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TMI Blog2016 (2) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS) to find out the extent of quantum of tax paid by the payees. CIT(A) has also directed the ITO (TDS) that if entire tax amount has been claimed from the deductor has been paid by the deductees, then for that amount the deductor cannot be treated as assessee in default. Accordingly, the CIT(A) has directed the AO to give relief subject to verification as above. In our opinion, before deciding the issue the Assessing officer should give an opportunity of being heard to the assessee. AO is further directed to decide the issue keeping in view the relevant provisions of Income-tax Act, 1961 applicable to the facts of the present case. Remand this issue to the Assessing officer for a fresh decision. Accordingly, the order of the C IT(A) is modified to the above extent. Ground allowed for statistical purposes. - ITA Nos. 648 & 649/Chd/2014 - - - Dated:- 4-2-2016 - Shri H.L.Karwa, Hon'ble Vice President And Ms. Rano Jain, Accountant Member Appellant By: Sh. Harish Aggarwal Respondent By: Sh. Jatinder Kumar ORDER H.L.Karwa, These two appeals by the assessee are directed against the consolidated order of C IT(A), Shimla (H.P.) dated 5.5.2014 relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59/- for the assessment years 2010-11, 2011-12 respectivel y. On appeal, the C IT(A) vide his separate orders dated 30.11.2015 confirmed the order of the ITO (TDS), Solan dated 28.3.2013 relating to financial years 2009- 10 and 2010-11 relevant to assessment years 2010-11 and 2011-12, and hence, the assessee is in appeal before the Tribunal. 5. Before us, Shri Harish Aggarwal, Ld. Counsel for the assessee submitted that during the period relevant to assessment year under consideration, the assessee had entered into an agreements with various Transport Cooperative societies viz. The Solan Distt. Truck Cooperative Transport Societ y Ltd, the Baghal Land Loosers Transport Societ y Ltd, Amuja Darla Kashlog Transport Cooperative Societ y Ltd and The Golden Land Loosers Houseless Cooperative Societ y Ltd for carrying out the transport work at its Darlagghat unit. The Transport societ y is nothing more than a conglomeration of the truck operaors. Shri Harish Aggarwal, Ld. Counsel for the assessee submitted that the reasons for creation of the societ y was onl y to ensure equitable distribution of work amongst the individuals truck operators. These societies are registered under Himac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. I have considered facts of the case. As the demand created u/s 201(1)/(1 A) in respect of payments made to H.P. Ex-Servicemen Corporation has been reduced to 'nil', the dispute remains only in respect of payments made to Bilaspur District Truck Operators Co-operative Transport Society Ltd. For appreciating the issue in proper prospective, it would be appropriate to reproduce relevant provisions of this Act. Hence, for the sake of ready reference, provisions of section 194C(6) and Explanation-(ii) below section 194C(7), provisions of section 44AE{1) and Explanation below section 44AE(7) of the Act are reproduced below: 194C. Payments to contractors. Any person responsible for paying any sum to any resident /hereafter 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 specified person 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, whichever is earlier, deduct an amount equal to-- --------------- (6) No deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority the details pertaining to the above contractor in the prescribed form. 5.2 In the instant case, the appellant had obtained PAN from the payee and furnished the same before the prescribed authority. Further, the goods carriages involved also satisfied the definition given in the Motor Vehicles Act. Therefore, the only issue to be decided is whether the payee i.e. Bilaspur District Truck Operators Co-operative Transport Society Ltd (hereinafter referred to as 'Society 5 ) was engaged in the business of plying, hiring or leasing of goods carriage. The appellant has filed a copy of bye-laws of this Society, a perusal of which reveals that the main object of this Society is to provide goods and passenger carriages on hire and lease to anyone. This clearly implies that it is engaged in the business of plying, hiring and leasing of goods carriage. As per clauses of the agreement between the appellant and the Society, it was the responsibility of the Society to honour the commitment and obligation, which arose from the said agreement and to bear all risks arising therefrom 5.3 It is noteworthy that Explanation--(ii) below section 194C(7) refers to the definition of 'goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt paid or credited to the transport cooperative society on which tax has not been deducted in its quarterly TDS return. Shri Soumen Adak, Ld. Counsel for the assessee submitted that the goods carriage involved also satisfies the definition of 'goods carriage' given in Section 2(14) of the Motor Vehicle Act, 1988. The term 'goods carriage' means any motor vehicle construed or adopted for use solely for the carriage of goods or any motor vehicle not so constructed or adapted when used for the carriage of goods. 7. In our view, the Ld. CIT(A) has correctly observed that the inference drawn by the Assessing officer that for the purpose of claiming the benefit of sub section (6) of section 194C, the assessee is required to satisfy the ownership criteria mentioned in Explanation (b) below section 44AE(7) is not correct. In our view, reference of Explanation to section 44AE(7) in section 194C is only in the context of definition of 'goods carriage'. Clause (a) of Explanation to Section 44AE(7) defines 'goods carriage' and clause (b) defines 'deemed ownership'. The Ld. CIT(A) has correctly held that clause (a) is applicable to both sections i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a is not based on correct appreciation of the facts of the case and law and, therefore, the impugned order deserves to be set aside and consequently, we allow all the appeals of the assessee and delete the demand created u/s 201 and 201(1A) of the Act. 8. It is relevant to state here that facts of the present case are similar to that of M/s ACC Limited, Barmana Vs. ITO, Palampur referred to above. The issue involved is also identical. Respectfull y following the order of the Tribunal in the case referred to above, we set aside the order of C IT(A) and allow common ground No.1 of the appeal. Accordingl y, the demand of ₹ 1,91,78,200/- and ₹ 3,84,01,159 created u/s 201(1) and 201(1A) for assessment years 2010-11 and 2011-12 are hereby deleted. 9. As regards ground No.2 of the appeal, the relevant facts are that the assessee entered into an agreement with Himachal Road Transport Corporation (in short 'HRTC' ) in availing bus services on contract basis. The employees engaged with the assessee company including their families were permitted to travel in the buses provided by HRTC. The assessee did not deduct tax u/s 194C while making payment to HRTC in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to verification by A.O. 11. We have heard the rival submissions. In the above findings, the Ld. CIT(A) has given certain directions to the Assessing officer as per para 5.18 of the order. These are as under;_ 5.18 In view of the aforesaid decision it is found that even though the deductor has been held as assessee in default, tax cannot be recovered from them to the extent if the same has been paid by the recipient. There are no findings by the ITO (TDS ) regarding the payment of taxes by the deductees. Therefore, the ITO (TDS) is directed to find out the extent and quantum of tax paid by the deductees. If the entire amount as claimed from the deductor has been paid by the deductees then for that amount the deductor cannot be treated as assessee in default. Accordingly the relief is available to the appellant subject to verification by Assessing officer. 12. After considering the entire facts of the present case, we are of the view that the Ld. C IT(A) has taken a correct view that that there is no provision in the Income Tax Act, 1961 to the effect that tax is deductable at source in case of exempt income. The assessee claimed that the deductee HRTC is registered as a Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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