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2015 (6) TMI 106
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....justified in ignoring the categorical finding of the CIT(A) that there was a contract between the parties and Assessee was liable to deduct TDS? (iv) Whether on the facts and in the circumstances of the Case the Learned Tribunal is justified in relying upon the decision delivered in the case of Bhagwati Steel reported in (2011) 198 TAXMAN 275 (P&H) which was not at all applicable in the instant Case? (v) Whether on the facts and in the circumstances of the Case the impugned Order is perverse?" 2. This matter has been taken up for its final hearing by the consent of the learned counsel for both the sides and have argued out the case at length. 3. Counsel for the appellant on behalf of the Commissioner Income Tax, Jamshedpur has submitted that the respondent has claimed deduction of Rs. 98,76,419/-, which is paid to the sub contractor for transportation. Similarly, the respondent-assessee has also claimed deduction of Rs. 17,60,600/- under the heading of "loading and unloading charges". These deductions not having been allowed , appeal was preferred by the respondent before the Commissioner, Income Tax (Appeals) Jamshedpur bearing Appeal No. 525/JSR/2011- 12. Which was di....
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....financial year 2008-09. Looking to the repairs and maintenance charges, the amount has also been paid by this assessee over and above vehicle hire charges. There is also huge payments for loading and unloading charges. There is also payments for labour charges. There is an oral contract between this assessee and transporters, who are transporting goods of M/s Rungta Mines Ltd. It is submitted by the counsel for the appellant that looking to the payments made on different dates to the same party of more than Rs. 20,000/- in cash as stated in para 3.4 of the Assessment Order passed by the Assessing Officer dated 20th December, 2011 (Annexure 1 to the memo of the Tax Appeal). It appears that gross error has been committed by the ITAT that Section 194C of the Income Tax Act, 1961 is not applicable and consequently the deductions disallowed under Section 40 (a) (ia) should have been allowed by the Income Tax Department. This is an error on the face of the record committed by the ITAT, which is not permissible. (e) Similarly, learned counsel for the appellant submitted that for loading and unloading charges, deductions claimed by the respondent-assesseee is of Rs. 17,60,600/-. Such....
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....200 per truck. In fact, he is a transporter and he is giving sub contract for transportation of goods of M/s Rungta Mines Ltd. and, therefore, as per Section 194 C of the Income Tax Act, 1961, TDS ought to have been deducted by the respondent-assessee before making huge payment to the sub contractors and hence, this tax deduction at source has not been carried out. The deductions claimed from the total income by the assessee of Rs. 98,76,419/- for vehicle hire charges is not permissible under Section 40 (a) (ia) of the Income Tax Act, 1961. Similar is the position with respect to the loading and unloading charges for Rs. 17,60,600/-. Learned counsel for the appellant has relied upon the decision rendered in the case of Raja and Company vs. Commissioner of Income Tax reported in (2011) 335 ITR 381 (Kerala). In view of the aforesaid decision, it is submitted by the counsel for the appellant that the conclusion arrived at by the Income Tax Appellate Tribunal, Ranchi Circuit bench, Ranchi deserves to be quashed and set aside and the order passed by the Commissioner of Income Tax (Appeals), Jamshedpur in Appeal No.525/JSR/2011-12 dated 31st December, 2012 may be upheld by this Cou....
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....ransporting of goods mainly through hired vehicles. Heavy vehicles have been hired by the respondent . It further appears that the respondent-assessee is not only paying vehicles hire charges, but, he is paying entire vehicles running expenses such as cost of diesel and lubricants, labour charges, repair and maintenance charges which mainly comprising replacement of spare parts, tyres and tubes, batteries, engines, motors auto body, leaf spring and other general repairs and maintenance and also towards loading and unloading charges. These are the payments made under the different major heads by the respondents during the financial year 2008-2009. Thus, it appears that he is not a broker at all who is earning Rs. 150-200 per truck as argued out by the respondent-assessee. (III) Huge amount has been paid in cash for vehicle hire charges. Looking to the profits and loss accounts the said payment reads as under:- Sl. No. Name of the Party (S/Sri) Date of Payment Amounts paid without deduction of tax 1. (i) Sudhir Kumar Singh 07/04/2008 1,00,000 (ii) 30/04/2008 50,000 (iii) 28/05/2008 1,45,000 (iv) 01/07/20....
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.... Ganesh Sahoo 06/01/2009 39,000 (ii) 28/01/2009 30,000 (iii) 11/02/2009 43,086 Sub-total 1,12,086 9(i) Md. Samsuddin 10/01/2009 80000 (ii) 09/03/2009 50000 Sub-total 1,30,000 10. Lucky Roadways 12/02/2009 2,00,000 11.(i) Prasanna Kumar Prusty 27/02/2009 38,000 (ii) 18/03/2009 50,790 Sub-total 88,790 12. Radhey Shaym Sahu 27/02/2009 65,150 13.(i) Raj Roadways 04/03/2009 19,000 (ii) 26/03/2009 29,181 Sub-total 48,181 14. (i) Md. Khlim 02/01/2009 50,000 (ii) 05/03/2009 1,00,000 Sub-total 1,50,000 15.(i) Md. Irshad 06/03/2009 50,000 (ii) 25/03/2009 1,00,000 Sub-total 1,50,000 16. Jayesh Thakkar 09/03/2009 25,000 17. Farukh Seikh 09/03/2009 1,00,000 18. Md. Kalim 14/03/2009 1,02,000 18/03/2009 1,00,000 25/03/2009 80,000  ....
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....liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. (3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source- (i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or (ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice. (4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed [thirty thousand rupees]: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds [se....
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.... sub-section (7) of section 44AE; (iii) "contract" shall include sub-contract; (iv) "work" shall include- (a) advertising (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer." (Emphasis Supplied) "40. (a) (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1....
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....on shall.......". The words in pursuance of a contract "also includes the oral contract". (b). The oral contract has to be deduced from the existing evidence. (c). Every time there cannot be a written contract and the tax payers' tendency specially, those who want to evade the tax will never prove or assist the authorities in giving evidence of the contract, especially when huge amount of cash is involved. Therefore, whenever any assessee is claiming huge cash paid e.g. in this case Rs. 98,76,419/- which is paid in cash to the aforesaid different persons on different dates then it is a prime duty of the Income Tax Authorities to look at the transactions carefully. In the facts of the present case repeatedly several amounts have been paid in cash exceeding Rs. 20,000/ - in breach of Section 40 A (3) of the Income Tax Act, 1961 towards vehicle hire charges, without deducting the tax at source and, therefore, this amount of Rs. 98,76,419/- is to be added in the income of the respondent-assessee as deduction is not permissible under Section 40(a) (ia) of the Income Tax Act, 1961. When any assessee is paying once in a blue moon for a transportation charges, Section 194C of the Inc....
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....rs 10/03/2009 75,000 14. Ch. No. 760276 to Earth 26/03/2009 67,000 TOTAL 12,76,700 The aforesaid amount of Rs. 12,76,700/- out of Rs. 17,60,600/- cannot be allowed to be deducted from the income of the respondent-assessee as TDS has not been deducted under Section 194C of the Income Tax Act, 1961 to be read with Section 40(a) (ia). (VII) Learned senior counsel appearing for the respondent has relied upon several decisions as stated hereinabove. The judgment reported in (2011) 198 Taxman 275 (Punjab and Haryana) is not applicable to the facts of the present case, mainly for the reason that looking to para 2 of the said decision, it has been observed by the Punjab and Haryana High Court that there was no material on record to prove any written or oral agreement between the assessee and the recipient of goods for transportation or carriage thereof. It has also been observed in the said decision in para no.2 that there is no material to prove the payments of freight having been made pursuant to a contract of transportation of goods for specific period, quantity or price. There is also observations in the said para 3, while quo....
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....lained by the assessee who is M/s Vector Shipping Services (P) Ltd. Thus, TDS was deducted and was paid also to the Department, whereas, in the facts of the present case no TDS has been deducted by the respondentassessee and hence, deductions are not allowed under section 40(a)(ia) of the Income Tax Act, 1961. (IX) Similarly, the decision upon which heavy reliance has been placed by the counsel for the respondent reported in (2013) 350 ITR 427 (Delhi), the facts of this case is also different from the facts of the present case. Looking to para 5 of the said decision it has been held that there was no privity of the contract for carriage of goods with the clients and the assessee, whereas, in the facts of the present case as stated herein above there is sufficient evidence for establishment of the oral agreement between the present assessee and the sub contractors, who has transported the goods. (X) Similarly, the facts of the decision reported in (2006) 282 ITR 3 (Madras) are also remarkably different than the facts of the present case. The present respondent-assessee is a transporter and transporting the goods through sub contractors and as stated hereinabove on different da....