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TMI Blog2017 (4) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as 'Act') on 29/10/2007 determining the total income of Rs. 25,47,303/-, inter alia by making an addition of Rs. 3 Lac towards adhoc disallowance of certain expenditure and further addition of Rs. 3,38,723/- towards disallowance of tax paid under section 40(a)(ii) of the Act. Subsequently, the assessment for the Assessment Year 2007-08 was set aside under section 263 by the Commissioner of Income Tax, Rajahmundry vide his order dated 09/03/2012. The Assessing Officer, consequent to revision of assessment by the Commissioner of Income Tax, has reopened and completed assessment under section 143(3) r.w.s. 263 of the Act and determined the total income of Rs. 68,61,770/-, inter alia by making additions towards disallowance of hire charges under section 40(a)(ia) of the Act and further disallowance of adhoc disallowance of expenditure and taxes paid in the earlier assessment completed under section 143(3) of the Act. The assessment for the Assessment Year 2010-11 has been completed under section 143(3) on 18/03/2013 determining the total income of Rs. 1,20,21,060/- by making additions towards disallowance of hire charges under section 40(a)(ia) of Rs. 18,17,833/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overlooked the facts that the amounts withheld earlier and released subsequently were excluded from the gross amount referred in the TDS certificates. It is seen that the deduction towards cess, TDS etc. were made with reference to the net amounts, which clearly shows that the contract receipts admitted by the assessee after reducing the withheld amount received is correct and justified. With these observations, directed the Assessing Officer to delete the additions made towards difference in gross receipts. 5. Aggrieved by the Commissioner of Income Tax (Appeals)'s order, the Revenue is in appeal before us. 6. The first issue came up for consideration is that disallowance on hire charges paid for tippers/tractors/water tankers under section 40(a)(ia) of the Act. The Assessing Officer observed that the assessee has incurred expenditure towards hire charges for tippers/tractors/ water tankers, but failed to deduct tax at source under section 194-C of the Act. The Assessing Officer further observed that as per the provisions of section 194-C read with Explanation-(iv) 'work' includes carriage of goods or passengers by any mode of transport other than by railways. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative of the assessee strongly supported the order of the Commissioner of Income Tax (Appeals) and submitted that the transaction between the assessee and the vehicle owners is a simple hire, but not a work contract as defined under section 194-C. The assessee has taken the tippers/tractors/ water tankers on hire without any contractual agreement and hence, the question of application of the provisions of section 194-C on the impugned payments does not arise. The Authorized Representative of the assessee, referring to the order of the Commissioner of Income Tax in 263 proceedings, submitted that the Commissioner of Income Tax has taken up the issue to examine the applicability of the provisions of section 194-I to the impugned payments, whereas the Assessing Officer has disallowed the amount for failure to deduct tax at source under section 194-C of the Act. Since the amount incurred by the assessee is less than the amount prescribed for deduction at source under section 194-I, the question of deduction at source on the impugned payments does not arise. The Commissioner of Income Tax (Appeals) after considering the relevant facts rightly deleted the additions made by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than by railways. The word 'rent' has a limited meaning which clearly says that for the use of any asset including plant and machinery etc. Therefore, to decide whether a particular transaction falls within the definition of 'work' or 'rent', one has to examine the nature of transaction, but not nomenclature given by the tax-payer to define the transaction. If the transaction is in the nature of work contract, definitely the payments are coming within the ambit of work as defined under section 194-C. If the assessee engaged tippers/tractors/ water tankers for the purpose of use of those assets without driver, fuel and maintenance expenditure, definitely the transaction would fall under the definition of 'rent' as defined under section 194-C of the Act. In other words, if the tippers/tractors/water tankers are taken on simple hire without driver and related maintenance expenditure, then the transaction is a payment of rent for use of those assets which comes under the definition of rent as defined under section 194-I and if the tippers/tractors/water tankers are taken on hire with driver and related maintenance expenditure, then the transaction would fall under the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased by the respective contractees. The Assessing Officer after considering the explanation and reconciliation filed by the assessee, held that there is a difference between the turnover admitted in the books of account and turnover as per the TDS certificates. The Assessing Officer has extracted the details of TDS certificates issued by the contractees. The Assessing Officer observed that the contractees have deducted TDS on the gross amount including withheld amount. The assessee ought to have considered the entire gross receipts for taxation, instead of net amount excluding withheld amount. Therefore, opined that there is a difference between the turnover as per the books of account and TDS certificates. Accordingly, difference of Rs. 26,90,462/- has been added to the returned income. 14. The Departmental Representative submitted that the Commissioner of Income Tax (Appeals) erred in analysing the facts of the withheld amount appearing in the TDS certificate with corresponding assessment year to which it relates. The Departmental Representative further submitted that the Commissioner of Income Tax (Appeals) erred in entertaining the additional evidence of reconciliation stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve deducted TDS on withheld amount on payment basis. The assessee further contended that it has filed detailed, reconciliation statement and explained difference between the turnover as per the books of account and TDS certificates. 17. Having heard both the parties and considered the material on record, we find that there is a difference of Rs. 26,90,462/- in the turnover as per the books of account and TDS certificates received from the contractees. The assessee has filed a detailed reconciliation statement explaining the difference between the turnover. On perusal of the reconciliation filed by the assessee which was extracted by the Commissioner of Income Tax (Appeals) in his order at page No. 7, we find that there is a difference of Rs. 13,10,200/- in the TDS certificate received from the Executive Engineer (EE), R & B Kakinada. As per the TDS certificate, contractee has paid amount of Rs. 2,19,64,982/-, whereas the assessee has considered an amount of Rs. 2,06,63,782/- thereby, there is a difference of Rs. 13,01,200/- . The assessee claims that the difference of Rs. 13,01,200/- represents payment of withheld amount from the bills dated 12/03/2010 for an amount of Rs. 6,09,12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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