TaxTMI 
TaxTMI 
2012 (7) TMI 691
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....or carriage of goods from one location to another location. 3. The brief facts of the issue are that a survey under section 133A of the Income Tax Act, 1961 ('the Act' hereinafter) was conducted on 09.02.2009. The assessee is running Oil Refinery and manufacturing petrol, diesel and other petroleum products. The said products are being transported from the Refinery to the market to various destinations through Truck Tankers etc. During the course of survey, it was found that the assessee had been making payments to the operators from whom it had taken tankers for transportation of oil and oil products from it's refinery to various places and deducting tax at source under section 194C of the Act @ 2%. The Assessing Officer was of the view that after 01.06.2007 the assessee was liable to deduct tax @ 10% as per amended provisions of section 194- I of the Act. The Assessing Officer accordingly created demand of short deduction and charged interest under section 201(1) and 201(1A) read with section 194-I of the Act as under :- Financial Year Short Deduction Interest Charged Total Demand 2007-08 62470407 9750136 72220533 2008-09 (till Dec '08) 488....
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....ard both the parties and gone through the facts of the case as also the aforesaid decisions. The issue before us is as to whether the assessee company was required to deduct tax at source in terms of provisions of sec.194C or u/s sec.194-I of the Act while making payments to the carrier for transportation of petroleum products in accordance with agreement, sample copy of which is placed at pg. 59 to 72 of the paper book. The relevant provisions of sec. 194C, stipulating deduction of tax at source from payments to contractors fall under Part B of the chapter-XVII of the Act. In terms of these provisions, any person responsible for paying any sum to any resident 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 cheque or draft or any other mode, whichever is earlier, deduct an amount equal to the percentage specified thereunder of such sum as income tax. The term 'work' defined in clause (iv) of the explanation to the sec. 194C of the Act includes in sub-....
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....he services of any other tank truck and recover the difference in transportation charges from the carrier. The assessee company, in terms clause 6 of the agreement, is required to pay for the transportation work in accordance with stipulated rates on per KL per KM basis. Inter alia, it is stipulated that no idle charges would be payable. In terms of clause 8, the carrier is responsible for loading and discharge and in the event of shortage, the carrier is made responsible. After considering various clauses of the sample agreement, we are of the opinion that the said agreement is essentially for transportation of bulk petroleum products and not for hiring of tank trucks. We find that the Hon'ble Gauhati High Court in their decision dated 27.2.2009 in CR3997/1998 in the context of deduction of tax u/s 27(a) of the Assam General Sales Tax Act, 1993, after analyzing the terms of a similar agreement in the case of the assessee observed that the said agreement obliged the contractor to operate the vehicles for the purpose of carrying petroleum and petroleum products, as per the directions of the assessee company, from one place to another. If the vehicle remained off the road and, conseq....
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....e following terms:- "5. The Commissioner (Appeals) upon appreciation of the evidence on record has found that the assessee had given subcontracts of transportation of goods from one place to another. To prove the nature of contracts, the assessee had produced various bills issued by such; sub-contractors to show that, the contracts were mainly carried out for shifting of goods from one place to another. The Commissioner (Appeals) also found that the charges were collected by sub-contractors on the basis of the quantity* of goods transported and the number of trips carried out; the assessee had not acquired dumpers on rent or lease; and that the possession and control of vehicles was with the sub-contractors, who only provided services of shifting of goods from one place to another place. It was noted that evidence in support of above was submitted to the Assessing Officer during assessment proceedings. In the background of the aforesaid findings of fact recorded by him, the Commissioner (Appeals) was of the view that when the. transportation, contract was in the nature of shifting of goods from one place to another, such contracts would be covered as works contracts and provisio....
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....es for the transportation of goods and not for renting out of machineries and equipments. Section 194-I of the Act makes provision of deduction of tax at source where any person who is responsible for paying to a resident any income by way of rent where as section 194C of the Act makes provision for deduction of tax at source where any person is responsible for paying any sum to any resident 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. In the facts of the present case, there is nothing to indicate that the assessee has taken trailers/cranes on rent so as to attract the provisions of section 194-I of the Act. The assessee had given sub-contracts for transportation of goods. In the circumstances, the said transactions would fall within the purview of section 194C of the Act as the assessee was responsible for paying the amount in question for carrying out work in pursuance of contracts between the assessee and the transporters and as such was required to deduct tax at source at the rate prescribed under the said section. The Commissioner (Appeals) was, therefore, justified in h....
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....t for vehicle hire charges and not the provisions of section 194-I of the Act. 10. In the light of consistent view taken in the aforesaid decisions and considering the various clauses in the aforesaid Bulk Petroleum Products Road Transport agreement, we have no hesitation in upholding the findings of Id. CIT(A) in concluding that the arrangement for transportation of petroleum products was essentially a contract for transportation of goods and not an arrangement of hiring of vehicles. In view thereof, tax is required to be deducted at source from the payments to the carrier in terms of provisions of sec. 194C of the Act and not u/s 194-I of the Act. Therefore, ground nos. 1.1 & 1.2 in these six appeals of the Revenue are dismissed. As a corollary, grounds raised in the six COs become academic and do not survive for our adjudication." 7. Ld. Departmental Representative, however, relied upon the order of the Assessing Officer but he did not dispute that the facts of the case of Delhi Bench and facts of the case under consideration are identical. 8. Since on identical set of facts the issue has been decided by the I.T.A.T., Delhi Bench in assessee's own case vide order....
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....ile deciding the appeals relating to tax deducted at source in respect of payment for tanker Truck etc, we hold that the CIT(A) was not correct in making apportion in between the sections 194-I and 194C of the Act. In respect of these appeals also the ld. Representatives of the parties submitted that the effective facts for deciding the issue are common in the case under consideration and in the case of a decision of I.T.A.T., Ahmedabad Bench in the case of Ahmedabad Urban Development Authority vs. ACIT TDS Circle in ITA No.1637/Ahd/2010 order dated 10.03.2011. The relevant finding noted from copy of order filed in assessee's Paper Book is reproduced as under :- "5. We have considered the rival submissions and the material available on record. The facts noted by the AO are not in dispute that the assessee had hired cars on fixed rent payment and TDS was deducted @ 2% treating the same as contract as per section 194C of the IT Act. The AO also noted that the assessee had made vehicle hire charges payment in connection with plying of employees from one place to another. It was also noted by the AO that vehicles are owned and maintained by contractors. The assessee paid fixed payme....
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....eing rent paid to the contractor which provides as under: (prior to amendment w.e.f. 1-10-2009). "194-I Any person, not being an individual or a Hindu undivided family, who is responsible for paying to [a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, [deduct income-tax thereon at the rate of- [(a) ten per cent for the use of any machinery or plant or equipment; and (b) fifteen per cent for the use of any land or building (including factory building or land appurtenant to a building (including factory building) or furniture or fittings where the payee is an individual or a Hindu undivided family; and;]] (c) twenty percent for the use of any land or building (including factory building), or land appurtenant to a building (including factory building) or furniture or fittings where the payee is a person other than an individual or a Hindu undivided family" Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the ....