TaxTMI 
TaxTMI 
2013 (5) TMI 786
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.... of income on September 30, 2009 declaring total income of Rs. 85,39,865 for the assessment year 2009-10, which was processed under section 143(1) of the Income-tax Act. Subsequently, a notice under section 148 was issued on February 4, 2011 and in response to this notice, the assessee filed a letter dated March 12, 2011 stating that the return of income already filed under section 139(1) of the Act on September 30, 2009 may be treated as the one filed under section 148 of the Income-tax Act. The assessee is a transport contractor and received freight charges at Rs. 16.94 crores and on this the assessee declared income of Rs. 85.39 lakhs. For carrying out this business, the assessee owned trucks and also engaged outside trucks for which an amount of Rs. 13.89 crores was debited as hire charges and the same was claimed. The Assessing Officer noted that in the tax audit report in Form No. 3CD, the tax auditor has made the following observations : "The assessee has also incurred a total amount of Rs. 3,94,28,546 as lorry freight payment to drivers who had undertaken to....
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....r the second proviso to section 194C(3) of the Income-tax Act. For this proposition, the assessee relied on the decision of the Income-tax Appellate Tribunal, Ahmedabad, in the case of Valibhai Khanbhai Mankad v. Deputy CIT [2011] 139 TTJ (Ahd) 70. The Assessing Officer did not agree with the contention of the assessee and held that it is not a mere procedural mistake as the assessee paid the hire charges without having a declaration in Form 15-I from the parties and thereafter the assessee has to file Form 15J within the prescribed time limit before the concerned authorities. As the said forms were filed only after receipt of notice under section 148 and the payments towards hire charges were made without having Form 15-I, there was a default under section 194C of the Income-tax Act, and therefore, the Assessing Officer disallowed the payment of hire charges to the extent of Rs. 3,94,28,546 while passing assessment order under section 143(3) read with section 148 of the Income-tax Act. However, the Assessing Officer has observed that out of Rs. 3,94,28,546 the assessee had furnished Form 15-I to the extent of Rs. 3,06,79,523 and no Form 15-I filed remaining balance amount of Rs. 8....
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....Gujarat High Court in the case of CIT v. Steel Cast Corporation [1977] 107 ITR 683 (Guj) and also the judgment of the hon'ble Andhra Pradesh High Court in the case of Addl. CIT v. Chekka Ayyanna [1977] 106 ITR 313 (AP). 8. On the other hand, the learned Departmental representative submitted that assessment was reopened due to audit objection. The learned Departmental representative relied upon the judgment of the hon'ble Supreme Court in the case of CIT v. P.V.S. Beedies P. Ltd. [1999] 237 ITR 13 (SC). He also relied on the judgment of the Madras High Court in the case of CIT v. First Leasing Company of India Ltd. [2000] 241 ITR 248 (Mad). 9. We have heard both parties on this issue. This ground was raised by the assessee before the Commissioner of Income-tax (Appeals) as ground No. 1, which reads as follows : "1. The order passed by the hon'ble Assessing Officer under section 143(3) read with section 147 of the Income-tax Act, 1961 for the assessment year 2009-10 is bad in law, contrary to the facts and circumstances of the case." 10. The Commissioner of Income-....
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....bsp; "No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing of his permanent account number, to the person paying or crediting such sum" 12. The learned authorised representative submitted that this section would be considered as retrospective effect in view of the judgment of the hon'ble Supreme Court in the case of CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306 (SC), wherein it was held that "omission of the second proviso to section 43B and the amendment of the first proviso by the Finance Act, 2003, Page No : 0721 bringing about uniformity in payment of tax, duty, cess and fee on the one hand and contributions to employees welfare funds on the other are curative in nature and thus effective retrospectively with effect from 1988, i.e., the date of insertion of proviso". Further, the learned authorised representative relied upon the decision of the hon'ble Supreme Court in the case of Allied Motors P. Ltd. v. CIT [1997] 224 ITR 677 (SC). 13....
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....rce since the assessee had collected declaration from the truck owners to whom the payments has been made in Form 15-I. According to the learned authorised representative, Form 15-I is a self-declaration from the truck owners and that information given in the declaration to be considered as complete and correct and the assessee has in no way required to verify the genuineness of Form 15-I. If the assessee is in possession of Form 15-I, there is no necessity of deduction of TDS from the same. 16. The learned authorised representative relied on para 6 of the judgment of co-ordinate Bench in the case of Asst. CIT v. Sri Sai Road Ways in ITA Nos. 819 and 820/Hyd/2010 for the assessment year 2005-06, dated November 30, 2010, which reads as under : "6. We have considered the rival submissions and perused the material available on record. We find that in a sub- contract, a prudent contractor would include all the liability clauses in the agree ment entered into by him with the sub-contractor. The assessee has also claimed before the tax authorities that the responsibility in the whole process ....
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.... these payments, though these were contractual/sub-contractual payment in nature under section 194C of the Act. According to the Assessing Officer since there is default in not deducting TDS, the payments made attract the provisions of section 40(a)(ia) of the Act. The assessee could not explain before the Assessing Officer as to why TDS was not deducted the Assessing Officer made the disallowance. Aggrieved, the assessee preferred appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) deleted the disallowance by following the decision of the Income-tax Appellate Tribunal, 'A' Bench, Kolkata, in the case of Samanwaya v. Asst. CIT [2009] 34 SOT 332 (Kolkata) in I.T.A. No. 484/Kol./2008 dated April 23, 2009 by stating that there was no contractual agreement between the assessee and the dumper owners as noted by the Assessing Officer in the remand report. We find that this issue is cov ered against the assessee by the decision of the hon'ble Karnataka High Court in the case of Smt. J. Rama v. CIT [2012] 344 ITR 608 (Karn) wherein it is held that 'law does not stipulate the existence of a written contract as a condition preceden....
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.... effect relationship between workers assigned by the CDLB having employer workman relationship with the assessee, and the payments being made by the assessee to CDLB being not in the nature of "payment for supply of labour".' 4. Since the facts and circumstances are exactly identical, what was before us in Kamal Mukherjee & Co. (Shipping) P. Ltd. [2012] 51 SOT 73 (Kol) (URO) and also that in the case of Smt. J. Rama [2012] 344 ITR 608 (Karn) of the hon'ble Karnataka High Court, respectfully following the same, we are of the view that even oral contract is suf ficient and admittedly the assessee has taken the dumpers on hire and he has paid charges for the same. Respectfully following the same, we confirm the disallowance made by the Assessing Officer and reverse the order of the Commissioner of Income-tax (Appeals). However, as regard to alternative arguments made by learned counsel for the assessee regarding applicability of the decision of the Income- tax Appellate Tribunal, Special Bench, Visakhapatnam in the case of Merilyn Shipping and Transports v. Addl. CIT [2012] 16 ITR (Trib) 1 (Viskhapatnam), wherein it is held that the disallowance will be restricted to the am....
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....ders inter-parties, the authority of a decision as a precedent is never undermined. Unless a decision is set aside by the Superior Court, the said decision remains binding as a precedent though may not be binding upon the parties to the proceedings where the Superior Court has granted interim order. Moreover, once a provision has been declared ultra vires the Constitution of India, the State cannot invoke the said ultra vires proceeding against the citizens of the country simply because an interim order of stay of operation order declaring the provision as ultra vires has been passed in an appeal against such order. The object of granting interim order is to see that the relief claimed in the appeal may not become inappropriate or the appeal does not become infructuous for not granting such interim order ; but by mere grant of interim stay, the effect of a binding precedent is not established. Over and above, the interim orders of the stay granted by the Supreme Court clearly indicate that the said court never intended that notwithstanding the decision of the High Court declaring a part of the provisions of vesting as ultra vires the State would nevertheless be free to proceed with....
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....artly allowed for statistical purposes." 18. The learned authorised representative further relied on the order of the Mumbai Bench of the Income-tax Appellate Tribunal in the case of Asst. CIT v. Mumbai Road Carriers in ITA No. 800/Mum/2010 for the assessment year 2006-07 dated September 30, 2011. 19. The learned Departmental representative, on the other hand, relied upon the orders of the authorities below. 20. We have heard both parties and perused the record. In this case, the assessee collected Form 15-I from the parties as follows : "The learned Commissioner of Income-tax (Appeals), Hyderabad, failed to note that the sum of Rs. 3,94,28,546 comprised of : (Rs.) (i) Form 15-I obtained but Form 15J not filed before CIT 2,90,02,826 (ii) Not obtaining of Form 15-I 87,49,029 (iii) Defective Form 15-I obtained 16,76,700 Total 3,94,28,546" 21. Since the genuineness of the payment itself was at stake, the Commissioner of Income-tax (Appeals) asked the Assessing Officer to examine the issue as to the genuine....
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....s from the assessee. S. No. Name and address of truck Truck No. Amount received towards owner hire charges (Rs.) Remarks 1. K.K. Kemagullaiah 3017/43, 5th Main Road, 2nd block, Nandini layout, Bangalore-96 1. KA01A8723 2. KA01 B2261 2,24,500 1,73,200 2. N. V. V.R. Satyanarayana 3-8, Pushpaleela Nagar, Thangellamudi (Post) Chintallapudi Road, Eluru-534005 AP37Y4321 1,55,400 3. V. Thirupathaiah 1-49/A, Julapally Village, Thallakondapally-Mdl, Kalvakurthy-TO, Mahaboobnagar Dist. AP12U8374 2,23,312 4. Syed Ahmed 17-1-137/2B, Rain Bazar, Yakuthpura, Hyderabad AP10T3068 AP30TAA07 2,51,100 Sri K. K. Kempagullaiah, in whose case the letter was returned unserved, was asked as to why he did not accept the letter. In reply he stated that, while working in a transport firm, he purchased two trucks for which collateral surety was given by his employer and the employer's address was shown/stated in the RC book issued by trans port department. Subsequently, on closure of business by his employer, Sri K. K. Kempagullaiah was operating on his own from his residence. Hence he could....