TaxTMI 
TaxTMI 
2024 (5) TMI 633
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....refund of the TDS deducted by PIH u/s 194C on the payment received as freight charges but the same was not shown in the profit and loss account of the assessee. (3) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in not upholding the order u/s 201(1)/201(1A) of the Income Tax Act, 1961 ignoring the fact that the tripartite agreement between the PIH (Pepsi Co India Holding Pvt. Ltd.), the truck union and the assessee was constituted on 25.04.2016 i.e. after the completion of F.Y. 2015-16. Moreover, as per Column 1.2 of the agreement, the agreement is effective from 01.01.2016 and is therefore not applicable for first nine months of the F.Y. 2015-16. (4) The appellant craves leave to amend, add, alter or delete any of the aforesaid grounds till the disposal." 3. Briefly, the facts of the case are that a survey action under section 133A(2A) of the Act was carried out at the business premises of the assessee on 15/12/2016 and on examination of the assessee's records, it was noticed by the Survey Team that the assessee has made freight payment of Rs. 29,13,79,552/- to M/s Shree Guru Teg Bahadur Truck Operator Union Bhawanigarh for....
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....eipt in the return of income. 4. Thereafter, a show cause was issued to the assessee as to why it shouldn't be treated as assessee in default under section 201(1) r.w.s 201(1A) of the Act on account of non deduction of TDS under section 194C on freight payment of 29,13,79,552/-. 4.1 In response, the assessee submitted that it has not entered into any verbal or written contract for hiring of trucks with the Truck Operator Union and it is only acting as a transport commission agent for carriage of goods and no freight charges were paid to Truck Operator Union in pursuance of the contract for specific period, quantity or price. It was further submitted that M/s Pepsico India Holding Pvt. Ltd. paid commission to the assessee for rendering its services and the commission income has been duly reflected in the P&L Account. It was submitted that the assessee firm does not own any truck or vehicles and was merely working as a commission / liaison agent between M/s Pepsico India Holding Pvt. Ltd. who wishes to send its goods to the dealers located at different places and the Truck Operator Union who transport the goods. 4.2 It was submitted that only the payment is routed through as....
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....d between M/s Pepsico India Holding Pvt. Ltd. and Truck Operator Union and pass on this payment to the Truck Operator Union as per the tripartite agreement. 6.2 It was held by the Ld. CIT(A) that the role of the assessee company is largely as a monitoring and reporting agent and therefore the assessee company has merely acted as an agent of M/s Pepsico India Holding Pvt. Ltd. receiving commission for its services and not as a actual transporter and therefore the primary responsibility to deduct TDS for payment made to the Truck Operator Union is that of the M/s Pepsico India Holding Pvt. Ltd. and not that of the assessee company. 6.3 Further, the Ld. CIT(A) relied on the order of the Hon'ble Delhi High Court in case of CIT Vs. Hardarshan Singh (2013) 350 ITR 427 stating that the facts in the instant case are similar as in the case before the Hon'ble Delhi High Court where it was held that where the assessee acted as a mere facilitator or intermediary as per contract, there is no liability to deduct tax at source u/s 194C and therefore following the same, it was held that the assessee is not liable to deduct TDS on the payment made to Truck Operator Union and the order passed ....
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.... the payment from M/s Pepsico India Holding Pvt. Ltd and making the freight payment to Truck Operator Union and in order to formalize and articulate the same, written agreement was entered into on 25/04/2016. 8.1 It was submitted that all along the understanding has been that the Truck Operator Union will provide the requisite trucks for transport of goods belonging to M/s Pepsico India Holding Pvt. Ltd. and the assessee company will facilitate and provide the necessary coordination and the logistical support as well as raise necessary invoices and collect payment and disburse the same subsequently to the Truck Operator Union. 8.2 It was further submitted that even the AO has referred to the tripartite agreement while giving his operative findings in the assessment order and therefore there is no basis to dispute the applicability of the tripartite agreement for the financial year under consideration. 8.3 It was submitted that the assessee firm was acting as an intermediary between M/s Pepsico India Holding Pvt. Ltd. and the Truck Operator Union and for its activity, it received commission income amounting to Rs. 66,81,696/- from M/s Pepsico India Holding Pvt. Ltd. which h....
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....ent Set, Tribunal had noted and found as a matter of fact that assessee was nothing but an intermediary between exporters and airlines as it booked cargo for and on behalf of exporters and mainly facilitated contract for carrying goods-Above decision completely covered case in favour of assessee and against respondent-Tribunal had already found as a matter of fact that contract was between assessee's clients and transporters and that assessee had mainly acted as a facilitator or as an intermediary-Revenue's appeal dismissed" 8.5 It was submitted that the facts in the present case are similar to the facts contained in the aforesaid Judgement. In the present case, the Appellant Firm is acting as an intermediary between M/s. Pepsico Holdings India Pvt. Ltd. (PIH) and the Truck Union/Truck Owners which is demonstrated as under: "A. The Accounting Treatment adopted by the Appellant Firm in showing only the Commission Income from Lorry Booking Business (and not the Freight Receipts on behalf of the Transporters/Truck Union) in its Trading Account shows the intention of the Appellant Firm. B. Even the Tripartite Agreement, mentioned by the Ld. AO in the last P....
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.... G. The Minutes of the Meeting between PIH and Union with regard to enhancement of the Freight Rate, are enclosed at Pages No. 24 to 27 of the Paper Book. The above Minutes, signed by the Authorized Representatives of the PIH and the Union, clearly states that even the Freight Rates had been decided by the PIH and the Union directly. The engagement of the Appellant Firm is only for the purpose of Logistics Support to deal with the Union, for which it is paid a Commission. H. The Sample Copies of Bills raised by the Appellant Firm to M/s. Pepsico Holdings India Pvt. Ltd. are enclosed herewith at Pages No. 28 & 29 of the Paper Book. It can be seen that two types of Bills had been raised by the Appellant Firm to M/s. Pepsico Holdings India Pvt. Ltd. during the year under consideration. The first type of Bill is related to the total Freight amount to be received by the Appellant Firm on behalf of the Truck Union/Truck Owners with regard to the transportation of goods made by them. The above amount, when received, was passed on by the Appellant Firm to the Truck Union/Truck Owners. The second type of Bill is related to the Commission Amount charged by the Appellant Firm to M....
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.... revision agreement mentioned supra. 6.2 The Tripartite Agreement The agreement signed on 25th April 2016 is said to be effective from 1st January 2016. On construction of the agreement it becomes evident that vide Point page 2 (page 9 of paper book), Truck Union (Union) has represented to PIH that it is engaged in the Business of providing Trucks for transportation of goods and has offered its services to provide Trucks to PIH. PIH has vide terms Point D page 2 (page 9 of paper book) "On the representation of the Union PIH has agreed to engage it (the Truck Union) as a Truck Provider." 6.3 It also mentions as per Clause 2.1 that PIH is willing to utilize the services of the appellant " a s a service provider" on a non-exclusive basis and as per Clause 2.2 also use any other Service Provider to deal with the Truck Union, or deal with the Truck Union directly, which would be the determined by separate tripartite agreements. 6.4 As per Clause 2.3 the payments may be made through the Service Provider (the appellant) or even directly in the absence of the Service provider and the Service provider is required to intimate a confirmation to PIH....
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....a Commission as per the agreement and not the actual transporter. That the appellant raises two separate types of Invoices one for the Commission payable contractually to the appellant along with Service Tax thereon and the other the showing the total freight chargeable less shortages and damages is a matter of record. That the amount of Total Freight doses not enter the books of the appellant's as a receipt/ expense and is transferred directly to the Truck Union is a matter of record and not in dispute. That the appellant owns no trucks is also a matter of record and not in dispute. The Ld. AO's finding that the appellant was in earlier years showing the receipts from PIH in its books of accounts is not of consequence as the accounting treatment is as per the Tripartite agreement signed in Aril 2016 that is during the relevant FY of the impugned order. 6.9 It is my considered view that there is considerable merit in the appellant's submission that the primary liability to deduct tax at source for the payments made to the Truck Union is that of PIH. In fact Clause 5.2 of the Tripartite agreement clearly states that payments will be released by PIH after making ....
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....ade or credit is being given to an individual or a Hindu undivided family; (ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family Explanation.-For the purposes of this section,- (i) ....... (ii)....... (iii)....... (iv) "work" shall include- (a) ......... (b) (c) carriage of goods or passengers by any mode of transport other than by railways; (d) ........ (e) ......... 10. The aforesaid provisions have to be applied and appreciated in the context of the contractual understanding between the parties and in this regard, we refer to the tripartite agreement executed on 25/04/2016 between M/s Pepsico India Holding Pvt. Ltd., the Truck Operator Union and the assessee company wherein the scope of services are contained in Clause 2 of the said agreement and the contents thereof read as under: 11. Further, the Truck Operator Union's covenant are contained in Clause 3, matter relating to determination of freight rates and transit time are contained in Clause 5 and M/s Pepsico India Holding Pvt. Ltd.'s co....
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....ee was liable to deduct tax at source under section 194C on the payments made to the airlines. On appeal, the assessee contended that its job was mainly to transport goods belonging to exporters and it received a commission from the airlines on the cargo it booked on behalf of the exporters, thus, it was not the 'person responsible' for making payments in terms of section 194C. The Commissioner (Appeals) accepted the assessee's submissions. The Revenue appeal was dismissed by the Tribunal holding that the assessee was an intermediary between the exporters and the Airlines, it booked cargo on behalf of the exporters and mainly facilitated the contract for carrying goods and the principle contract was between the exporter and the Airlines. On further appeal, the Hon'ble High Court held that the Tribunal has rightly decided the nature of the contract between the parties concerned and it has been found as a matter of fact that the contract is actually between the exporters and the Airlines and the assessee is only an intermediary therefore it is not a person responsible for deduction of TDS in terms of Section 194C of the Act. In the instant case as well, the assessee acted....
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....essee in its favour. In Cargo Linkers (supra), the assessee was a partnership firm carrying on the business of clearing and forwarding agents and booking cargo for the transportation abroad by various airlines operating in India. The assessee collected freight charges from the exporters who intended to send the goods through a particular airline and paid the amount to the airline or its general sales agents and for the services rendered, the assessee charged commission from the airlines. According to the Assessing Officer, in that case, the assessee was liable to deduct tax at source on the payments made to the airlines. As can be noticed, the factual position is somewhat similar to the facts of the present case. Here also, the assessee collects freight charges from the clients who intended to transport their goods through separate transporters. The entire amount collected from the clients is paid to the transporters after deducting commission from the said amount. 8. In Cargo Linkers (supra), it was contended on behalf of the assessee that the assessee was not the 'person responsible' for making payment in terms of section 194C of the said Act. In that case, the Tribunal ....
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....from M/s Pepsico India Holding Pvt. Ltd to the Truck Operator Union. In view of the same, we confirm the findings of the ld CIT(A) where he has set-aside the order so passed by the AO. The order of the ld CIT(A) is hereby affirmed and the appeal of the Revenue is dismissed. 15. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 01/01/2024 ============= Document 1 2.1. 2.2. 2.3. 2.4. That the Union is willing to offer its Trucks and services for use by PIH and PIH is willing to utilize the services of the Service Provider (subject to terms and conditions of a separate Transport Agreement between Service Provider and PIH) for supplying goods ("Goods") to various destinations across the country ("Destinations) on a non-exclusive basis. The list of Destinations to which the Goods are normally dispatched along with freight rates is included in Annexure I to this Agreement. Any new Destination may be added to the Annexure I, and the rates for any new location may be finalized by the two parties by mutual agreement, considering the rates and dynamics of similar destinations. Notwithstanding anythin....
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....day of delay in delivery to be deducted from the invoices raised by Service Provider on behalf of the Union. However, the detention charges @ Rs 1500 per day shall be paid only if the Truck is not unloaded by the authorized person/s at the Destination. Detention charges shall be calculated in the following manner:& Document 2 2.7. 2.8. 2.9. 2.10. 2.11. 2.12. Any truck reports to Destination till 1.00pm, will be unloaded on the same day. truck unloads on the next date, one day detention will be paid by PIH. b. Truck reports to location post 1.00pm, can be unloaded till 5.00pm on the next da NO detention will be paid by PIH C. if there is holiday in the plant (e.g. Sunday, Holi, Dusshera etc.) on the date of th receipt of truck, than no detention charges will be paid. It is agreed between the Parties that in case a Truck is delayed beyond two days a against the normal mentioned time in Annexure I, PIH will, at its discretion, debarre the concerned truck for a period of six months and info m Union in writing. Union cha ensure that the defaulting truck will not be sent to PIH for a period of six months an PIH securi....
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....olved. As an example truck Document 3 2.13. 2.14. 2.15. 2.16. 2.17. 2.18 2.19 2.20 2.21 2.22. 2.23. 2.24. takes material for Madurai and Bangalore, the payment equivalent to full freight of Madurai and 25% freight of Bangalore will be made. PIH shall engage Shipping containers from any transporter from open market as per ts special business requirements for exports. In this case PIH shall inform the Union on the receipt of the Containers, but shall not pay anything to the Union. Union and Service Provider shall ensure that the General Cicaning standards of eli vehicles should be maintained. All the platforms should be properly cleaned before loading. Parties agree that in case of damage to Goods while in transit, where insurance claim is not possible, PIH will debit the equaling amount to the Service Provider to recover the damage cost at the invoice value. The Union and Service Provider shall ensure that the route followed by the Truckers should be the highway routes and not through shorter,'village routes. The truckers should go directly to all bottling location after loading in the plant and shouldn't m....
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....ith and that PIH is not exposed to any kind of hardship, loss, damage whatsoever on account of any failure to do so. In case PIH s so exposed, Union shall indemnify PIH against all such losses, claims, damage, fines, penalties, legal expenses and all direct and indirect expenses or account of such failure. The Union shall further ensure to take third party insurance for all Vehicles that he may provide to PIH for the purpose of this Agreement. The Union should provide Vehicles in good condition and in case of Vehicle failure breakdown; the Union must immediately intimate PIH and provide substitute Vehicle(s) within 48 hours. Such substitute Vehicle(s) will be provided at no extra cost. The Union shall provide only those Vehicles which have clean flat floor and sidewalls. It dust, soot, marble chips, coal etc. is found inside the Vehicle, the Union will arrange to clean the Vehicle and the Vehicle will be construed as having not come to the loading point at the Plant till it is so cleaned. The Union shall ensure that all the Trucks provided by him are covered with cotton reinforced Tarpaulin sheet, irrespective of monsoon months. For any Tru....