TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 254
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....2. The CIT(A) erred in law and on facts in deciding the appeal of the assessee 'exparte'. ----- The appellant craves leave to add, amend or alter the aforesaid grounds of appeal at the time of hearing, if the need arise. ----- Total tax effect (see note below) Rs.4,98,790/- 3. The brief facts of the case are that the assessee is engaged in the business of transportation. The assessee paid a sum of Rs. 2,81,54,400/- as freight charges and assessee has not deducted TDS on these payments and therefore an addition of Rs 2,81,54,400/- was made to the total income for non-deduction of TDS on the freight charges u/s. 40(a)(ia) of the Act in the assessment order u/s. 143(3) of the Act dated 05-12-2011. In the TDS proceedings, u/s. 201/201(1A) of the Act, the TDS officer held that the assessee to be an assessee in default and tax liability u/s. 201(1) of Rs. 2,89,990/- was determined along with interest u/s. 201(1A) amounting to Rs. 2,08,800/-. 4. In appeal before ld. CIT(A), despite several opportunities, none appeared on behalf of the assessee. Accordingly, the ld. CIT(A) dismissed the assessee's appeal with the following observations:- "4. The app....
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....n Ground No.1 of this appeal is squarely covered in favour of the assessee by the order of the ITAT passed in the case of father of assessee Shri Dilip C. Palany Vs. ITO in ITA Nos. 1393 to 1399/Ahd/2014 rendered vide its common order dated 06.07.2017 passed for AYs 2005-06, 2007-08 to 2009-10, wherein a similar issue was decided by the Tribunal vide paragraph Nos.6 & 7 as under:- "6. We have heard Shri Shah representing assessee and Shri Madhushudhan appearing as Senior Departmental Representative reiterating their respective stands against and in support of the impugned disallowance. It is an undisputed fact that the assessee has not deducted TDS upon the freight payments in question. Both the lower authorities invoke Section 194C of the Act in treating the said payments to be contractual in nature whose non deduction of TDS invites Section 40(a)(ia) disallowance. We proceed to examine the basic facts in this backdrop. The assessee admittedly has collected the impugned payments from its payers thereby undertaking all the risk involved in the transportation of the goods in question. He has thereafter engaged his payees' vehicles numbering more than 3500 to perform the said tran....
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....ing out any work in pursuance of a contract" is not fulfilled then the provisions of this section will not be applicable at all. Here in this case, the contract for carrying out the work was between the BPCL and the appellant. The appellant alone had risk and responsibility for carrying out the contract work as per the agreement entered into by it with its principal i.e. BPCL. There is no material on record to suggest that there was any contract or sub-contract whether written or oral with the outside tank owners and the appellant, whereby the risk and responsibility which is associated with a contract has also been passed on to these outside parties. Once the CIT(Appeals) has accepted the fact that the outside tank owners do not had any responsibility or liability towards the principal, then it cannot be held that these outside parties were privity to the contract between the appellant and its principal. Thus the payment made to the outside parties do not come or fall within the purview of section 194C, as the "carrying out any work" indicates doing something to conduct the work in pursuance of contract and here in this case, it was solely between appellant and its principal. 8....
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....ion 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 International Drill Inc. v. CIT [2005] 279 ITR 310, conside....