Income Tax Appellate Tribunal - Delhi
Akal Purkh Ex-Servicemen Transport Co. ... vs Ito, Tds Ward 49(1) on 19 August, 2005
Equivalent citations: [2006]5SOT200(DELHI)
ORDER
P.N. Parashar, J.M. These five appeals have been filed by the same assessee against different orders of Learned Commissioner (Appeals) for financial years 1995-96 to 1999-2000. As facts and circumstances and issues pertaining to these appeals are similar, for the sake of convenience, these five appeals were heard and are being decided together.
2. Shri M.S. Sekhon, Learned Chartered Accountant appeared for the assessee whereas Shri Rananjay Singh, Senior Departmental Representative represented the revenue.
3. Before dealing with the individual appeals, we consider it proper to narrate the background and relevant facts relating to this matter which are as under :
3.1 The Ministry of Energy and Ministry of Defence formulated a scheme in 1979 to raise ex-servicemen coal transport companies. The purpose of the scheme was to have union free captive transport companies in coal subsidiaries of Coal India Limited and to provide resettlement opportunity to ex-servicemen. This scheme laid down the eligibility criteria for the companies to be sponsored to the coal subsidiaries for undertaking coal transportation work. The companies were to be formed in accordance with the instructions and procedures laid down in the scheme. The scheme also formulated draft clauses, which were to be incorporated in Articles of Association by an ex-serviceman, company.
3.2 The assessee-company, namely, Akal Purkh Ex-Servicemen Transport Company (P) Ltd. was formed and certificate of incorporation was issued to it on 23-9-1993. As per its Memorandum of Association, this company had 56 objects, which covered a very wide range of activities. The Articles of Association contained procedure, rules and regulations for carrying out the activities of the company.
3.3 The company executed a transport agreement with South Eastern Coalfields Limited (SECL), a subsidiary of Coal (India) Limited having its registered office at Bilaspur, Madhya Pradesh. This agreement was executed on 10-4-1997. The agreement was valid for a period commencing from 9-9-1994 to 8-9-1997 as provided in clause 2 of the agreement. As per clause (1) of the agreement, the Ex-Servicemen Transport Company i.e., the assessee-company was required to transport coal from quarry /faces/ bunkers/ surface stocks/ CHPs /dumps /stock yards, etc., to various Railway sides /dumps/stock yards, etc., of SECL. The quantity of coal to be transported, the rates and other conditions were also set out in this agreement. In clause 10 of general terms and conditions, the following conditions were laid down:
"10. The Ex-Servicemen Transport Company shall deploy the tipper trucks owned by them and the tipper trucks which are registered in the name of Ex-Servicemen individually, or direct dependent of Ex-Servicemen. The Ex-Servicemen Transport Company shall not deploy tipper trucks /vehicles taken on lease or on hire except from the manufacturer of the vehicle /Authorised Agent."
The rights and liabilities of the company viz., SECL were also laid down in these terms and conditions. Some of the relevant clauses of this agreement are being reproduced below:
"27. In addition to what has been stated in para above, the contract may be terminated and any other dues of this work or any other work done by the Ex-Servicemen Transport Company under -the Company may be forfeited and brought under the absolute disposal of the company if in the opinion of the company-
(a) Either the work is not progressing satisfactorily or not likely to be completed within the stipulated period.
(b) If the Ex-Servicemen Transport Company fail to company with the terms and conditions.
(c) If it is found that any irregularity has been committed.
28. On receipt of notice of termination of the contract under clause 27 above, the Ex-Servicemen Transport Company shall be entitled to payment for the work actually done less the compensation and/or penalty contemplated under clause 27 above or any other clause/clauses of the terms and conditions except in case it is found that irregularity like subletting the works by the Ex-Servicemen Transport Company has been committed where the total amount would be forfeited.
34. (a) Payment will be made by cheque (crossed account payee) only from the Area Accounts Office of the concerned area of the company after pre-audit of the bills duly accepted and certified by the dispatching colliery and receiving siding/unit and such payment shall not be made more than twice in a month
(b) Bill for the work done will be prepared by the Chief General Manager/ General Manager/ Colliery Manager concerned on fortnightly basis. Payment of all such bills will be made to the Ex-Servicemen Transport Company within two weeks of the relevant bills.
35. The Ex-Servicemen Transport Company shall not sublet the work to any other person/ agency/ transporter.
41. Non-compliance/disobedience/non-fulfilment of the provisions of the orders /guidelines of the Director General, Resettlement and the company will disqualify the Ex-Servicemen Transport to work as Ex-Servicemen Transport Company and invite cancellation of sponsorship by the DGR and render the contract "null and void."
3.4 As per its Memorandum of Articles and Association, the company entered into hire agreements with various ex-servicemen for carrying out the transportation work and paid them transportation charges. Although written agreements between the company and the persons giving vehicles on hire have not been filed, however, one such agreement is available at page 76 of the paper book, which has been executed between S. Tara Singh, son of S. Mangal Singh, attorney of Captain Mandeep Singh, D/o S. Kuldip Singh Kang (First Party) and M/s. Akal Purkh Ex-Servicemen Transport Company (P) Ltd. (Hirer). As per this agreement, the owner agreed to let on hire tripper truck and the hirer agreed to take on hire subject to the conditions given in the agreement. We consider it proper to extract some of the stipulations of this agreement which are as under :
"(e) The Hirer pays a total sum of Rs. 5,000 (Rs. Five thousand only) to the owner per month as Hire charges of the vehicle. The first payment will become due after a lapse of 30 days from the date on which the vehicle is engaged on work.
No other payment is admissible on that account. The hirer undertake to pay :-
(i) All charges of driver, helpers and other staff according to rules.
(ii) Damages, destruction or any other claim raised by third party.
(iii) all taxes, loans, fees and fines if any.
(f) The owner may take back possession of the vehicle after the completion of agreement period or claim his initial investment of Rs. 1,80,000 (Rupees One lakh eighty thousand only) after the complete payment of loan amount in lieu of the said tipper truck.
(g) The Hirer shall return to the owner the permit, registration certification and all other certificates granted by the Registering Authority on termination of this agreement if the owner exercises the option to take possession of the vehicle.
(h) The Hirer is liable to follow all rules and regulations imposed by Coal Mines, RTO and other authorities.
(i) If applicable, the owner pays the income-tax under the Income Tax Rules as applicable.
3.5 It came to the knowledge of the income-tax department that the assessee-company was paying transportation charges during financial years 1996-97 and 1997-98 to its Directors in connection with transportation done by them for the company. In view of the department, since provisions of section 194C are attracted to the said payment, the assessee was required, by letters dated 28-11-2000 and 1-12-2000, to show cause as to why no TDS was deducted by the assessee on transportation charges paid during the financial years 1994-95 to 1997-98. As the assessee failed to respond to show-cause notices of the department, a survey operation under section 133A was conducted in the case of the assessee on 10-1-2001.
3.6 During the course of survey and subsequent follow up proceedings, it was found that during the financial years 1994-95 to 1999-2000, the assessee had paid following transport charges to various persons under the expenditure head 'Tipper expenses'. The details as given in the order of the Income Tax Officer dated 31-3-2003 for financial years 1994-95 to 1997-98 are as under :
Financial Year Tipper Expenses (Rs.) 1994-95 44,62,543 1995-96 1,18,41,726 1996-97 1,33,85,082 1997-98 63,84,006 The department further found that the assessee had not deducted any TDS on above payments made during the financial years 1994-95, 199596 and 1996-97 and deducted tax under section 194C only on the payment of Rs. 6,48,300. The assessee had also filed return on Form No. 26C for financial year 1997-98.
3.7 In order to find out the details of payment on which the assessee had not deducted tax during the financial years 1994-95 to 1997-98, vide letter dated 17-3-2003, the assessee was required to explain as under :
"It has been found from the explanation filed by you in connection with above mentioned proceedings that you have not deducted any tax under the provisions of section 194C on the payments made or credited under head "Tipper Expenses" to various persons including the directors of the company during the financial years 1994-95 to 1996-97. Further it has also been noticed that during the financial years 1997-98 to 1999-2000 you have deducted tax under section 194C on part of the payments made under the head 'Tipper Expenses".
In this connection you are requested to please file the details of payments made by you without deducting TDS in the financial years 1994-95 to 1999-2000 in the following format for each financial year separately:
Date of payment Name of person Gross Amount Paid/Credited"
3.8 The assessee filed the following written explanations vide letter dated 24-3-2003 :
"It has been submitted in detail vide our letter Nos. MSS/161/2001 and MSS/167/2001 dated 19-2-2001 that on the facts as pertain to the assessee's case it was not obliged to deduct tax at source under the provisions of section 194C of the Act in respect of the financial years 1993-94 to 1999-2000. It is submitted that the TDS which was deducted under section 194C in respect of some payments made during the financial years 1997-98 to 1999-2000 was due to erroneous understanding of facts and misinterpretation of the provisions of section 194C of the Act by the new accountant who had been engaged by the assessee at that stage.
In its above reply assessee has referred to detail explanations given by it in the letters MSS/161/2001 and MSS/167/2001 dated 19-2-2001. In the said letters assesseebas explained the necessity, object and manner of forming of Ex-Servicemen coal transport companies under the guidance of Director General Resettlement, Army Head Quarters. Assessee has filed detailed explanation on the manner in which these companies carry out their day-to-day operations.
According to the assessee the assessee-company was formed for re-employment of ex-servicemen. It was sponsored by the DGR to undertake transportation and loading work with the South Eastern Coalfields Ltd. (SECL). The assessee has further explained that subsequent to its incorporation the assessee-company entered into a transportation agreement with SECL. Assessee has pointed out that from the stipulated DGR guidelines and the transportation agreement entered into by it with the SECL the following points emerge:
1. That it is the assessee which is the Formal Entity.
2. That it is the assessee which has entered into an agreement with SECL.
3. That it is the assessee which alone performs or carries out the operations at the mines of SECL.
4. That it is the assessee that alone lodge claims and against which claims can be lodged.
5. That the tipper deployed can either be owned by the assessee or by the individual Ex-servicemen or their direct dependents.
6. That the contract may be terminated and due of the company may be forfeited if assessee fails to comply with terms and conditions.
7. That in case of sub-letting of the work, all the dues of the assessee shall be forfeited and the assessee was forbidden to sublet the work to any other person, agency or transporter.
8. The assessee will retain up to 15% of the income carried on tipper trucks owned by the Ex-servicemen including directors and pass on the balance to them after deducting expenses incurred on each tipper towards expenses."
3.9 On the basis of above submissions, it was pleaded on behalf of the assessee that it is only the Ex-Servicemen Transport Company which entered into an agreement with Coal Company and that there was no further agreement or contract to sublet the work to the owners of the tipper truck. It was further pleaded that since there existed no contract between the company and the owners for hiring the trucks, the provisions of section 194C(1)(a) to (j) are not attracted.
3.10 The assessing officer, after considering various clauses, held that all the essential ingredients of legal contracts do exist in this case. For coming to this conclusion, he made reference to the following clauses of the 'Current Instructions and Procedures' of the guidelines issued by DGR which were also incorporated by the assessee in its letter dated 19-2-2001. The relevant clauses as reproduced in para 5 of the assessment order are as under:
"Cl.3(d) Ex-servicemen owners are eligible to procure tipper trucks and attach them with the Ex-Servicemen Transportation Company. The company will take up to 15% gross earning of each vehicle for administrative cover provided by them. The balance earning belong to the ex-servicemen owners.
Cl.3(e) The detailed monthly account will be maintained by the company in respect of each vehicle and shown to the concerned owners. All the expenses incurred including insurance, taxes, repairs and maintenance and fuel consumption, etc., will be met out of the earnings.
Cl.(g) A legal agreement will be signed between the company and ex-servicemen covering the aspects mentioned in paragraph 3(d) to (e). A copy of the agreement will be forwarded to DGR prior to the commencement of work of coal transportation.
Cl.(h)(vii) A legal agreement will be signed between the Ex-servicemen coal transport company and the widow or disabled Ex-servicemen. A copy of the same will be given to DGR."
3.11 The assessing officer on the basis of analysis of the terms and conditions and another material rejected the arguments of the assessee that it had no contract with the tipper owners and held that there existed a contractual relationship between the tipper owners and the assessee. He further held that payments made in connection with the contractual obligations falls within the ambit of the provisions of section 194C(2) as the tipper owners are nothing but sub-contractors of the assessee. According to him, the assessee was legally bound to deduct tax on the payments made to various tipper owner at the rate of 1% plus surcharge during the financial years 1994-95 to 1999-2000. He further observed as under:
"So far as the contractual relationship between the assessee and SECL is concerned, it has no effect on the contractual relationship of the company with tipper owners, Both the relationship operates in their own spheres and are neither coextensive or overlapping. Deduction of tax by SECL on payments made to the assessee does not absolve the assessee from deducting the tax on payments by it under its own contractual obligations. In other words, assessee was obliged to deduct tax on tipper payments irrespective of the fact whether any tax was deducted on the payments received by it from SECL."
3.12 In order to determine the exact liability of the assessee in respect of tipper expenses, the assessee was asked by the assessing officer vide office letter dated 17-3-2003 to furnish party-wise details of payments made or credited during the financial years 1994-95 to 1999-2000. But the assessee did not file such details. The assessing officer, therefore, determine the liability under section 201(1) and 201(1A) in the following manner:
Financial Year Tipper Expenses Paid (Rs.) Demand Under sectopm 201(1) (Rs.) Demand Under section 201(IA) 1994-95 44,62,543 44,625 53,550 1995-96 1,18,41,726 1,18,417 1,24,337 1996-97 11,33,85,082 1,33,850 1,20,465 Total :
2,96,892 12,98,352 Thus, for three financial years, the total liability determined under section 201 was worked out at Rs. 2,96,892 and under section 201(1A) at Rs. 2,98,352. It is to be pointed out that the assessing officer passed a combined order for these three financial years on 31-3-2003.
3.13 For financial years 1998-99 and 1999-2000, he passed another order adopting the same approach and determined the liability of the assessee as under:
Financial Year Tipper Expenses (Rs.) 1998-1999 89,75,142 1999-2000 2,19,83,239 This order was also passed on the same date i.e., 31-3-2003.
3.14 The assessee preferred separate appeals for each financial year before the Learned Commissioner(A). In these appeals, common grounds have been taken to challenge the order of the assessing officer. Before the Learned Commissioner(A), additional ground was also taken and it was contended that section 194C of the Act did not cover transport contract up to 30-6-1995 and, therefore, there was no liability to deduct tax at source for payment made up to 30-6-1995. The Learned Commissioner(A) has allowed this ground and directed the assessing officer to exclude transport charges aggregating to Rs. 18,25,940 paid by the assessee till 30-6-1995 for determining the liability under section 201 and 201(1A).
3.15 Another plea raised by the assessee during the appellate proceedings was that apart from excluding the amount of Rs. 18,25,940 from transport charges of total amount, another amount of Rs. 12,15,398 representing instalments of Rs. 9,95,398 paid in respect of hired tippers to Tata Finance Limited and Rs. 2,20,000 paid to various parties being less than Rs. 20,000 should also be excluded. The Learned Commissioner(A) did not find force in this plea and rejected the same by observing as under :
"16. There is no merit in this claim of the appellant. Instalment in respect of hired tippers are adjustable against transportation charges due to the tipper owners and in fact constitute payment of transportation charges to the tipper owners through discharge of their liability to Tata Finance Limited. The break up of Rs. 2,20,000 also shows that though the quarterly payment of hire charges in cases of Naurang Singh, Harman Singh, Mewa Singh, Mandip Kumar Kang is Rs. 15,000, the aggregate amount paid during the year under consideration in respect of the continuing contract was in excess of Rs. 20,000. In the case of Vijay Pal Singh likewise there are two payments of Rs. 15,000 each on 30-9-1995 and payment of Rs. 30,000 each on 31-12-1995 and 31-3-1996 and the aggregate payments exceed Rs. 20,000 and, therefore get covered under section 194C of the Act."
3.16 So far as the original ground taken in the appeals are concerned, the assessee challenged the applicability of section 194C of the Act and consequent invoking of provisions of section 201 and 201(1A) of the Act. In this regard, following contentions were raised :
"Provisions of section 194C are not attracted as it was only the appellant-company which had entered into the contract with the coal company for transportation and there was an absolute prohibition for entering into a sub-contract or sub-letting of the work in view of clause 35 of the General terms and conditions annexed to the agreement of the appellant with SECL.
There was no contract between the tipper owner and the assessee-company and it was only SECL which was to deduct tax under section 194C of the Act."
3.17 The Learned First appellate authority by making following observations :
"7. I am not convinced by the arguments of the appellant. It is an admitted position that appellant-company was transporting coal of SECL on the terms and conditions of the contract entered into with SECL. The general terms and conditions as annexed to the agreements in clause (10) provided that the appellant shall deploy the tipper trucks owned by them and the tipper trucks which are registered in the names of Ex-servicemen individually or direct dependent of Ex-servicemen.
8. Similarly, in terms of the guidelines of the DGR, as extracted by the assessing officer at page 4 of the order, tipper trucks were attached with the appellant-company and a legal agreement in the regard was executed between the company and the tipper owners. In view of clause (10) of the agreement with SECL and the DGR guidelines, there was a valid contract between the appellant and the tipper owners for carrying out the work of transportation of coal and, therefore the tipper owners were sub-contractors of the appellant in terms of section 194C(2) of the Act.
9. The prohibition regarding sub-contracting relied upon by the appellant did not operate in regard to the deployment of tipper for transportation belonging to Ex-servicemen or dependent of Ex-servicemen in view of clause (10) of the agreement extracted in the preceding paragraph. Further, the fact that SECL was obligated to deduct tax at source from the payments made to the appellant did not exempt the appellant from deducting tax at source from the payments made by the appellant to the persons who were its sub-contractors for carrying out the transportation work. The assessing officer was justified in treating payments of transportation charges as liable for tax deduction at source under section 194C of the Act and imposing liability under section 201 and 201 (1 A) of the Act. Grounds 1 and 2 are dismissed."
Similar approach was adopted by him in rejecting the grounds taken by the assessee in other assessment years.
4. Before us, Shri M.S. Sekhon, Learned Counsel for the assessee made a reference to the "Guidelines on Formation and Running of Ex-Servicemen Coal Transport Company/ Co-operatives" and submitted that the guidelines were made with the noble object of rehabilitation of ex-servicemen who formed company for doing the transportation work of SECL. According to him, as per the guidelines, the ex-servicemen owner-drivers were eligible to procure one tipper truck and attach the same with the company and the company was entitled to charge up to 15% of gross earning of each vehicle for administrative cover provided by them. The balance of the earning was to belong to ex-servicemen owner-drivers. He further pointed out that as per clause (e), a detailed monthly account was to be maintained by the company in respect of each vehicle and shown to the concerned drivers. The Learned Counsel also pointed out that the SECL was deducting TDS on entire receipts from the assessee-company. The Learned Counsel also pointed out that there was absolute prohibition for giving sub-contract or sub-letting as per clause 35 of the terms and conditions. After referring to various clauses of the agreement, the Learned Counsel submitted that there was no contract between the assessee-company and the tipper owners and, therefore, the provisions of section 194C were not attracted. In support of his contention, the Learned Counsel placed reliance on the following decisions :
(i) Decision of ITAT Chandigarh Bench in the case of Esskay Construction Co. v. ITO (1988) 41 Taxman 15; and
(ii) Decision of Hon'ble Punjab and Haryana High Court in the case of CIT v. Esskay Construction Co. (2004) 267 ITR 618.
5. On the other hand, the Learned Senior Departmental Representative placed reliance on the order of the assessing officer and that of the Learned Commissioner(A). The Learned Departmental Representative pointed out that the assessee-company had itself entered into an agreement and gave a subcontract to the tipper owners. In this regard, he invited our attention to the agreement available at pages 76 and 77 executed between S. Tara Singh and the assessee; reference to which has been made in the body of this order earlier. The Learned Senior Departmental Representative also pointed out that the assessee had himself deducted TDS in respect of some. payment and, therefore, the approach of the assessee itself was self-contradictory. He also submitted that the company and its directors are two separate entities and the object of the company was to earn income. Another contention of the Learned Senior Departmental Representative was that there may not be formal written agreement but the arrangement made between the two parties may be in the form of agreement and the contractual relationship and obligations are to be worked out from such arrangement and circumstances. The Learned Departmental Representative also submitted that the decision in the case of Esskay Construction Co. (supra) is not applicable because in that case no commission was charged either by the main firm or by the allied concerns and the whole of the amount was received by the contractors from MESS and, therefore, there was no contract between the assessee firm in that case and its sister concerns and it was only a mutual arrangement.
6. In rejoinder, the Learned Counsel for the assessee submitted that the test of mutuality should be applied in this case because there was a mutual arrangement between the tipper owners and the assessee- company and services were rendered by the two entities as per such arrangement. The Learned Counsel further pointed out that there was no written agreement between the tipper owners and the assessee and the assessing officer did not collect any such information from the tipper owners nor conducted any enquiry in this regard from them.
7. We have carefully considered the entire material on record and the rival submissions. The main issue to adjudicate is as to whether the payment made by the assessee to the Ex-servicemen drivers for giving their tippers to the assessee on hire amounted to a payment given under the sub-contract to a sub-contractor so as to be covered under section 194C(2). In other words, whether there was any contractual relationship of a contractor and sub-contractor between the assessee and the payees.
7.1 The provisions of section 194C(2) of the Income Tax Act, 1961 are as under :
"194C(2) - Any person (being a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax on income comprised therein"
7.2 The assessee has taken various pleas to show that there was no such contractual relationship between the assessee or the persons to whom payment for hiring the tippers was made. At the out set we want to deal with the main objections of the assessee, which are as under:
A. The first argument of the assessee was that in view of condition No. 35 of' the terms and conditions attached with the transport agreement between the Ex-Servicemen Transport Co. (P) Ltd. i.e., the assessee and the South Eastern Coalfields Ltd., the assessee was prohibited from sub-letting the work of transport to any other person, agency or transporters. In view of this prohibition it was contended that the assessee could not have entered into sub-contract with any other person. We consider it to reproduce condition No. 34, which runs as under:
It will be clear from the above that the prohibition related to other persons, other agencies and transporters and there was no prohibition so far as the Ex-servicemen are concerned. Secondly, from the agreement available at page 76, which has been executed between the assessee and Shri Tara Singh, it is clear that hire agreements were executed by the assessee with some persons or with Ex-servicemen. In view of the above, it is clear that the prohibition did not regulate or cover the cases where the sub-letting or sub-contract was with the Ex-army men. Thus, this argument is not acceptable.
B. The learned counsel for the assessee has also argued that in view of the doctrine of mutuality, it cannot be said that the payees were benefited as sub-contractors. This argument was not taken before the authorities below and has not been substantiated before us even;
C. The learned counsel for the assessee has placed heavy reliance on the decisions of ITAT Chandigarh Bench in the case of Esskay Construction Co. (supra) and the decision of Hon'ble P&H High Court in the case of same assessee reported in Esskay Construction Co. (supra). On perusal of these decisions, it is found that in that case the assessee-company obtained contracts from MES and allocated some of them to sister concerns without any considerations. Thus, in that case no commission or discount was taken by the assessee from the sister concerns whereas in the present case, as per the agreement itself, the assessee was to deduct or charge a commission at the rate of 15 per cent from the gross payments. Thus, the decisions in these cases are not applicable to the facts of the present case.
7.3 After considering these arguments, we proceed to discuss the other aspects of the matter and find that neither the assessing officer nor the learned Commissioner (Appeals) has properly considered the relevant facts and the relevant material for adjudicating the issue involved in these appeals. These aspects are as under (1) In view of clause 3(c) of the guidelines, referred to above, the concerned coal subsidiary company was to sign a contract with the sponsored company to assign the transportation work. The Financial years covered in this cases are 1995-96 to 1999-2000. The only agreement filed on record is dated 10-4-1997. There is no other agreement for the earlier period. The agreement dated 10-4-1997 cannot cover financial years 1995-96 and 1996-97. No inquiry in fact has been made by the assessing officer about this aspect of the matter.
(2) In view of clause 3(d), referred to above, the company was to charge 15% of gross earning on each vehicle for administrative cover provided by them. It has not been examined as to whether only 15% of the gross earning has been charged by the assessee in compliance to this clause or not. On perusal of the agreement available at page 76 of paper book, referred to above, it is found that as per this agreement the assessee was to pay Rs. 5,000 per month on each truck to the owner as hire charges of the vehicle. This agreement is, therefore, not in consonance with clause 3(d) of the guidelines referred to above. It may also be pointed out that as per page 82 of the paper book in financial year 1998-99, the assessee has paid hire charges at the rate of Rs. 5,000 per month per tipper and the total amount as shown in page 82 for financial year 1998-99 was Rs. 8,04,200. This payment cannot be justified in view of theguideline No. 3(d). This aspect has not been considered by the assessing officer.
(3) As per clause 3(g) of the guidelines, it was obligatory for the assessee to execute legal agreement with Ex-servicemen drivers and widows/ disabled army man. No such agreement has been filed on record. Neither the assessing officer nor the learned Commissioner (Appeals) made detailed enquiry in this regard. It is not understandable that without setting up conditions in the form of an agreement or in the form Of letters, etc. The hire charges could not be properly worked out and liability of the hirer and the hiring person cannot be ascertained.
(4) Details of persons to whom transport charges have been paid, are available at pages 69 to 75 of the paper book. These details also include the names of persons to whom the payments were made. Neither the assessing officer nor the learned Commissioner (Appeals) made any enquiry from such person about the execution of any agreement for hiring the tippers nor about other conditions regarding hire of tippers.
(5) As per clause (vii) of 3(h) of the guidelines, a copy of the agreement was to be given to DGR. The assessing officer could have obtained a copy from DGR or could have made enquiry from it. This has not been done.
(6) On page 75 of the paper book, details of tipper expenses have been given. On going through these details, it is found that the payments were made under various categories. The assessing officer has not made any enquiry about the payments made by the assessee under different categories. The assessing officer has also not made any enquiry from South Eastern Coalfields Ltd. as to whether TDS was deducted from the assessee for payments made by it and if so, at what rate and on what amount.
(7) The assessee filed memorandum and Articles of Association of assessee-company before the Tribunal at the time of hearing of the appeal. This document was not filed before the assessing officer or before the learned Commissioner (Appeals). Without examination of this document, various aspects of the matter could not be considered. The document filed before us is in the shape of fresh material. It will not be proper to consider and examine the issue at this stage in the light of this document.
(8) The assessee has admitted that TDS was deducted by it on some payments. It has not been clarified as to why TDS was deducted by the assessee on some payments and not on other payments. This required proper enquiry and clarification.
(9) As per the terms and conditions, detailed monthly account in respect of each tipper was to he maintained. The assessing officer has not collected anysuch details.
(10) Similarly, half yearly and annual record was to be maintained. Such details have also not been collected.
7.4 In view of the above, it is clear that the departmental authorities have neither collected full facts nor examined the same. Various documents filed on record by the assessee including the agreement executed by Tara Singh, referred to above, have also not been properly considered. In our considered opinion, for proper adjudication of the issue involved in these appeals, it is essential to examine various aspects referred to above and other related aspects and the entire material filed by the assessee on record. Although survey proceedings were done in this matter, but the assessing officer has not conducted thorough enquiry required for adjudicating the issue nor has adjudicated the issue properly. The learned Commissioner (Appeals) also repeated the course adopted by the assessing officer. In our opinion, a thorough probe, is required for examining as to whether the provisions of section 194C(2) are applicable to the present matter or not.
7.5 In view of the above, we are unable to concur, with the findings recorded by the learned Commissioner (Appeals) and consider it proper to set aside the same. Accordingly, order of learned Commissioner (Appeals) in all the five appeals on the issue in question is set aside and the matter is restored back to the file of assessing officer for proper adjudication, in the light of our observations made above and as per law, of course, after affording full opportunity of being heard to the assessee.
7.6 Consequently, the grounds taken in these appeals are allowed for statistical purposes.
8. In the result, all the appeals of the assessee are allowed for statistical purposeg.