2014 (11) TMI 948

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....e Income Tax Act amounting to Rs. 1,52,87,975/-? (ii)Whether the Tribunal was right in holding that the provisions of Section 194C of the Income Tax would not be applicable in the present case? (iii)Whether the Tribunal is right in not considering the provisions of Explanation II(c) to Section 194C(2) of the Income Tax Act? 2.1. The facts in a nutshell are as under: The assessee is carrying on transport business and has filed return of income for the assessment year 2005-2006 on 24.10.2005 disclosing an income of Rs. 11,13,069/- and the return was processed under Section 143(1) of the Income Tax Act. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued and after hearing the assessee's representativ....

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....cally admitted that the assessee is taking on hire only the trucks. The agreement is not between the assessee and the truck owners for the transportation or carriage of goods. Once it is noticed that the hiring is only of the trucks and the hire charges paid is not for the purpose of carriage of goods, the same falls out of the inclusive definition of 'work' as provided in the Explanation to Section 194C of the Act. This view of ours also finds support from the decision of the Hon'ble Madras high Court in the case of CIT v. Poompuhar Shipping Corporation, referred to supra, which is also the jurisdictional High Court decision. In the circumstances as it is noticed that the learned CIT(A) has only followed the principles laid dow....

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....tion Limited case, referred supra. For better clarity, the relevant portion of the decision in Poompuhar Shipping Corporation Limited case, referred supra, is extracted hereunder: "4. We heard the arguments of learned counsel. Under section 194C, the tax is to be deducted when a contract was entered into for carrying out any work in pursuance of a contract between the contractor and the entities mentioned in sub-section (1) of section 194C. In the present case, 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 ....

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....ave deducted tax at source under section 194C of the Act. Further, the other argument of counsel was, section 194C was amended with effect from July 1, 1995, incorporating the Explanation and the said Explanation clarifies the existing provision of section 194C of the Act. Hence, it would be applicable retrospectively. We are concerned with the assessment year 1994-95. In a recent judgment, the Supreme Court in the case of Sedco Forex International Drill Inc. v. CIT [2005] 279 ITR 310, considering the scope of the Explanation, held that there is no principle of interpretation which would justify reading the Explanation as operating retrospectively, when the Explanation comes into force with effect from a future date. In this case, the Expla....