pvt. Ltd. vide order dated 22/12/2014. 6. ITAT order in ITA No. 13/Mum/2013 in the case of Smt. Zeenat N. Shaik vide order dated 17/09/2014. 7. ITAT order in ITA No. 18/Del/2013 in the case of Shri Anoop Khandelwal vide order dated 17/10/2014. 11. Learned counsel further submitted that the provisions of section 194C(6) also come to the rescue of the assessee. He submitted that though the provisions of section 194C(6) were subsequently introduced they are actually clarificatory and were applicable to pending proceedings. He submitted that PAN of all the payees are placed on record. Hence there was no obligation to deduct tax at source as per the provisions of section 194C(6). Hence no disallowance u/s 40(a)(ia) is required. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has not been upheld that provisions of section 40(a)(ia) are attracted only when the amount is payable. However, we note that there is no jurisdictional High Court decision on this issue. In such a situation we now have a Hon'ble Allahabad High Court decision which is in favour of the assessee. Revenue Department's petition for special leave to appeal has been dismissed by the Hon'ble Apex Court by condoning the delay in filing the leave petition. In such a situation, in our considered opinion, the decision of Hon'ble Apex Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 has to be followed. In the said decision the Hon'ble Apex Court has expounded that in case there are two views possible, the view in favour of the assessee should be followed. Accordingly in absence of any jurisdictional High Court decision, we respectfully follow the decision of Hon'ble Allahabad High Court in the case of Vector Shipping Services (P) Ltd. as above. Accordingly since no amount of the freight was unpaid or was payable as on 31-03-2007 we hold that the provisions of section 40(a)(ia) are not attracted and in this view of the matter we are of the opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside, the responsibility of successful completion of transportation work rested upon the appellant. From the record or the findings of the authorities below no where it is borne out that there was any kind of written or oral contract with the principals by such outside tank owners that they will share the risk and responsibility with the appellant. 8.1 At this stage, it is not dispute that the department's case is that in the present case provisions of section 194C(1) are applicable and not section 194C(2). Once it is held that it is a case of 194C(1) they it would be sent that this section applies to any payment made to a person for carrying out any work in pursuance of a contract between the contractor and the person making the payment. If the condition of Carrying out any work in pursuance of a contract is not fulfilled they the provisions of this section will not be applicable at all. Here in this case, the contract for carrying out the work was between the BPCL and the appellant. The appellant along had risk and responsibility for carrying out the contract work as per the agreement entered into by it with its principal i.e. BPCL. There is no material on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the Assessee's own tankers and also from some hired tankers belonging to outside parties. An amount of ₹ 1,79,03,198/- was paid to various parties and the Assessee furnished the details. The amounts paid and summary thereof is noted and what the Assessing Officer, the First Appellate Authority and Tribunal fond that TDS (Tax deducted at a source) had not been remitted or there is no deduction in cases of third parties. The Tribunal noted the rival contentions and rendered a finding of fact by referring to the legal provisions that the risk and responsibility for carrying out the contract work was solely that of the Assessee. There is no material to suggest that there was any contract of sub-contract, whether written or oral with the outside tanker owners and the Assessee. It is in these circumstances and when these outside tanker owners do not have any responsibility or liability the Bharat Petroleum Corporation Ltd. or other principals then, in the absence of any privity, the obligation to deduct the tax at source was not that of the Assessee. In such circumstances, we do not find that the Appeal raises any substantial question of law, the findings cannot be term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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