TaxTMI 
TaxTMI 
2015 (10) TMI 825
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....ove appeal is filed by the Revenue impugning the order passed by the Tribunal. 3. The substantial questions of law that arise for consideration in the above appeal are as follows: 1. Whether in the facts and circumstances of the case, the ITAT is right in law in deleting the addition made under Section 40(a)(ia) ignoring the facts that there was oral contract with transporters which was evident from the fact that, payments made to each lorry owner exceeded Rs. 50,000? 2. Whether the ITAT is right in deleting the addition made ignoring Explanation-III to Sectiion 194C defining "Work" as only carriage of goods and not sub-contract of entire work as held by ITAT and also ovelooking Uttaranchal High Court decision in 290 ITR 530 wherein, it is held that once agents are appointed by contractor liability to TDS arises under Sectiion 194C? 3. Whether the ITAT is right in deleting the addition made on the ground that entire work undertaken by contractor was not sub-contracted to transporters ignoring provisions of Section 194C(2) which clearly provides that, even sub-contracting part of work by contractor also attracts T.D.S.? 4. The brief facts of the case....
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.... seen that for the same distance, different rates have been paid to different vehicles under different voucher numbers and thus arrived at the conclusion that the amounts expended was indeed freight charges and not hire charges. Though, it was the specific case of the assessee that the amounts paid reflect only the hire charges. No material has been placed to demonstrate the same either before the Assessing Officer or before the Commissioner (Appeals). Hence, the Commissioner (Appeals) by a detailed and reasoned order was pleased to conclude that the amounts allegedly paid are indeed freight charges and not hire charges and rejected the contention of the assessee that the entry "freight paid" is on account of the mistake committed by the accountant and in fact such amount represent the hire charges only. It is the admitted case of the assessee that there are no written contract nor bills issued by the transporters and the entire case is sought to be demonstrated and supported only by the vouchers maintained by the assessee. 6. The other undisputed fact is that the asseessee has described the payments in the vouchers as "freight charges" (though it is alleged to be the result of ....
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....of the assessee nor the assesseee placed any material to demonstrate or buttress the case made out by the Tribunal. 12. The appellant counsel would submit that the reasoning of the Tribunal that the Revenue failed to place any material to controvert "oral statement" of the assessee is not only perverse but also contrary to all known canons of evidence. He would submit that the reasoning of the Tribunal calling upon the revenue to disprove or controvert, unsubstantiated and uncorroborated self serving statement of the assessee is not only whimsical but highly illegal. He would state that no burden is caste upon a person to disprove anything that has not been proved. 13. The learned counsel for the appellant would submit that the vouchers and entries in the books of accounts are the evidence of contract entered into and executed on behalf of the assessee. He would submit that it is the case of the assessee that he owned only five trucks and that the trucks of third party has been used to transport the materials, that is to execute the contract entered into between the assessee and his principal. He would submit that the same are evidence of an implied agreement and agreements i....
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.... the Tribunals and of the Panjab and Harayana High Courts. 16. The above appeal came to be admitted on 03.02.2011 on the substantial questions of law as framed by the revenue. Apart from the same, this Court would also deem it necessary to frame an additional issue, which has arisen incidentally as a result of the approach adopted by the Tribunal, the same is as follows: Whether in the facts and circumstances of the case, the income tax appellate Tribunal was right in allowing the appeal by merely relying on broad principles without reference to the critical facts of the case? 17. For the sake of brevity and convenience the provisions of Section 194C of IT Act, are culled out for reference purpose only. "194C. [(1) Any person responsible for paying any sum to any resident (hereinafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and- (a) XXXXX (b) XXXXX (c) XXXXX (d) any company; or (e) XXXXX (f) XXXXX (g) XXXXX (h) XXXXX (i) XXXXX (j) XXX....
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....t income-tax [under this section:]" 18. The provisions of Section 40(a)(ia) are culled out for the sake of convenience: 40. Notwithstanding anything to the contrary in sections 30 to [38], the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",- (a) in the case of any assessee- [(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,- (A) outside India; or (B) in India to a non-resident, not being a company or to a foreign company, Provided XXXXX (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 XVII-B and such tax has not been deducted or, after deduction, has not been paid during the prev....
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....ter dated 19.11.2007 stated that it is not a freight charges but it is lorry hire charges and that by mistake the accountant has used the word freight paid. Thus it was asserted for the first time by the assessee that he had hired the vehicles belonging to others for transportation of materials under contract with principle. It was also asserted that there are no written contracts with the lorry owners and who ever was available had been employed by them and paid hire charges and that as the lorry owners are not fleet owners and possess one or two trucks, the question of making TDS from hire charges did not arise. With reference to the explanation offered under the letter dated 19.11.2007, a further query was addressed by the Assessing Officer on 12.12.2007. It was pointed out to the assessee that his explanation vide letter dated 19.11.2007 was self contradictory. It was pointed out that in one breath he has stated that the amounts paid to the lorry owners is not freight charges but hire charges and in next breath, he admits that there are no contracts. It was further pointed out that there is no hire agreement presented before the Assessing Officer. It was further pointed out tha....
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....s. 5,10,16,407/- as this represented the total sum of amounts, where the aggregate of payments made to the transporters exceeded Rs. 50,000/- in the assessment year. It is seen that the Assessing Authority has also brought out specific instance which go to demolish the contention of the assessee. The assessee and his Chartered Accountant attended hearing before the Assessing Authority. 24. The dispute in a nutshell is as to whether the provisions of Section 194C of the Act can be invoked only if any single payment exceeds Rs. 50,000/- or can be invoked if the aggregate of payment in an assessment year exceeds Rs. 50,000/-. As stated supra there is no controversy regarding the said contention, the provision is clear and unambiguous and the word aggregate has been specifically used. In that view of the matter, the assertion on behalf of the assessee, that only in respect of payment which exceeds Rs. 50,000/- is liable to be deducted at source is liable to be rejected and is accordingly rejected. Accordingly, the substantial questions of law as framed by the appellant/revenue is answered in favour of the revenue. 25. The simple issue has been approached by the Tribunal in an err....
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....addressed itself to any of the findings of fact rendered by the Assessing Authority. In particular, several instances of the aggregate of payments have exceeded Rs. 50,000/- in the assessment year have been placed on record. It does not render any reasoning to unsettle the finding of the original authority, that even the agreement can also be an oral and that the transactions with the lorry owners/transporters is within the purview of the provisions of the Act as it amounts to carriage of goods other than the railways. 26. The finding that the appeal requires to be allowed in view of the decision by the Co-ordinate Bench and that of the Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. United Rice Land Limited reported in (2010) 322 ITR 594 (P&H) is erroneous. Therein the finding of fact, that the amounts paid to the transporter is by way of hire charges, was rendered on the basis of evidence furnished by the alleged transporters. The assessee therein was in the manufacturer and export of rice and there was an identified route, quantity etc., in view of which certain facts could be easily identifiable. The transportation of goods was from its premises t....