TaxTMI 
TaxTMI 
TaxTMI 
2011 (8) TMI 1299
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....mount (Rs.) Alok Jaiswal 1,07,305/- APCON 8,36,560/- SBP Associates 9,07,180/- SR Enterprise 6,58,680/- Ajay Dutta 1,30,693/- BMJ Enterprise 2,65,000/- Bapi Mondal 99,910/- Assessee contended before Assessing Officer that payments made to abovenamed parties are rent for use of Dozers, Excavators, earth moving machineries, etc. for carrying out Civil Works contract awarded by HIDCO and Bridge & Roof. Assessee enclosed copy of works contract in his reply to Assessing Officer. It was contended that the provision of section 194-I relating to deduction of TDS on rent paid for use of machineries or plants or equipments came into force w.e.f. 01.06.2007. Payment of rent for use of any machinery or plant or equipment is covered under section 194-I and not under section 194C of the Act. Therefore, assessee was not required to deduct any TDS on the said sum of ₹ 30,05,398/- paid/ payable to abovenamed seven parties. Assessee also enclosed xerox copies of some of the bills relating to such type of expenditures in support of his submission. It is observed that assessee also stated that all other bills in original of the seven parties are produced for verification. However,....
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....hat equipments had to be necessarily operated by the owner of the respective machineries and that itself could not be a ground to state that it was a sub-contract under section 194C(2) inasmuch as the engagement of the service of the skilled operator for operating those machines would have been purely an incidental one. It was contended that payments constituted rent for hiring of machinery and skilled labour within the meaning of section 194-I of the Income Tax Act. Since provisions for deducting TDS on hiring of machinery were introduced in section 194-I of the Act w.e.f. 01.06.2007, assessee was not liable to deduct tax on such payments. It was contended that hiring charges aggregating ₹ 30,05,398/- were incurred by assessee prior to 10.09.2004, the date when the assent of Hon'ble President of India was given on Finance (No. 2) Act, 2004 w.e.f. 01.04.2005 inserting Section 40(a)(ia) of the Act. It was contended that even otherwise any expenditure which accrued prior to 10.09.2004 could not be disallowed on the ground that no TDS was deducted. In support of his submission, ld. AR relied on the decision of ITAT, Mumbai Bench in the case of Golden Stables Lifestyle Center Pvt....
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....d brought by the Department, we find substance in the submission of ld. AR that assessee made the payments aggregating ₹ 30,05,398/- to abovenamed seven parties as rent for use of Dozers, Excavators, earth moving machineries, etc. for the purpose of executing the contracts awarded to it by WBHIDCO and Bridge & Roof. Hence, we agree with ld. AR that provision of section 194C of the Act in respect of above payments is not attracted. Now the question comes if the above amount paid is rent, whether assessee was required to deduct TDS in the assessment year under consideration or not. There is no dispute to the fact that in the assessment year under consideration, assessee was not required to deduct TDS on payment of rent as TDS @ 2% from rent on plant & machinery equipments is required to be deducted w.e.f. 01.06.2007 on account of Amendment made by the Finance (No. 2) Act, 2007. Hence, in the assessment year under consideration, assessee was not required to deduct TDS on rent payable/ paid towards machinery/ plant/ equipment hired in the assessment year under consideration. In view of above, we hold that assessee was not liable to deduct TDS under Chapter-XVII of the Act and acc....
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.... are contractual payments and accordingly, action of Assessing Officer to disallow of ₹ 60,30,480/- made under section 40(a)(ia) of the Act was upheld. Hence, assessee is in further appeal before the Tribunal. 12. At the time of hearing, ld. AR submitted that assessee was awarded an order from Bridge & Roof Co. (India) Ltd. for supply of well graded quarry crushed stone etc. (known as Stone Chips in market) at Paradip Project Site, Orissa. Ld. AR referred pages 188 to 191 of the paper book, which is a copy of the purchase order under consideration. Ld. AR submitted that the said purchase order states the amount divided under consideration into two parts, i.e. cost of materials and transportation charges from quarry to the Project site at Paradip including loading and unloading at both points. He submitted that assessee raised bills on Brief & Roof for supply of crushed stone for total consideration of ₹ 1,11,72,000.88 and the said amount included a sum of ₹ 60,30,480.73 on account of transportation charges as agreed in the aforesaid purchase order. He also referred page 75 of the paper book, which is a copy of Statement of Profit & Loss A/c. as on 31.03.2005. He ....
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....order 13. On the other hand, ld. DR merely relied on the order of ld. CIT(Appeals). 14. We have carefully considered the submissions of ld. representatives of the parties and the orders of authorities below. We have also perused the copies of bills placed at pages 31 to 50 of the paper book and also statement of Profit & Loss A/c. placed at page 75 of the paper book. It is a fact that in the bills placed at pages 31 to 50 of the paper book, it is only mentioned the cost of supply of material, i.e. stone chips and no separate narration is given for charging of any transportation cost of material in the bills. We observe that at page 12 of the paper book, which is a copy of ledger account, the cost of total purchases of material from the abovenamed six parties is aggregating to ₹ 1,07,92,702/- and the said amount is appearing in the Statement of Profit & Loss A/c. as on 31.03.2006 at page 75 of the paper book. However, in the said Profit & Loss A/c., aggregate amount of ₹ 1,07,92,702/- is bifurcated as transportation charges of ₹ 60,30,480/- and material charges of ₹ 47,62,222/- under the head 'purchases account'. Besides the profit stated is ₹ 3,79,29....
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....freight". Considering the above cases and the facts of the case before us and in absence of any material brought on record by the Department that assessee made payments to transporters, we are of the considered view that provisions of section 194C(2) of the Act are not applicable to the facts of the case. Accordingly, we delete the said addition of ₹ 60,30,480/- by allowing Grounds No. 3 & 4 of the appeal taken by assessee. 15. Ground No. 5 of the appeal reads as under :- "That without prejudice to Ground Nos. 1 to 4 above, the ld. Commissioner of Income-tax (Appeals) erred in not following the decision of Jaipur Bench of Income Tax Appellate Tribunal in the case of Jaipur Vidyut Vitran Nigam Ltd. - vs.- DCIT (123 TTJ 888) while confirming the disallowances under section. 40(a)(ia) on the amounts of expenditure which did not remain outstanding as on the last date of the previous year". 16. At the time of hearing, ld. AR submitted that the above ground is not pressed for. In view of the above, Ground No. 5 of the appeal is rejected. 17. In Ground No. 6 of the appeal, assessee has disputed the order of ld. CIT(Appeals) in confirming the disallowance of ₹ 75,000/- ....