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TMI Blog2018 (7) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... below are deleted. - Decided in favour of assessee Unexplained cash credit addition in assessee’s partners’ capital account - Held that:- various judicial precedents have settled the law that such addition has to be made in the concerned partners’ hands than in case of a firm assessee. We quote one of them CIT vs Metachem Industries (1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT) in support. CIT(A) has already granted liberty to the Assessing Officer to assess the very sum in case of assessee’s individual partners’ concerned. We make it clear that there is not an argument raised before us doubting assessee explaining all the impugned money coming from its partners’ capital account only. - Decided against revenue - ITA No.2023/Kol/2016 - - - Dated:- 4-7-2018 - Shri S.S.Godara, JM And Shri M. Balaganesh, AM For The Appellant : Shri S.Dasgupta, Addl. CIT (DR) For The Respondent : None ORDER PER S.S.GODARA, JM: This Revenue s appeal for A.Y.2005-06 calls into question the CIT(A)-12, Kolkata s order dated 19.07.2016 passed in Appeal No.90/CIT(A)-12/Kol/Ward- 40(3)/2015-16 reversing the Assessing Officer s action invoking section 40(a)(ia) disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity or price, and none of the individual payment exceeded ₹ 20,000 and the payments were made on the basis of individual goods receipts issued by the truck owners for each trip separately . The appellant also relied upon the judgement in the case of City Transport Corporation -vs,- ITA (2007) 13 SOT 479 (Mum.). The Hon'ble Tribunal held that there was no material to show that all trips for transporting goods were under a single contract and payment for each trip being less than ₹ 20,000 each time, provisions of sec, 194C were not attracted, Apart from this the appellant has also taken the plea that Provisions of Section 40(a)(ia) are not applicable to amounts paid on or before 01-10-2004 as held by Jurisdictional Kolkata Tribunal 3.1 It is humbly submitted that no disallowance u/s 40(a)(ia) is to be applied to payments made before 01-10-2004. Reliance in this regard can be placed on the decision of Jurisdictional Kolkata Tribunal in the case of Kahn Dutta Hooghly - vs.- ITO [ITA No. 1732/2010) dated 12-08-20111 wherein it has been held that no disallowance can be made U/S 40(a)(ia) of the Act on payments made before 10-09-2004, the date when the assent of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its transportation commitment, the appellant besides using its own tankers was also hiring the tankers from outside parties as and when required. In such a case of hiring from 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 in 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) then 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 then 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was no contract between the assessee and the shipping companies to carry out any work. On the other hand, the assessee-company hired the ships belonging to other shipping companies for a fixed period on payment of hire charges. The hired ships were utilised by the assessee in the business of carrying the goods from one place to another in pursuance of an agreement entered into between the assessee and the Tamil Nadu Electricity Board. There was no agreement for carrying out any work or transport any goods from one place to another between the assessee and the other shipping companies. The assesseecompany simply hired the ships on payment of hire charges and it was utilised in the business of the assessee at their own discretion. It is not the case of the Revenue that the assessee entered into the said contract with the shipping company for transport of coal from one place to another. The hiring of ships for the purpose of using the same in the assessee's business would not amount to a contract for carrying out any work as contemplated in section 194C. The term hire is not defined in the Incometax Act. So, we have to take the normal meaning of the word hire . Normal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble High Court as above, we are of the considered opinion that the appellant was not liable to deduct TDS u/s. 194C(1) for payments made to the outside parties and consequently the disallowance made u/s.40(a)(ia) by the authorities below are deleted. The appellant thus gets relief of Rs. ₹ 56,03,210/-. 5. Coupled with this, it has further come on record the assessee had made the impugned payment well before 01.10.2004 i.e. the day the statutory disallowance provision itself came in operation. Various coordinate bench s decisions (supra) have already held that the same does not apply in case of amounts already credited before 01.10.2004. We therefore conclude that the CIT(A) has rightly deleted the impugned disallowance. The Revenue fails in its former grievance. 6. This leaves us with Revenue s latter substantive ground seeking to revive unexplained cash credit addition of ₹ 64,10,000/- in assessee s partners capital account. Suffice to say, various judicial precedents have settled the law that such addition has to be made in the concerned partners hands than in case of a firm assessee. We quote one of them CIT vs Metachem Industries (2000) 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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