2011 (4) TMI 1340

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....ICT). A survey action u/s 133A of the I T Act was carried out at the office premises of the assessee on 31.1.2007. During the course of survey action, statement of the Director Shri Laxmichand Dharsi Mota was recorded on oath. 2.1 During the course of assessment proceedings, the Assessing Officer noted that the company has paid certain amounts to M/s Laxmichand Dharsi during the financial year 2006-07 relating to Assessment Year 2007-08 and tax has been deducted thereon at source @ 1.12% being the payment made as subcontractor. The Assessing Officer treated this payment as hire charges and accordingly, held that the assessee was liable to deduct tax at source as per provisions of sec. 194-I of the I T Act mainly on the ground that the....

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.... notice of the CIT(A) and the bills submitted by M/s Laxmichand Dharshi were produced before the CIT(A) for perusal. It was submitted that no adverse inference can be drawn on the basis of the real nature of work carried by the party. It was submitted that the payments have been made for transportation of cargo containers and accordingly, it was submitted that tax @ 1.12% has been deducted at source out of payment made to sub contractor. The Assessing Officer is not justified in treating such payment as rent. 4 Based on the arguments advanced by the assessee, the CIT(A), relying on a couple of decisions, held that provisions of law contained in sec. 194C are applicable to payments debited under the head transport charges on account of tr....

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....he case of Hindustan Coco Cola Beverages P Ltd vs CIT reported in 293 ITR 226(SC) and CBDT circular no.275/201/95-IT(B) dated 29.1.1995. 5 Aggrieved with such order of the CIT(A), the revenue is in appeal here before us with the following grounds: i) On the facts and in the circumstances of the case and in law the ld CIT(A) erred in not appreciating the facts that there was neither any written agreement nor any written arrangement between the assessee company and M/s Laxmichand Dharshi on the basis of which the hiring charges paid can be treated as sub-contract. ii) On the facts and in the circumstances f the case and in the ld CIT(A) erred in not appreciating the facts that the relevant bills issued by M/s Laxmichand Dharshi menti....

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....hire charges paid. We find, the CIT(A) has decided the issue in favour of the assessee on two counts. Firstly, according to the CIT(A), the payments made by the assessee to M/s Laxmichand Dharshi for carrying out the work of transportation of containers fall within the meaning of sec. 194C of the I T Act. Secondly, since the deductee assessee has paid the tax due; therefore, in view of the decision of the Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages P Ltd (supra), payments cannot be recovered from the deductor. 6.1 Although the revenue has taken a ground challenging the order of the CIT(A) in holding that the payment made by the assessee to M/s Laxmichand Dharshi does not come under the provisions of sec. 194-I, we ....