Income Tax Appellate Tribunal - Ahmedabad
Roshanlal D.Bhalothia, Baroda vs Assessee on 18 February, 2011
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IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "C" AHMEDABAD
Before S/Shri Bhavnesh Saini, JM and D.C.Agrawal, AM
ITA No.809/Ahd/2009
Asst. Year 2005-06
Roshanlal D. Bhalothia, Vs. Income-tax Officer, Ward
Prop. Indian Road Carrier, 2(2), Baroda.
Plot No.493, GIDC,
Makarpura, Baroda.
(Appellant) (Respondent)
..
Appellant by :- Shri S. N. L. Agrawal, AR
Respondent by:- Shri Mudit Nagpal, Sr.DR
ORDER
Per D.C. Agrawal, Accountant Member.
This is an appeal filed by the assessee raising following grounds :-
Under the facts and circumstances of the case, the ld. CIT(A) has erred both in law and facts, (1) confirming the addition of Rs.23,66,150/- on account of appellant's failure to deduct tax on transport payments u/s 40(a)(ia) (2) Ld. CIT(A) failed to appreciate that the provisions of section 194C (2) are not applicable to the appellant.
2. The only issue involved in this appeal is whether the provisions of section 194C(2) of the I.T. Act, 1961 would be applicable to the facts of the case and thereby assessee would be liable to deduct tax on the ITA No.809/Ahd/2009 Asst. Year 2005-06 payments made by it and for non-deduction of such tax the payment would be liable for addition under section 40(a)(ia).
3. The facts of the case are that the assessee is an individual engaged in the business of transportation on contract basis. During the assessment year assessee claimed total amount of Rs.97,70,910/- as payment of hire charges to the truck owners from whom assessee had taken trucks on hire and used them for plying the goods of the clients from whom he has taken contract. The AO while examining the accounts found that assessee was required to deduct tax on a sum of Rs.23,66,150/- u/s 194C paid by it to different truck owners as under :-
Sl.No. Name of the party Amount (Rs.)
1 AGRL Andhra Gujarat Road Lines 256795
2 Aman Transport 294465
3 Calcutta Cargo 119750
4 Chandan Cargo Movers 114060
5 Delhi-Baroda Roadlines 276120
6 Padda National Roadlines 116480
7 Satguru Roadlines 596955
8 Shivam Roadlines 130135
9 Super Haryana Transport 51460
10 Shri Shyam Trailor 125520
11 Shree Shyam Tempo Services 77300
12 King Road Carriers 86960
13 Punjab National Roadways 57050
14 Tata Trailor Service 63100
Total 23,66,150
Since tax was not deducted, he considered it as violation of section 40(a)(ia) and added the same to the total income.
4. The ld. CIT(A) confirmed the addition by holding that provisions of section 194C are clearly applicable as the gross receipts/turnover 2 ITA No.809/Ahd/2009 Asst. Year 2005-06 exceeds monetary limit prescribed under section 44AB and that assessee is making payments to sub-contractors from whom it has taken contracts on hire.
5. Before us, the ld. AR for the assessee submitted that assessee has contracted with his clients for transporting their goods and for doing this work it has taken the trucks on hire but has not awarded any sub-contract to the truck owners. No work as such has been sub-contracted to the truck owners. Further the trucks are hired as and when needed. The assessee has not shared any risk with the truck owners who had only provided the trucks. The hire charges paid are in the nature of rent. As the assessee has not awarded any work to the truck owners, assessee is not liable to deduct tax on the payments made to them. Further according to the ld. AR there was amendment in section 194 (5) where limit for individual payment was Rs.20,000/- and was increased to Rs.30,000/- by Finance Act 2010 w.e.f. 1.7.2010 and limit for aggregate payment in a Financial Year was Rs.50,000/- till amendment was made by Finance Act 2010 w.e.f. 1.7.2010 making the limit to Rs.75,000/-. According to the ld. AR the AO has not disallowed any sum out of payments made to others on the ground that payment in aggregate did not exceed Rs.50,000/-. Earlier according to him there was no limit for aggregate amount. The limit was only of Rs.20,000/- till FY 2003-04. The ld. AR has relied on several judgments as under :-
(1) Kavita Chug (Mrs.) vs. ITO (2010) 45 DTR 146 (Kol) (Trib).
(2) Mythri Transport Corporation vs. ACIT, Cir-1(1), Visakhapatnam (2010 124 ITD 40.
(3) ITO vs. Indian Road Lines (2010 45 DTR 49 (Asr) (Trib).3 ITA No.809/Ahd/2009
Asst. Year 2005-06 (4) DCIT vs. Satish Aggarwal & Co. (2010) 122 ITR 35.
(5) M/s Siddhi Vinayak vs. ITO in ITA No.2233/Ahd/2009 ITAT 'A'Bench Ahmedabad order dated 18.02.2011.
(6) City Transport Corpn. Vs. ITO (TDS)-2(5), Mumbai (2007) 13 SOT 479(Mum).
(7) ITAT Ahmedabad 'D' Bench M/s Pramukh Jute Traders vs. ITO Ward-2 Anand, ITA No.3422/Ahd/2008, Asst. Year 2005- 06 order dated 18.09.2009 (para 3).
(8) ITAT Ahmedabad 'B' Bench M/s Pragati Trading Co. vs. ITO Ward-2, Anand, ITA No.3478/Ahd/2008 Asst. Year 2005-06 order dated 26.11.2010 (para 4).
6. The ld. DR on the other hand submitted that it has not been clarified by the assessee as to who has drawn the way-bills, what is the agreement between the assessee and the truck owners and whether payments were made to truck owners for merely hiring the trucks or for carrying goods also.
7. We have considered the rival submissions and perused the material on record. In our considered view the agreement between the assessee and the truck owners has not been examined. Whether assessee has actually passed on the work to the truck owners or he himself executed the work, is not clear. It is not clear who has drawn way-bills and on whose way-bills, goods transported are insured. Further, whether hire charges are paid on the basis of distance covered or on the basis of goods transported. In other words it has to be seen whether any work taken by the assessee from his clients was transferred to the truck owners or the assessee had taken the entire responsibility of transporting the goods of the clients. If there was any loss in between, who has borne the loss, whether the assessee or the truck owners. If no work was entrusted to the 4 ITA No.809/Ahd/2009 Asst. Year 2005-06 truck owners then assessee is certainly not liable for deduction of tax but if work taken from the clients is transferred to the truck owners along with risk and liabilities then it would be a sub contract. The issue needs to be examined afresh and clear finding is to be given as to the nature of agreement between the assessee and truck owners. Accordingly for re- examination of the issue we restore the matter to the file of AO. As a result, appeal is allowed but for statistical purposes.
8. In the result, the appeal filed by the assessee is allowed but for statistical purposes.
Order was pronounced in open Court on 18.3.11.
Sd/- Sd/-
(Bhavnesh Saini) (D.C. Agrawal)
Judicial Member Accountant Member
Ahmedabad,
Dated : 18.3.11.
Mahata/-
Copy of the Order forwarded to:-
1. The Assessee.
2. The Revenue.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
1.Date of dictation 14/3/2011
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ITA No.809/Ahd/2009
Asst. Year 2005-06
2.Date on which the typed draft is placed before the Dictating 15/3/ 2011 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S.............
4.Date on which the fair order is placed before the Dictating Member for pronouncement..............
5.Date on which the fair order comes back to the Sr.P.S./P.S...............
6.Date on which the file goes to the Bench Clerk...........
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................
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