Income Tax Appellate Tribunal - Ahmedabad
Anupam Industries Ltd.,, Baroda vs Department Of Income Tax on 10 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "C"
Before SHRI MUKUL SHRAW AT,JM & SHRI A N P AHUJ A, AM
ITA nos.2926/Ahd/2009
(Assessment Years:-2008-09)
Assistant Commissioner of V/s M/s Anupam Industries Ltd.,
Income-tax, TDS Circle, 138,GIDC Vithal Udhyog
Room no. 5,Ground Floor, Nagar,District Anand
Aayakar Bhavan, Baroda
TAN: AABCA9602Q
[Appellant] [Respondent]
Revenue by :- Shri G.S Suryavanshi, DR
Assessee by:- Shri M.K.Patel, AR
Date of Hearing:- 10-08-2011
Date of Pronouncement:- 10-08-2011
O R D E R
A N Pahuja: This appeal filed on 27.10.2009 by the Revenue against an order dated 18-08-2009 of the ld. CIT(Appeals)-IV, Baroda for the Assessment Year 2008-09 , raises the following grounds:-
"[1] The Ld. CIT(A) has erred in law as well as facts of the case in deleting the order passed u/s 201(1) & 201(1A) r.w.s. 192 & 194 of the I T Act of Rs.29,61,255/- for AY 2008-09 by the AO by treating the hiring of contract for transportation/carriage of goods to be deducted u/s 194C of IT Act as against u/s 194I of the IT Act being trucks/vehicles given on hire by the AO.
[2] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.
[3] The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.
[4] It is, therefore, prayed that the order of the Ld. CIT(A) may be cancelled and that of the Assessing Officer may be restored to the above effect."
2. At the outset, we may point out that the issues of levy of interest u/s 201(1A) of the Income-tax Act, 1961 [hereinafter referred to as 2 ITA nos.2926/Ahd/2009 the "Act"] and applicability of provisions of sec. 192 of the Act, referred to in ground no.1 of the appeal, do not emerge from the findings of the ld. CIT(A) nor have been agitated before us. The only issue before us is as to whether the case of the assessee falls u/s 194C or u/s 194I of the Act. W ith these observations, adverting now to ground no.1 in the appeal, facts, in brief, as per relevant orders are that a survey was undertaken in the premises of the assessee on 26-08-2008 when it was noticed that the payments made to transportation contractors fell within the ambit of provisions of sec. 194I of the Income-tax Act, 1961 [hereinafter referred to as the "Act"] and not u/s 194C of the Act. The ACIT(TDS)[AO in short] was of the opinion that since in respect of vehicles/trucks hired by the assessee company through the fixed rate contract/agreement for transferring the goods/material from one place to another within a specific time period and the assessee having paid fixed hire charges or freight charges, it was not necessary to take possession of vehicle or machinery by the company, entering in to contract and after 13.7.2006 all the machinery and plant including transportation of vehicle on hire were covered u/s 194I and not u/s 194C of the Act. Since the assessee deducted tax at source u/s 194C of the Act while the ACIT(TDS)[AO in short] was of the opinion that provisions of sec. 194I were applicable, the AO worked out difference of tax to the extent of Rs. 29,61,255/- for the period 1.4.2007 to 31.3.2008 on penultimate page of his order dated 5.11.2008.
3 On appeal, the learned CIT(A) allowed the claim of the assessee in the following terms:-
"5. I have carefully considered the matter. Section 194C applies for the purpose of deduction of tax at source from payments for carrying out any'work' in pursuance of a contract. Explanation III below section 194C(2) defines expression "work", so as to include carriage of goods or passengers by any mode of transport other than by Railways. On the other hand, section 194I applies for the purpose of deduction of tax at source from the income by way of rent. Explanation below section 194I defines "rent"to mean payments for use of land, building, machinery, plant, 3 ITA nos.2926/Ahd/2009 equipment, furniture or fittings. Appellant has entered in to contracts with transporters for carriage of goods and not for hiring trucks. Even though the 'work' was done by the transporter using trucks, the payment by appellant was not for hiring the trucks but was for carriage of goods. As seen from the copies of sample Goods Consignment Notes filed by appellant, charges include hamali, i.e. loading/unloading charges, making it amply clear that the contract was for carriage of goods. Assessing officer has highlighted the fact that charges were fixed. However, this does not change the basic characteristic of contracts, which were for carriage of goods and not for hiring of trucks. One can always negotiate fixed charge for transporting goods from one place to other .It is also relevant to note that the trucks were never under appellant's possession. Moreover, description of goods transported was recorded in the invoices/documents of transporter. If the transporter had hired out the trucks to the appellant, there was no need to record description of goods transported/consigned by the appellant, in the bills etc. The contracts entered in to by the appellant were, therefore clearly in the nature of works contracts for carriage of goods under Explanation III, clause (c) below section 194C(2) and the payments in question were for the work of transportation of goods instead of being for hiring any plant or machinery or equipment. The CBDT circulars referred to by the appellant, specially Circular no. 6/2006 dated 23.6.2006 also indicate that tax is to be deducted u/s 194C from payments to transporters for carriage of goods. Further , as per CBDT Circular No. 720 dated 30.8.1995,' Each section regarding TDS under Chapter XVII deals with a particular kind of payment to the exclusion of all other sections in the Chapter. Thus, payment of any sum shall be liable for deduction of tax under one section. Appellant's case is squarely covered under section 194C as per clause (c) of Explanation III of the said section. In view of this, it is held that appellant rightly applied section 194C and deducted tax at source provided therein instead of section 194I.Action of ITO,TDS in working out difference of Rs.29,61,255/- as tax payable u/s 201(1) by applying section 194I is cancelled."
4 The Revenue is now in appeal before us against the aforesaid findings of the learned CIT(A). At the outset, both the parties agreed before us that the issue is squarely covered by the decision of the Hon'ble jurisdictional High Court in CIT(TDS) vs. Swayam Shipping Services (P) Ltd.,11 taxmann.com 137(Guj).Inter alia, the ld. AR referred to decisions in Mukesh Travels Co. vs. ITO,10 taxmann.com 143(Ahd.) and Ahmedabad Urban Development Authority vs. ACIT,TDS Circle,11 taxmann.com325(Ahd.).
5. W e have heard both the parties and gone through the facts of the case as also the decisions relied upon. Indisputably and as 4 ITA nos.2926/Ahd/2009 observed by the ld. CIT(A), the assessee entered in to contracts with transporters for carriage of goods and not for hiring trucks. After considering the various documents ,including sample Goods Consignment Notes and referring to clause (c) of Explanation III, below section 194C and the CBDT Circular no. 6/2006 dated 23.6.2006 as also the Circular no. 720 dated 30.8.1995 , the ld. CIT(A) concluded that the contracts entered in to by the assessee were in the nature of works contracts for carriage of goods and the case of the assessee was covered u/s 194C and not u/s 194I of the Act. W e find that while adjudicating a similar issue, Hon'ble jurisdictional High Court in their aforesaid decision in Swayam Shipping Services (P) Ltd.(supra) concluded as under:
" 6. The facts are not in dispute. The assessee has carried out freight and transportation works contracts with three transporters who transported the goods belonging to the assessee and its clients to various places through their vehicles. The assessee had not taken the trailers/cranes on hire or rent from the said parties. The assessee has given sub-contracts to the said parties for the transportation of goods and not for renting out of machineries and equipments. Section 194-I of the Act makes provision for deduction of tax at source where any person who is responsible for paying to a resident any income by way of rent where as section 194C of the Act makes provision for deduction of tax at source where any person is responsible for paying any sum to any resident for carrying out any work including supply of labour for carrying out any work in pursuance of a contract between the contractor and a specified person. In the facts of the present case, there is nothing to indicate that the assessee has taken trailers/cranes on rent so as to attract the provisions of section 194-I of the Act. The assessee had given sub-contracts for transportation of goods. In the circumstances, the said transactions would fall within the purview of section 194C of the Act as the assessee was responsible for paying the amount in question for carrying out work in pursuance of contracts between the assessee and the transporters and as such was required to deduct tax at source at the rate prescribed under the said section. The Commissioner (Appeals) was, therefore, justified in holding that the assessee was not an assessee in default within the meaning of the said expression as contemplated under section 201 of the Act and consequently, the Tribunal was justified in confirming the order passed by the Commissioner (Appeals).
7. In view of the above discussion, there being no legal infirmity in the impugned order of the Tribunal the same does not give rise to any question of law, much less, a substantial question of law so as
5 ITA nos.2926/Ahd/2009 to warrant interference by this Court. The appeal is, accordingly, dismissed."
5.1 Even a co-ordinate Bench in their decision dated 25.2.2011 in Mukesh Travels Co.(supra) held that provision of services of carrying of passengers by vehicles is deemed as work within the meaning of provisions of section 194C of the Act. Similarly, in Ahmedabad Urban Development Authority (supra), the ITAT concluded that vehicle hire charges paid for hiring cars on fixed rent, fell within the scope of provisions of sec. 194C and not u/s 194I of the Act.
5.2 In the light of view taken in the aforcited decision by the Hon'ble jurisdictional High Court and the Revenue having not placed any material before us so as to enable us to take a different view in the matter, nor cited any contrary decision, we have no alternative but to uphold the findings of the learned CIT(A) that the assessee having entered in to contracts with transporters for carriage of goods, the case of the assessee was covered u/s 194C and not u/s 194I of the Act. In view thereof, ground no.1 in the appeal is dismissed.
6 Ground nos. 2 & 4 in the appeal, being general in nature nor any submissions having been made before us on these grounds, do not require any separate adjudication while no additional ground having been raised before us in terms of residuary ground no.3 in the appeal, accordingly, all these grounds are dismissed.
7 In the result, appeal is dismissed.
Order pronounced in the court today on 10 -08-2011 Sd/- Sd/-
(MUKUL SHRAW AT) (A N P AHUJ A) JUDICI AL MEMBER ACCOUNTANT MEMBER Dated : 10-08-2011 6 ITA nos.2926/Ahd/2009 Copy of the order forwarded to:
1. M/s Anupam Industries Ltd., 138,GIDC Vithal Udhyog Nagar,District Anand
2. Assistant Commissioner of Income-tax Officer, TDS Circle,Room no. 5,Ground Floor, Aayakar Bhavan, Baroda
3. CIT concerned
4. CIT(A)-IV,Baroda
5. DR, ITAT, Ahmedabad Bench-C, Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABAD