2018 (12) TMI 1514

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....unds of appeal No.1: Assessee is into transport and handling services. It has paid lorry hire charges to several parties but tax was not deducted at sources. Finance Act, 2009, w.e.f. 01.10.2009, clarified that assessee need not deduct tax at source on payments to transporters, if payees had furnished PAN.As assessee had collected PAN of the payees, AO held that it was not liable to deduct TDS on payment made after 01.10.2009. However, on payments made during 01.04.2009 and 30.09.2009, assessee was required to deduct tax at source. As assessee has failed to deduct TDS on payments to four transporters, AO has invoked the provision of section 40(a)(ia). These four transporters are: Sl. No. Name Quantum of freight charges paid without TDS (in Rs) 1 Jai Gopal Pariwaahan 5,16,67,761.00 2 Cargo Liners Pvt Ltd 2,99,34,500.00 3 Jagannath Enterprise 2,30,45,272.00 4 R.M. logistics  1,21,98,685.00 Invoking the provision of section 40(a)(ia) AO has disallowed Rs. 11,68,46,218/-. In appeal proceedings, AR has submitted Form 26A (under rule 31ACB) from Chartered Accountant and has claimed that all the four payees have included ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....(1) are not fully satisfied. Hence, disallowance made u/s.40(a)(ia) by AO ae justified in respect of payments made to these 3 parties. Now coming to the 4th party, it was noticed that R.M. Logistics is a proprietory concern of Saswata Nayak. In Form 26A, it was mentioned that this party had filed return of income on 31.03.2011. Appellant had also submitted a copy of the acknowledgement of the return filed. However, on verification, AO informed that no return was filed. Assessing Officer's report was forwarded to assessee. In response AR appeared on 20.02.2017 and explained that return was filed online but verification (ITRV) was not forwarded. Now this party has forwarded the ITRV with a request to condone the delay in sending ITRV. In my opinion, online return filing is complete only when verification regarding filing of online return is sent to CPC, in the Form of ITRV. Non-receipt of ITRV makes the online return non-est. Thus R.M. Logistics (Prop: Saswata Nayak), in effect, has not filed any return and situation in his case is also like the other 3 payees. Hence, payments made to this party are also rightly disallowed u/s.40(a)(a) and the same is upheld. Wi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....age, loading & unloading' charges. However, on payments made to following 4 parties (same as those mentioned in para 3.1), tax was not deducted at source, as per the provision of section 194C: Sl. No. Name Quantum of freight charges paid without TDS (in Rs) 1 Jai Gopal Pariwaahan 3,30,387.00 2 Cargo Liners Pvt Ltd 5,16,102.00 3 Jagannath Enterprise 1,28,287.00 4 R.M. logistics 1,12,609.00   Total 10,87,385.00 Hence, invoking the provisions of section 40(a)(ia), AO has disallowed Rs. 10,87,385/-. Issue involved here is same as in para 3.1. Hence, for reasons mentioned therein, disallowance of Rs. 10,87,385/- are confirmed." 3. We have given our thoughtful consideration to rival contentions. Case file perused. There is no dispute about the assessee being engaged in transport and handling services. It admittedly made the impugned freight and loading / unloading charges to four parties M/sJai Gopal Pariwahan, Cargo Liners Pvt. Ltd.,, Jagannath Enterprise and R.M. Logistics. This what has made both the lower authorities to invoke sec. 40(a)(ia) to disallow the twin payments on account of nondeduction of TDS. Learned ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t for carrying out any work as contemplated in section 194C. The term "hire" is not defined in the Income- tax Act. So, we have to take the normal meaning of the word "hire". Normal hire is a contract by which one gives to another temporary possession and use of the property other than money for payment of compensation and the latter agrees to return the property after the expiry of the agreed period. Therefore, in our view, when the assessee entered into a contract for the purpose of taking temporary possession of ships in the shipping company it could not be construed as if the assessee entered into any contract for carrying out any work, and when the contract is not for carrying out any work, the Revenue cannot insist the assessee ought to have deducted tax at source under section 194C of the Act. Further, the other argument of counsel was, section 194C was amended with effect from July 1, 1995, incorporating the Explanation and the said Explanation clarifies the existing provision of section 194C of the Act. Hence, it would be applicable retrospectively. We are concerned with the assessment year 1994-95. In a recent judgment, the Supreme Court in the case of Sedco Forex Interna....