TaxTMI 
TaxTMI 
2012 (9) TMI 731
X X X X Extracts X X X X
X X X X Extracts X X X X
....iwali expenses of Rs.10,095/-, staff accommodation expenses of Rs.17,500/-, traveling expenses of Rs.10,150/- & lorry trip expenses of Rs.50,48,615/- totalling to Rs.51,41,178/-. 3. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of assessing officer in disallowing Rs.7,399/- at the rate of 20% out of telephone expenses. 4. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of assessing officer in framing assessment u/s.143(3) of the I.T.Act 1961 without serving notice u/s.143(2) of the Act within the statutory time limit. 5. It is therefore prayed that above disallowances made by Assessing Officer and confirmed by Commissioner of Incometax (Appeals) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 2. At the outset, ld.AR Mr.Rasesh Shah has made a statement at Bar that he is contesting only ground No.1 and rest of the grounds, i.e. Ground Nos.2, 3, 4, etc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the freight is paid directly by the principal to the truck driver and after delivery of the goods the balance 30% of the freight collected by us on behalf of truck driver whom the balance amount is paid after showing satisfactory delivery of goods receipts. In all the above dealings we only get our brokerage from truck driver only and there is no any further role on our part." 3.1. On the basis of above reply, it was contented that as per the terms of the business, the contract was between the principle and the truckowner. It was explained that the assessee has acted only as a broker between the principle and the truck-owner. Case laws cited was Sitaldas Tirathdas 41 ITR 367(SC). An another contention of the assessee was that his position was only as a sub-contractor and, therefore, in terms of the provisions of section 194C(2) he is not liable for deduction of TDS being a sub-contractor himself. It was argued that the assessee is in individual capacity has acted as a sub-contractor, therefore even not covered under the provisions of section 194C(2) of IT Act. It was also emphasized that as per the provisions of section 194C(1), an individual is required to deduct tax with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bench in the case of Merilyn Shipping & Transports, Visakhapatnam vs. Addl.CIT-Range-I, Visakhapatnam in ITA No.477/Viz.2008 for A.Y. 2005-06 [ITAT Visakhapatnam Special Bench] :: [16 ITR (Trib) pg-1] order dated 29th March-2012, wherein the final verdict approved by the majority decision was quote "The provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS." unquote. His second plank of argument is that in a situation where truck-owner is to execute the transportation work, then in the absence of any specific contract the provisions of section 40(a)(ia) could not be applied and in this regard, he has placed reliance on R.R. Carrying Corporation vs. ACIT 126 TTJ 240 (Cuttack), wherein the held portion is reproduced below:- "Held that, it was undisputed that the assessee was a transporter executing various contracts by engaging its own vehicles and transporter's vehicles. The Assessing Officer disallowed the payments by observing that payments were made to the transport....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ngth. The assessee is a Proprietor of M/s.Pandit Owners. The assessee was engaged to provide trailers and trucks. For this purpose, he has arranged his own trucks as well as arranged trucks on hire. As far as the first contention of the assessee is concerned, that the provisions of section 194C in respect of individual have applied with effect from 1st June-2007 is correct as held in the case of Shri Prashant H.Shah by ITAT "C" Bench Ahmedabad in ITA No.17/Ahd/2011 (A.Y.2007-08) vide an order dated 08/07/2011, wherein vide para-7 it was opined as under:- "7. We have heard both the sides at some length. We have also perused the material placed before us in the light of the provisions of the Act as also the case law cited. Before we proceed further, we may like to point out that the provisions of section 194C of the Act had undergone certain vital changes in the recent past. The main purpose of introduction of this section in the Act is to make provisions for deduction of tax at source from payments made to contractors and subcontractors in certain cases. Income tax is deductible at source from income comprised in payments made by the persons specified in this section. As per the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....construction work of peripheral and approach roads at LNG terminal Dahej. Thereafter, the said contractor had entered into a sub-contract with M/s.A.N.S. Construction Ltd., who in turn, had entered into an another sub- contract with the assessee. The work to be carried out by the assessee, therefore pertained to construction of peripheral approach roads. To carry out the above work, the assessee had to purchase construction material, viz. Sand, gravels, etc. In order to bring the construction material at the construction site at Dahej, the assessee has availed the services of several transporters. The assessee had made payment under the head "transport charges". The view of the AO was that on payment of "transport charges", the assessee being a subcontractor was required to deduct the tax at source as prescribed under sub-section (2) of Section 194C of the Act. On the other hand, the assessee's contention is that although the assessee could be a subcontractor M/s.A.N.S. Construction Ltd., but vis-à-vis transporters the assessee has not acted as a sub-contractor but only as a contractor. As per assessee's contention it was a principal to principal arrangement of transporta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en fastened with any of the above liabilities, meaning thereby the transporters were not the part of the said agreement and the assessee had an independent arrangement with them. In other words, peculiarity of this case is that the sub-contract which was assigned to this assessee was not further sub-contracted to the lorry owners. In a sub-contract, a prudent contractor generally include the clauses of liability which were undertaken by him while accepting the execution of the work from the main contractor. We may like to clarify that a condition of passing of the liability can not exhaustive and can not be said to be the only criteria to decide whether there was an existence of contract or sub-contract. The catalog of criterion must include certain other clauses as well, yet in this case this criteria can be determinative considering the nature of work assigned by the assessee to transporters. It is not the case of the A.O. that he happened to be in possession of some material to allege that there existed a specific contract between the assessee and the transporters. Whether the goods were transported in pursuance of any sub-contract so as to apply the provisions of Sec.194C(2)....