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TMI Blog2010 (5) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... s on settled terms which clearly goes to establish the existence of sub-contract and attracts the provisions of s. 194C of the Act on the aggregate amount of exceeding of ₹ 50,000 to these truck owners. 1.2 The learned CIT(A) has also failed to appreciate that the CBDT's Circular No. 715, dt. 8th Aug., 1995 [(1995) 127 CTR (St) 13] clarifies that normally each GR can be said to be separate contract, if the goods are transported at one time but if the goods are transported continuously in pursuance of contract for specific period or quantity each GR can be said to be a separate contract and all GRs relating to that period or quantity will be aggregated for the purpose of TDS. 2. That the learned CIT(A) has further failed to appreciate the facts that the assessee could not adduce any evidence with regard to its claim that the payments were made to different truck owners who do not own more than two trucks. Moreover, the assessee's claim that Form No. 15-I obtained from truck owners claimed to have got wet because lot of water came inside the office of the assessee, is also not supported by any evidence. 3. That it is prayed that the order of the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciate that the assessee executed the work of carriage and goods by hiring of trucks from other truck owners on settled terms which established existence of sub-contract and consequent application of provisions of s. 194C of the Act, as the amount exceeded ₹ 50,000 paid to the truck owners. It was also contended by the learned 'Departmental Representative' that the learned CIT(A) has failed to appreciate the contents of CBDT Circular No. 715, dt. 8th Aug., 2005 [(1995) 127 CTR (St) 13]. In the course of present appellate proceedings, the learned 'Departmental Representative' placed reliance on para 3 of the assessment order and also drew our attention to paras 8 and 8.1 of the assessment order. The learned 'Departmental Representative' also referred to paras 7 and 7.1 of the impugned appellate order. Ultimately, the learned 'Departmental Representative' placed reliance on the order passed by the AO. 3.2 The learned counsel for the assessee, on the other hand, placed reliance on the order passed by the CIT(A). The learned counsel, after giving brief narration of the factual position of the case placed reliance on the written submission file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent with any truck owner. Reliance has been placed on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. United Rice Land Ltd. (2008) 217 CTR (P H) 332 :;H) (2008) 8 DTR (P H) 305 : (2008) 174 Taxman 286(P H). In this decision the Hon'ble High Court noted that the CIT(A) had recorded a finding of fact that there was neither any oral or written agreement between the assessee and transporters for carriage of goods nor had it been proven that any sum of money regarding freight charges was paid to them in pursuance of a contract for specified period, quantity or price. This finding of fact was recorded by CIT(A) after considering the certificate furnished by the transporters. This finding had not been controverted by the Department even before the Tribunal and the Tribunal had clearly stated that nothing had been brought on record by the AO to prove that there was written or oral agreement between the alleged parties for carriage of the goods. The Hon'ble High Court held that the finding of fact recorded by the Tribunal was not to be interfered with. The AO, on the other hand, has relied on CBDT Circular No. 715, dt. 8th Aug., 1995 for the proposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of the assessee shows that the assessee was submitting bills to the company on a monthly basis for all the work carried out during the month and was receiving payments periodically during the month of various amounts. No information is however available in the assessment record to show that a particular truck was engaged in a continuous manner for carriage of particular amount of goods or at the same rate of carriage. Similarly, there is no information in the assessment record to show that a particular truck owner was engaged to supply a specified amount of goods or at an agreed rate for transport of goods to a particular destination. While I agree with the AO that there need not be a written contract between the contractee and the contractor, it still needs to be established that the several jobs undertaken by the transporter for the contractee were in pursuance of a specific contract for quantity or period. If each job undertaken by a truck owner is a separate job for the same person, at different rates and terms, then the different jobs will not turn into a single contract. 8.3 We may refer to the answer to question No. 9 of CBDT Circular No. 715, dt. 8th Aug., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the prosecution proposes to rely and should also be given adequate opportunity to defend himself. This principle has been incorporated in the IT Act, 1961 under s. 142(3) of the Act which provides that the assessee shall be given an opportunity of being heard in respect of any material collected by the AO and proposed to be utilized for the purpose of assessment. The AO, not having confronted the assessee with the statement of Shri Zorawar Singh, could not have used the same for arriving at a conclusion that all the other truck owners were also having a similar relationship with the assessee firm as in the case of Shri Zorawar Singh. 8.4 The information obtained by the AO from the different companies whose goods were being transported, or from the assessee firm itself, do not reveal that the different truck owners to whom payments for several GRs were being made by the assessee had agreed to transport a particular quantity of goods for the assessee and different GRs were issued for this purpose. There is also no information in the assessment record to show that the truck owners had agreed to place their vehicles at the disposal of the assessee for specific period (except t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout having examined the matter in the office of the CIT, Jalandhar-1, Jalandhar and then drawn adverse inference. The AO's contention that this evidence could have been filed much earlier is not very material. If the assessee is in possession of evidence which is submitted during the course of assessment proceedings, I do not think it is of much consequence that evidence is furnished much after the assessment proceedings were started as long as the assessment proceedings have not been completed and the evidence is genuine. 8.5 The answer to question No. 9 in Circular No. 715 (supra) clearly shows that normally each GR will be considered as a separate contract unless the several GRs are for a specified period or quantity. The appellant has consistently claimed that each GR was a separate contract. In my opinion, the burden of proving that the different GRs were part of same contract, therefore, was on the AO. The AO has not brought anything on record to show that the different GRs were for a specified quantity or period. In the case of United Rice Land Ltd. (supra) the Hon'ble jurisdictional High Court held that once it had not been proven that any sum of money regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made by the assessee did not own more than two trucks. Hence, neither has the AO brought on record evidence to show that there was a contract between the assessee and the different truck owners for carriage of goods so as to include all the payments made to a truck owner under the same contract, nor has the AO rebutted the appellant's contention that each truck owner to whom payment was made did not own more than two trucks. The fact that the appellant plied more than 300 trucks during the year also supports the appellant's submissions that it obtained the trucks from the market whenever required for the purpose of sending the goods of the companies since regular contract with so many truck owners does not appear to be probable for the volume of business transacted by the appellant. 8.6 I, therefore, am of the opinion that the AO has not brought on record sufficient material to show that there was a contract between the assessee and truck owners for specified quantity, period or price so as to attract the provision of s. 194C of the Act, in respect of different GRs for the same truck owner. Ground No. 3 is, therefore, allowed. 4.1. Having regard to the above leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard ground No. 4, I agree with the AO that the reasons for not submitting the copy of Form No. 15-I are not very convincing. The appellant submitted that these forms had become wet as lot of water had come into the office. As noted by the AO, there is no evidence of any loss of any other document or material on account of the alleged water stated to have come into the assessee's office. However the AO negated the Form No. 15H submitted by the assessee in support of Form No. 15-I for the reasons that these were submitted by a chartered accountant whose power of attorney was submitted to the AO much later and that this evidence itself was submitted to the AO much after the assessment proceedings were started. I have discussed this issue in the preceding para wherein I have noted that the AO could not have rejected the evidence submitted by the assessee of having furnished Form No. 15J to the office of CIT, Jalandhar-1, Jalandhar, without conducting any inquiry to disprove the claim made. Hence, even if the Form No. 15-I were not available, the submission of Form No. 15J do tend to support the appellant's contention that each truck owner to whom the payment was made did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order and remand the matter to the AO for fresh assessment after giving the assessee a proper opportunity of being heard. This decision lays down the proposition that evidence has to be led by the assessee before the first adjudicating authority i.e., the AO for fresh adjudication. The undersigned is not in a position to set aside the assessment since such powers of the CIT(A) have been withdrawn from the IT Act. Under the circumstances, following the decision in the case of Kishinchand Chellaram (supra), no adverse inference can be drawn based on such information which has not been confronted to the assessee at the time of assessment. 9.2 In the light of the discussion above, ground No. 4 is allowed. 6.1 In view of the above legal and factual discussions and having regard to the detailed and well reasoned order passed by the learned CIT(A), which is reproduced above, we are of the considered opinion that this ground of appeal of the Revenue is liable to be dismissed. Consequently, the findings of the CIT(A) are upheld and ground No. 2 raised by the Revenue is dismissed. 7. Now, we shall deal with C.O. No. 6/Asr/2010 filed by the assessee, wherein following gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all expenditure whether paid or payable on the last day of the year as against claim of the assessee that provisions of s. 40(a)(ia) are attracted only in respect of amounts which were outstanding on the last day of previous year. 9.1 In the course of present appellate proceedings, the learned counsel for the assessee submitted that the learned CIT(A) grossly erred in holding that provisions of s. 40(a)(ia) of the Act are attracted in the case of the assessee. He further reiterated the submissions made before the learned CIT(A), which are incorporated at pp. 4 to 8 of the impugned appellate order. Reliance was placed on the judgment of Jaipur Vidyut Vitran Nigam Ltd. vs. Dy. CIT (supra) and judgment of Mythri Transport Corporation vs. Asstt. CIT (supra) and submitted that the decision of Jaipur Bench is squarely applicable to the present case. In view of the above submissions, he submitted that provisions of s. 40(a)(ia) are attracted in respect of amounts which are outstanding on the last day of previous year and not on all expenditure whether paid or not. 9.2 The learned 'Departmental Representative', on the other hand, strongly relied on the orders of the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous year. Respectfully differing with the view of the Hon'ble Tribunal in the case of Jaipur Vidyut Vitran Nigam Ltd. (supra), I am of the opinion that the provisions of s. 40(a)(ia) apply also to amounts to payments which have been made during the year and on which either TDS was deductible but has not been deducted or after deduction has not been paid to the Government. 6.1 The proviso to s. 40(a)(ia) provides that if the TDS is paid in a subsequent year, the relevant payment shall be allowed as deduction in the subsequent year. The appellant has contended that the legislature could not have provided for depositing of TDS amount, penalty under s. 221 of the Act, penalty under s. 271C of the Act and also disallowance of the payment under s. 40(a)(ia) of the Act. The provisions of the Act have to be given plain meaning if the language is clear. Failure to deduct tax at source might have various consequences including the liabilities to pay the amount which should have been deducted at source, and interest and penalty for non-deduction. In addition, it is provided that the relevant payment will not be allowed as a deduction in computing the business income unless the TDS amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng factually different and distinguished. We find that the learned CIT(A) has passed a detailed and well reasoned order and has given following findings in para 11 of his order : 11. As far as ground No. 6 is also concerned, I do not agree with the appellant's submissions. The appellant has received the entire freight charges from the company and has paid freight expenditure to the truck owners. It has reflected only the difference between these two figures in the P L a/c as commission income. As noted earlier, the prime relationship and responsibility for dispatch of goods was on the assessee and it was receiving payments from the companies directly. These receipts were, therefore, in the nature of assessee's revenue income. The payments made to the truck owners were, on the other hand, in the nature of revenue expenditure of the assessee. Merely because the assessee chooses to show only the net difference between the receipt and the expenditure in the P L a/c does not mean that either the receipts were not its income or that the payments were not its expenses which had been claimed as such. The net commission income is, in fact the difference of the receipt and expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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