ITO (TDS), Haridwar v. Indian Oil Corporation, Uttrakhand

ITA 1829/DEL/2011 | misc
Pronouncement Date: 16-11-2011 | Result: Dismissed

Appeal Details

RSA Number 182920114 RSA 2011
Assessee PAN AAACI1681G
Bench Delhi
Appeal Number ITA 1829/DEL/2011
Duration Of Justice 7 month(s)
Appellant ITO (TDS), Haridwar
Respondent Indian Oil Corporation, Uttrakhand
Appeal Type Income Tax Appeal
Pronouncement Date 16-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 16-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year misc
Appeal Filed On 15-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI C.L. SETHI JM & SHRI A.N. PAHUJA AM ITA NOS.1829 TO 1834/DEL/2011 WITH CO NOS.166 TO 171/D/2011 AYS:2008-09 TO 2010-11 INCOME TAX OFFICER (TDS) INCOME TAX OFFICE D29/30 INDUSTRIAL AREA HARDWAR V/S . INDIAN OIL CORPORATION (MARKETING DIVISION) I)UASIDC LANDHAURA ROORKEE TERMINAL AND II) USAIDC INDANE BOTTLING PLANT BAHADRABAD INDUSTRIAL AREA HARIDWAR UTTARAKHAND [PAN NO.: AAACI 1681 G] ASSESSEE BY S/SHRI MURLIDHAR AR REVENUE BY SHRI SALIL MISHRA DR DATE OF HEARING 9-11-2011 DATE OF PRONOUNCEMENT 16-11-2011 O R D E R PER BENCH: THESE SIX APPEALS FILED ON 15.04.2011 BY THE REVENU E AND THE CORRESPONDING CROSS-OBJECTIONS[CO] FILED ON 25.5.20 011 BY THE ASSESSEE AGAINST SIX DIFFERENT ORDERS DATED 04.01.2011 OF T HE LD.CIT(A)-I DEHRADUN IN THE CASE OF INDIAN OIL CORPORATION (MARKETING DIVISION ) FOR ITS UASIDC ROORKEE TERMINAL AND INDANE BOTTLING PLANT AT BAHADRABAD I NDUSTRIAL AREA HARIDWAR FOR THE ASSESSMENT YEARS 2008-09 TO 2010- 11 RAISE THE FOLLOWING SIMILAR GROUNDS:- ITA NOS.1829 TO 1834/DEL/2011[REVENUE] 1.1 THE CIT(A) HAS ERRED ON FACTS AND IN LAW I N DIRECTING THAT THE PAYMENT OF HIRING CHARGES OF TANKER IS LIABLE FOR T DS U/S 194C AND NOT 194I OF THE I.T. ACT 1961 AS APPLIED BY THE A.O. ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 2 1.2 IN DIRECTING SO CIT(A) HAS FAILED TO APPREC IATE THE FOLLOWING: I) THE PAYMENT WAS MADE ESSENTIALLY FOR HIRING OF TANKERS WHICH WERE GIVEN IN EXCLUSIVE POSSESSION AND USE OF THE ASSESSEE FOR A FIXED TENURE AND THE TANKERS WERE AL SO CUSTOMIZED AS PER THE REQUIREMENT OF THE HIRER. II) THE ASSESSEE BEING THE HIRER WAS NOT ONLY IN EXCLUSIVE POSSESSION OF THE VEHICLE BUT COULD ALSO USE THEM IN THE MANNER IT WANTED AND NO OTHER PERSON COULD USE THEM IN THE MANNER IT WANTED AND NO OTHER PERSON COULD USE THEM DURING THE TENANCY PERIOD. III) LD. CIT(A) HAS ERRED IN HOLDING THAT THE EX CLUSIVE RIGHT TO USE THE TANKERS WAS NOT VESTED WITH THE ASSESSEE COMPANY WHEREAS THE VERY FIRST CLAUSE OF THE CONTRA CT DEED PROVIDES FOR SUCH EXCLUSIVE RIGHTS TO USE BY THE AS SESSEE COMPANY AND THE COMPANY HAS THE EXCLUSIVE POSSESSIO N OF THE TANKERS TO THE COMPLETE EXCLUSION OF THE OWNER OF VEHICLES FOR THE DURATION OF TENANCY. IV) SECTION 194I(A) (INTRODUCED W.E.F. 01.06.2006 ) IS APPLICABLE WHICH PROVIDES TDS @10% ON HIRING OF ANY MACHINERY OR PLANT OR EQUIPMENT AND PLANT INCLUDES VEHICLES ALSO. THEREFORE THE BOARD CIRCULAR NO.558 (DATED 28.03.1990) IS NOT APPLICABLE AS IT WAS ISSUED PRIO R TO THE INTRODUCTION OF SECTION 194I. THE CASE OF THE ASSE SSEE IS DISTINGUISHABLE INASMUCH AS IN THE INSTANT CASE TH E VEHICLE HAD BEEN GIVEN ON HIRE FOR EXCLUSIVE POSSESSION AND USE OF THE ASSESSEE FOR TENURE PERIOD OF TWO YEARS WHEREAS THE CIRCULAR NO.558 SPEAKS OF CASE WHERE PART TIME POSS ESSION OF BUSES I.E. 14 HOURS/DAY WERE PROVIDED TO THE TRA NSPORT AUTHORITIES. V) THE HONBLE APEX COURT IN THE CASE OF M/S ASSO CIATED HOTELS & INDIA LTD. VS. R.N. KAPOOR (AIR 1959 S.C. 262) HAVE LAID DOWN CERTAIN TESTS FOR DETERMINATION FOR TENANCY. THE THIRD TEST THEREIN STATES THAT IF UNDER THE DOC UMENTS A PARTY GETS EXCLUSIVE POSSESSION OF THE PROPERTY PR IMA FACIE HE WILL BE CONSIDERED AS TENANT. IN THE INSTANT CA SE EXCLUSIVE POSSESSION OF THE TANKERS WERE GIVEN TO T HE ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 3 ASSESSEE AND HENCE SECTION 194I IS APPLICABLE ON TH E ENTIRE PAYMENTS. CO NOS.166 TO 170/D/2011[ASSESSEES] 1. THE LEARNED CIT(A) ERRED IN REJECTING THE CONTE NTION OF THE APPELLANT THAT THE APPELLANT WAS UNDER BONA FIDE B ELIEF THAT FROM THE TRANSPORTATION CHARGES TAX WAS DEDUCTIBLE U/S 194C AND FOR THAT REASON THE APPELLANT SHOULD NOT B E HELD AS AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT. 2. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT SUFFI CIENT DETAILS REGARDING PAYMENT OF TAXES BY THE TRANSPORT CONTRAC TORS WERE PROVIDED BY THE APPELLANT AND THEREFORE OUGHT TO HAVE SPECIFICALLY HELD THAT NO FURTHER TAXES CAN BE COLL ECTED FROM THE APPELLANT U/S 194C. 3. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITH OUT PREJUDICE TO THE OTHER. 4. THE APPELLANT RESERVES THE RIGHT TO ADD ALTER O R AMEND ANY GROUNDS OF THE APPEAL. SINCE SIMILAR ISSUES WERE INVOLVED IN THESE APPEALS AND THE CORRESPONDING COS THESE WERE HEARD SIMULTANEOUSLY FOR THE SAKE OF CON VENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER.. 2.. ADVERTING FIRST TO THE COMMON GROUNDS IN APPEAL S OF THE REVENUE FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT A SURVEY U/S 133A OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDU CTED ON 03.12.2009 IN THE AFORESAID TWO PREMISES OF THE ASSESSEE ENGAGED IN TRANSPORTING PETROLEUM PRODUCTS FROM ITS PLANTS TO MARKET AT VARIOUS DESTI NATIONS THROUGH HIRED TRUCKS/TANKERS IN TERMS OF AN AGREEMENT WITH THE R ESPECTIVE TRANSPORTERS TERMED AS THE CARRIER IN THE AGREEMENT. THE TAX ON SUCH PAYMENTS HAS BEEN DEDUCTED AT SOURCE @2% IN TERMS OF THE PROVISIONS OF SECTION 194C OF THE ACT. HOWEVER THE ASSESSING OFFICER (A.O. IN SHORT) WAS OF THE OP INION THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX @10% PER ANNUM IN TERMS OF A MENDED PROVISIONS OF 194I OF THE ACT UNTIL 30.9.2009 AND @ 2% W.E.F 1.10.2009 ONWARDS. IN RESPONSE TO A ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 4 SHOW CAUSE NOTICE BY THE A.O. AS TO WHY THE ASSESSE E MAY NOT BE TREATED IN DEFAULT FOR NOT DEDUCTING TAX AT THE STIPULATED RA TES IN TERMS OF PROVISIONS OF SEC. 194I OF THE ACT THE ASSESSEE WHILE REFERRING TO CB DT CIRCULAR NO.681 DATED 08.03.1994 AND CIRCULAR NO. 558 DATED 28.03.1990 C ONTENDED THAT THE AGREEMENT BETWEEN THE COMPANY AND THE CARRIERS IS S IMILAR TO THE CONTRACT DISCUSSED IN THE AFORESAID CIRCULARS AND THEREFORE THEY DEDUCTED AT SOURCE IN TERMS OF PROVISIONS OF SECTION 194C OF THE ACT. HO WEVER THE AO DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND WHILE ANALYZING VARIOUS CLAUSES OF THE SAMPLE AGREEMENT CONCLUDED THAT THE ASSESSEE WAS RE QUIRED TO DEDUCT TAX AT SOURCE @10% UNTIL 30.9.2009 & @ 2% W.E.F. 1.10.2009 IN TERMS OF PROVISIONS OF SECTION 194I OF THE ACT. INTER ALIA THE AO RELIED UPON THE DECISION IN M/S ASSOCIATED HOTELS AND INDIA LTD. VS. R.N. KAPOOR A IR SC 262 3. ON APPEAL THE LD. CIT(A) OBSERVED THAT THE CRU CIAL THING TO DETERMINE WHETHER THE ARRANGEMENT IS OF HIRING OR FOR TRANSPO RTATION IS TO SEE WHO IS DOING THE TRANSPORTATION WORK. IF THE ASSESSEE TAKES THE TRUCKS AND DOES THE WORK OF TRANSPORTATION HIMSELF IT WOULD AMOUNT TO HIRING. SINCE THE ASSESSEE. WAS IN THE BUSINESS OF REFINING CRUDE OIL AND STORING DISTRIB UTING AND SELLING THE PETROLEUM PRODUCTS WHICH INVOLVED TRANSPORTATION OF ITS BULK PETROLEUM PRODUCTS AND FOR THAT PURPOSE UTILISED THE SERVICES OF THE CARRIER AND THE PAYMENT WAS FOR ACTUAL TRANSPORTATION WORK THE LD. CIT(A) WAS OF THE OPI NION THAT CONTRACT WAS FOR TRANSPORTATION OF GOODS AND NOT AN ARRANGEMENT FOR HIRING OF VEHICLES. THEREFORE WHILE RELYING UPON DECISION DATED 27.2.2009[PG.84 T O 117 PB] OF THE HON. GUWAHATI HIGH COURT IN CR 3997/1998 IN THE CASE OF THE ASSESSEE COMPANY IN THE CONTEXT OF THE PROVISIONS OF THE ASSAM SALES TA X ACT THE LD. CIT(A) CONCLUDED THAT THE ARRANGEMENT UNDER CONSIDERATION IS OF THE NATURE OF TRANSPORT CONTRACT AND NOT ONE FOR HIRING OF VEHICLES AND CON SEQUENTLY THE ASSESSEE DID NOT DEFAULT THE PROVISIONS OF SEC. 194I OF THE ACT . ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 5 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF LEARNED CIT(A) HOLDING THAT THE TAX WAS REQUIRED T O BE DEDUCTED IN TERMS OF SECTION 194C OF THE ACT AND NOT U/S 194I OF THE ACT WHILE THE ASSESSEE IN THEIR COS RAISED A GROUND REGARDING THEIR BONA FIDE BELIE F THAT TAX WAS REQUIRED TO BE DEDUCTED U/S 194C OF THE ACT AND THE TRANSPORT CONT RACTORS HAVING PAID THE TAXES NO FURTHER TAX COULD BE COLLECTED FROM THE ASSESSEE . THE LD. DR WHILE CARRYING US THROUGH THE IMPUGNED ORDER AND THE RELEVANT SAMPLE AGREEMENT SUPPORTED THE ORDERS OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF LD. CIT(A) IN THE LIGHT OF DECISION IN ACIT (TDS) VS. ACCETURE SERVICES (P) LTD. (2010) TIOL 618 (MUM.); LOTUS VALLEY EDUCA TION SOCIETY VS. ACIT (2010) 10 TAXMAN COM 46 (DEL.); AHMEDABAD URBAN DEV ELOPMENT AUTHORITY VS. ACIT IN ITA NO.1637/AHD./2010(AHD. ); CIT VS. SHREE MAHALAXMI TRANSPORT CO. IN ITA NO. 1038 OF 2009(GUJARAT ); CIT VS. SWAYAM S HIPPING SERVICES PVT. LTD. IN ITA NO. 1037 OF 2009 (GUJARAT) 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS. THE ISSUE BEFORE US IS AS TO WHETHER THE ASSESSEE COMPANY WAS REQUIRED TO DEDUCT TAX AT SOURCE IN TER MS OF PROVISIONS OF SEC. 194C OR U/S SEC. 194I OF THE ACT WHILE MAKING PAY MENTS TO THE CARRIER FOR TRANSPORTATION OF PETROLEUM PRODUCTS IN ACCORDANCE WITH AGREEMENT A SAMPLE COPY OF WHICH IS PLACED AT PG. 59 TO 72 OF THE PAPE R BOOK. THE RELEVANT PROVISIONS OF SEC. 194C STIPULATING DEDUCTION OF TAX AT SOUR CE FROM PAYMENTS TO CONTRACTORS FALL UNDER PART B OF THE CHAPTER-XVII OF THE ACT. IN TERMS OF THESE PROVISIONS ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WOR K IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE OR DRAFT OR ANY OTHER MODE WHIC HEVER IS EARLIER DEDUCT AN AMOUNT EQUAL TO THE PERCENTAGE SPECIFIED THEREUNDER OF SUCH SUM AS INCOME TAX. THE TERM WORK DEFINED IN CLAUSE (IV) OF THE EX PLANATION TO THE SEC. 194C OF THE ACT INCLUDES IN SUB-CLAUSE (C) CARRIAGE OF GOODS O R PASSENGERS BY ANY MODE OF ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 6 TRANSPORT OTHER THAN BY RAILWAYS. ON THE OTHER PROV ISIONS OF SEC. 194I OF THE ACT FALLING UNDER THE SAME CHAPTER BEAR THE HEADING 'RE NT'. THE PROVISIONS OF THE SAID SECTION STIPULATE THAT ANY PERSON NOT BEING A N INDIVIDUAL OR A HINDU UNDIVIDED FAMILY WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT ON ACCOUNT OF LAND BUILDING FURNITURE OR FITTINGS MACHINERY PLANT OR EQUIPMENT SHALL AT THE TIME OF CREDIT OF SUCH INCO ME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISS UE OF CHEQUE OR DRAFT OR ANY OTHER MODE WHICHEVER IS EARLIER DEDUCT INCOME TAX THEREON AT THE RATE SPECIFIED THEREUNDER. 5.1 EXAMINING THE FACTS OF THE INSTANT CASE IN THE LIGHT OF THE AFORESAID STATUTORY PROVISIONS AND FROM THE UNDISPUTED FINDIN GS OF FACTS RECORDED BY THE LD. CIT (APPEALS) IT IS APPARENT THAT THE ARRANGEMENT IN TERMS OF THE AFORESAID AGREEMENT IS OF THE NATURE OF TRANSPORT AGREEMENT AND NOT ONE FOR HIRING OF VEHICLES THE AGREEMENT BEING FOR TRANSPORTATION OF PETROLEUM PRODUCTS INCLUDING INDANE GAS. THE PREAMBLE TO THE AGREEMENT ITSELF S AYS THAT THE ASSESSEE COMPANY FOR DISTRIBUTION OF PETROLEUM PRODUCTS REQU IRED TANK TRUCKS FOR ROAD TRANSPORTATION OF BULK PETROLEUM PRODUCTS FROM ITS VARIOUS STORAGE POINTS TO CUSTOMERS/OTHER STORAGE POINTS. AS PER CLAUSE 1 OF THE AGREEMENT THE CARRIER ENGAGED IN THE BUSINESS OF OPERATING TANK TRUCKS AGREED TO PROVIDE A STIPULATED NUMBER OF TANK TRUCKS FOR THE EXCLUSIVE USE OF THE COMPANY. CLAUSE 2 STIPULATES THAT EACH TANK TRUCK WOULD BE ATTACHED TO A PARTICU LAR LOADING/STORAGE POINT FOR TRANSPORTATION OF BULK PETROLEUM PRODUCTS AND THE A SSESSEE COMPANY CAN ASSIGN A PARTICULAR TANK TRUCK TO DIFFERENT LOADING/STORAG E POINT. IN TERMS OF CLAUSE 3 OF THE AGREEMENT THE CARRIER ALONE IS REQUIRED TO PRO VIDE CREW(DRIVER & CLEANER) FOR EFFICIENT OPERATIONS. IN OTHER WORDS IN THE INSTAN T CASE THE TANK TRUCK OWNERS NOT SIMPLY CONFINED THEMSELVES TO THE EXTENT OF PROVIDI NG VEHICLES AT THE DISPOSAL OF THE ASSESSEE IN LIEU OF RENT BUT ALSO ENGAGED THEIR DRIVERS IN DRIVING SUCH VEHICLES AND THEREBY IN TRANSPORTING PETROLEUM PRODUCTS FROM ONE PLACE TO THE OTHER..IN EFFECT TANK TRUCK REMAINS IN POSSESSION OF THE STA FF OF THE CARRIER. IN THE EVENT TANK TRUCK IS NOT MADE AVAILABLE ON ANY PARTICULAR DAY THE ASSESSEE COMPANY IS ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 7 FREE TO USE THE SERVICES OF ANY OTHER TANK TRUCK AN D RECOVER THE DIFFERENCE IN TRANSPORTATION CHARGES FROM THE CARRIER.. THE ASSES SEE COMPANY IN TERMS CLAUSE 6 OF THE AGREEMENT IS REQUIRED TO PAY FOR THE TRAN SPORTATION WORK IN ACCORDANCE WITH STIPULATED RATES ON PER KL PER KM BASIS. INTE R ALIA IT IS STIPULATED THAT NO IDLE CHARGES WOULD BE PAYABLE. IN TERMS OF CLAUSE 8 THE CARRIER IS RESPONSIBLE FOR LOADING AND DISCHARGE AND IN THE EVENT OF SHORTAGE THE CARRIER IS MADE RESPONSIBLE. AFTER CONSIDERING VARIOUS CLAUSES OF THE SAMPLE AGREEMENT WE ARE OF THE OPINION THAT THE SAID AGREEMENT IS ESSENTIA LLY FOR TRANSPORTATION OF BULK PETROLEUM PRODUCTS AND NOT FOR HIRING OF TANK TRUCK S. WE FIND THAT THE HONBLE GAUHATI HIGH COURT IN THEIR DECISION DATED 27.2.200 9 IN CR3997/1998 IN THE CONTEXT OF DEDUCTION OF TAX U/S 27(A) OF THE ASSAM GENERAL SALES TAX ACT 1993 AFTER ANALYZING THE TERMS OF A SIMILAR AGREEMENT IN THE CASE OF THE ASSESSEE OBSERVED THAT THE SAID AGREEMENT OBLIGED THE CONTR ACTOR TO OPERATE THE VEHICLES FOR THE PURPOSE OF CARRYING PETROLEUM AND PETROLEUM PRODUCTS AS PER THE DIRECTIONS OF THE ASSESSEE COMPANY FROM ONE PLACE TO ANOTHER. IF THE VEHICLE REMAINED OFF THE ROAD AND CONSEQUENT THEREUPON T HE ASSESSEE COMPANY SUSTAINED ANY LOSS THE CONTRACTOR WAS LIABLE TO MA KE GOOD THE LOSS. IF IN CERTAIN CIRCUMSTANCES THE CONTRACTOR WAS UNABLE TO CARRY T HE PETROLEUM AND/OR PETROLEUM PRODUCTS IN A PARTICULAR VEHICLE WHEREIN HE HAD UNDERTAKEN TO CARRY HE COULD CARRY THE PRODUCTS IN DRUMS IN STAKE-TR UCKS. SIMILARLY THE CONTRACTOR WAS ALSO LIABLE TO MAKE GOOD THE LOSS WHICH THE AS SESSEE COMPANY MIGHT SUSTAIN DUE TO SHORT DELIVERY OF ITS PRODUCTS OR DU E TO CONFISCATION THEREOF DURING THE COURSE OF CARRIAGE. IN THE LIGHT OF VARIOUS TE RMS AND CONDITIONS OF THE AGREEMENT THE HONBLE HIGH COURT OBSERVED THAT 54. THUS WHEN THE CONTRACT AGREEMENT IS READ CLAU SE-BY- CLAUSE IT BECOMES ABUNDANTLY CLEAR THAT THERE IS N O TRANSFER OF THE RIGHT TO USE THE VEHICLE INVOLVED IN THE CON TRACT AGREEMENT AND THAT THE CONTRACT AGREEMENT IS MERELY FOR CARRIAGE OF THE PETROLEUM AND PETROLEUM PRODUCTS AN D NOTHING MORE. 5.2 THEREAFTER HONBLE HIGH COURT AFTER CONSID ERING THE DECISIONS IN AHUJA ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 8 GOODS AGENCIES V. STATE OF U.P. REPORTED IN (1997) 106 STC 540 AND LAXMI AUDIO VISUAL V. ASSTT. COMMISSIONER OF COMMERCIAL T AXES REPORTED IN (2001) 124 STC 426(KAR) CONCLUDED AS UNDER: 58. IN THE CASE AT HAND TOO THE TRANSACTIONS DO NOT AMOUNT TO TRANSFER OF THE RIGHT TO USE THE GOODS IN AS MUCH AS THE CONTRACTOR AS A TRUSTEE OF THE PETROLEUM AND PETRO LEUM PRODUCTS CARRIES THE SAME IN THE IDENTIFIED VEHICLES OR IN E XCEPTIONAL CIRCUMSTANCES IN SUCH A MANNER AS HAVE BEEN AGREED TO BY THE PARTIES CONCERNED . 5.3 IN NUTSHELL THE HONBLE GAUHATI COURT CONC LUDED THAT THE CONTRACT WAS ESSENTIALLY FOR TRANSPORTATION OF PETROLEUM PRODUCT S AND NOT FOR HIRING OF TRUCKS/TANKERS. FOLLOWING THE VIEW TAKEN IN THIS DE CISION THE LD. CIT(A) CONCLUDED THAT PROVISIONS OF SEC. 194C WERE APPLICABLE IN THE INSTANT CASE AND NOT THE PROVISIONS OF SEC. 194I OF THE ACT. THE LD. DR DID NOT PLACE ANY MATERIAL BEFORE US IN ORDER TO CONTROVERT THE AFORESAID FINDING OF FAC TS RECORDED BY THE LD. CIT(A) NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION. 6. WE FURTHER FIND THAT THE HONBLE GUJARAT H IGH COURT WHILE ADJUDICATING A SIMILAR ISSUE IN RESPECT OF DEDUCTION OF TAX AT SOU RCE FROM PAYMENTS FOR HIRING DUMPERS FOR TRANSPORTING BUILDING MATERIAL CONCLUDE D IN THEIR DECISION DATED 11.1.2001 IN THE CASE OF SHREE MAHALAXMI TRANSPORT CO. IN ITA NO. 1038 OF 2009 IN THE FOLLOWING TERMS:- 5. THE COMMISSIONER (APPEALS) UPON APPRECIATION OF THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD GIVEN SUB -CONTRACTS OF TRANSPORTATION OF GOODS FROM ONE PLACE TO ANOTHER. TO PROVE THE NATURE OF CONTRACTS THE ASSESSEE HAD PRODUCED VARI OUS BILLS ISSUED BY SUCH; SUB-CONTRACTORS TO SHOW THAT THE CONTRACT S WERE MAINLY CARRIED OUT FOR SHIFTING OF GOODS FROM ONE PLACE TO ANOTHER. THE COMMISSIONER (APPEALS) ALSO FOUND THAT THE CHARGES WERE COLLECTED BY SUB- CONTRACTORS ON THE BASIS OF THE QUANTITY OF GOODS TRANSPORTED AND THE NUMBER OF TRIPS CARRIED OUT; TH E ASSESSEE HAD NOT ACQUIRED DUMPERS ON RENT OR LEASE; AND THAT THE POSSESSION AND CONTROL OF VEHICLES WAS WITH THE SUB-CONTRACTORS W HO ONLY PROVIDED SERVICES OF SHIFTING OF GOODS FROM ONE PLACE TO ANO THER PLACE. IT WAS NOTED THAT EVIDENCE IN SUPPORT OF ABOVE WAS SUBMITT ED TO THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. IN THE ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 9 BACKGROUND OF THE AFORESAID FINDINGS OF FACT RECORD ED BY HIM THE COMMISSIONER (APPEALS) WAS OF THE VIEW THAT WHEN TH E TRANSPORTATION CONTRACT WAS IN THE NATURE OF SHIFTI NG OF GOODS FROM ONE PLACE TO ANOTHER SUCH CONTRACTS WOULD BE COVER ED AS WORKS CONTRACTS AND PROVISIONS OF SECTION 194C WOULD BE A PPLICABLE ACCORDING TO THE COMMISSIONER (APPEALS) SINCE THE ASSESSEE HAD GIVEN SUB-CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENTS SUCH PAYM ENTS COULD NOT BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECTION 194I OF THE ACT WOULD NOT APPLY TO SUCH CONTRACTS. THE COMMISSIONER (APPEALS) ACCORDINGLY HELD THAT THE AS SESSEE HAS RIGHTLY DEDUCTED TDS UNDER SECTION 194C OF THE ACT; THAT THERE WAS NO DEFAULT NO THE PART OF THE ASSESSEE UNDER THE TD S PROVISIONS AND AS SUCH THERE WAS NO SHORT DEDUCTION OF TAX AND SET ASIDE THE LEVY OF INTEREST UNDER SECTION 201 (1A) OF THE ACT. 9. EXAMINING THE FACTS OF THE PRESENT CASE IN THE L IGHT OF THE AFORESAID STATUTORY PROVISIONS FROM THE FINDINGS O F FACT RECORDED BY THE COMMISSIONER (APPEALS) IT IS APPARENT THAT THE ASSESSEE HAS NOT TAKEN THE DUMPERS ON HIRE RENT FROM THE PARTIES IN QUESTION. THE ASSESSEE HAS GIVEN CONTRACTS TO THE SAID PARTIES FO R THE TRANSPORTATION OF GOODS AND HAS NOT TAKEN MACHINERI ES AND EQUIPMENT ON RENT. IN THE CIRCUMSTANCES THE COMMIS SIONER (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE TRANSAC TIONS IN QUESTION BEING IN THE NATURE OF CONTRACTS FOR SHIFTING OF GO ODS FROM ONE PLACE TO ANOTHER WOULD BE COVERED AS WORKS CONTRACTS THE REBY ATTRACTING THE PROVISIONS OF SECTION 194C OF THE ACT. THAT SIN CE THE ASSESSEE HAD GIVEN SUB-CONTRACTS FOR TRANSPORTATION OF GOODS AND NOT FOR THE RENTING OUT OF MACHINERIES OR EQUIPMENTS SUCH PAYM ENTS COULD NOT BE TERMED AS RENT PAID FOR THE USE OF MACHINERY AND THE PROVISIONS OF SECTION 194I OF THE ACT WOULD NOT BE APPLICABLE. THE TRIBUNAL WAS THEREFORE JUSTIFIED IN UPHOLDING THE ORDER PA SSED BY THE COMMISSIONER (APPEALS). 7. LIKEWISE IN THEIR ANOTHER DECISION DATED 11.1. 2001 IN THE CASE OF CIT VS. SWAYAM SHIPPING SERVICES PVT. LTD. IN ITA NO.1037 OF 2009 HONBLE GUJRAT HIGH COURT CONCLUDED AS UNDER:- 6. THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE HAS CARRIED OUT FREIGHT AND TRANSPORTATION WORKS CONTRACTS WITH THR EE TRANSPORTERS WHO TRANSPORTED THE GOODS BELONGING TO THE ASSESSEE AND ITS CLIENTS TO VARIOUS PLACES THROUGH THEIR VEHICLES. T HE ASSESSEE HAD NOT TAKEN THE TRAILERS/CRANES ON HIRE OR RENT FROM THE SAID PARTIES. THE ASSESSEE HAS GIVEN SUB-CONTRACTS TO THE SAID PA RTIES FOR THE ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 10 TRANSPORTATION OF GOODS AND NOT FOR RENTING OUT OF MACHINERIES AND EQUIPMENTS. SECTION 194I OF THE ACT MAKES PROVISIO N FOR DEDUCTION OF TAX AT SOURCE WHERE ANY PERSON WHO IS RESPONSIBL E FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT WHERE AS SECTION 194C OF THE ACT MAKES PROVISI ON FOR DEDUCTION OF TAX AT SOURCE WHERE ANY PERSON IS RESP ONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK IN PURSU ANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PER SON. IN THE FACTS OF THE PRESENT CASE THERE IS NOTHING TO INDICATE T HAT THE ASSESSEE HAS TAKEN TRAILERS/CRANES ON RENT SO AS TO ATTRACT THE PROVISIONS OF SECTION 1941 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 TH E ACT AS THE ASSESSEE WAS RESPONSIBLE FOR PAYING THE AMOUNT IN QUESTION FOR CARRYING OUT WORK IN PURSUANCE OF CONT RACTS BETWEEN THE ASSESSEE AND THE TRANSPORTERS AND AS SUCH WAS R EQUIRED TO DEDUCT TAX AT SOURCE AT THE RATE PRESCRIBED UNDER THE SAID SECTION. THE COMMISSIONER (APPEALS) WAS THEREFORE JUSTIFIE D IN HOLDING THAT THE ASSESSEE WAS NOT AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF THE SAID EXPRESSION AS CONTEM PLATED UNDER SECTION201OF THE ACT AND CONSEQUENTLY THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER PASSED BY THE COMMISSIONER (AP PEALS). 8. APART FROM CIRCULAR NOS. 558 AND 681 ISSUED BY THE CBDT CLAUSE 49.3 OF THE EXPLANATORY NOTES TO FINANCE(NO.2) ACT 2009 POINTS OUT THAT TAX IS REQUIRED TO BE DEDUCTED AT SOURCE IN TERMS OF PROVISIONS OF SEC. 1 94C OF THE ACT ON PAYMENTS TO TRANSPORT CONTRACTORS ENGAGED IN THE BUSINESS OF PL YING HIRING OR LEASING GOODS CARRIAGES AND AMENDED PROVISIONS WOULD EXEMPT PAYM ENTS TO TRANSPORT OPERATORS IF OPERATOR FURNISHES ITS PAN TO THE DEDU CTOR. 9. WE ALSO FIND THAT THE HONBLE BOMBAY HIGH COURT IN THEIR DECISION DATED 29.6.2007 IN INDIAN NATIONAL SHIP OWNERS ASSOCIATI ON AND OTHERS VS. CIT (TDS) IN CWP NO. 400 OF 2007 CONCLUDED THAT THE PROVISION S OF SECTION 194I OF THE ACT ARE APPLICABLE ONLY IN RESPECT OF RENT FOR LAND OR BUILDING (INCLU DING FACTORY BUILDING) FURNITURE FITTINGS OR ANY OTHER MACHINE RY ATTACHED THERETO AND NOT FOR ANYTHING ELSE LIKE SHIPS TRANSPORT VEHICLES (INCLU DING RAILWAYS) AND FREIGHT/CHARTER HIRE PAYMENTS THERETO. HONBLE HIGH COURT FURTHER H ELD THAT EXPLANATION-III OF SECTION 194-C CLARIFIES THAT THE EXPRESSION 'WORK ' MEANS CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY R AILWAYS AND TAX FROM FREIGHT ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 11 PAYMENTS HAVE TO BE DEDUCTED UNDER THIS SECTION AND NOT UNDER SECTION 194-I. OF THE ACT. FOLLOWING THE VIEW TAKEN IN THIS DECISION ITAT IN THE CASE OF ACCENTURE SERVICES (P) LTD. 2010-TIOL-618-ITAT-MUM HELD THAT EXPRESSION PLANT AND MACHINERY USED IN EXPLANATION TO SEC. 194I OF THE A CT REFERS ONLY TO THE PLANT AND MACHINERY USED BY THE ASSESSEE IN THEIR BUSINES S BY HIRING THEM BUT NOT THE HIRING THE TRANSPORT SERVICES. THE ITAT DELHI BENC H IN THEIR DECISION IN THE CASE OF LOTUS EDUCATION SOCIETY (SUPRA) HELD THAT PROVIS IONS OF SECTION 194I OF THE ACT COULD NOT BE APPLIED IN THE CASE OF PAYMENTS MADE T O BUS OPERATORS PROVIDING PICK UP AND DROP FACILITY TO SCHOOL STUDENTS. IN AHEMDABAD DEVELOPMENT AUTHORITY ITAT AHMEDABAD BENCH IN THEIR DECISION DATED 10.3.2011 IN ITA NO.1637/AHD./2010 HELD IN THE CONTEXT OF DEDUCTION OF TAX AT SOURCE F ROM FIXED RENT PAYMENTS FOR HIRING CARS THAT PROVISIONS OF SE CTION 194C OF THE ACT WERE APPLICABLE IN RESPECT OF PAYMENT FOR VEHICLE HIRE C HARGES AND NOT THE PROVISIONS OF SECTION 194I OF THE ACT. 10. IN THE LIGHT OF CONSISTENT VIEW TAKEN IN THE AFORESAID DECISIONS AND CONSIDERING THE VARIOUS CLAUSES IN THE AFORESAID BU LK PETROLEUM PRODUCTS ROAD TRANSPORT AGREEMENT WE HAVE NO HESITATION IN UPHO LDING THE FINDINGS OF LD. CIT(A) IN CONCLUDING THAT THE ARRANGEMENT FOR TRAN SPORTATION OF PETROLEUM PRODUCTS WAS ESSENTIALLY A CONTRACT FOR TRANSPORTAT ION OF GOODS AND NOT AN ARRANGEMENT OF HIRING OF VEHICLES. IN VIEW THEREOF TAX IS REQUIRED TO BE DEDUCTED AT SOURCE FROM THE PAYMENTS TO THE CARRIER IN TERMS OF PROVISIONS OF SEC. 194C OF THE ACT AND NOT U/S 194I OF THE ACT.THEREFO RE GROUND NOS. 1.1 & 1.2 IN THESE SIX APPEALS OF THE REVENUE ARE DISMISSED. AS A COROLLARY GROUNDS RAISED IN THE SIX COS BECOME ACADEMIC AND DO NOT SURVIVE F OR OUR ADJUDICATION . 11. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US BY ANY OF THE PARTY. ITA NOS.1829TO1834/D/2011/ & C.O. NOS.166 TO171/D/2011 12 12. IN RESULT THESE SIX APPEALS FILED BY THE REVE NUE AND THE CORRESPONDING COS FILED BY THE ASSESSEE ARE DISMISSED. SD/- SD/- (C.L. SETHI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. INCOME TAX OFFICER (TDS) HARDWAR. 2.INDIAN OIL CORPORATION (MARKETING DIVISION) UASIDC LANDHAURA ROORKEE TERMINAL AND INDANE BOTTLING PLANT BAHADRABAD INDUSTRIAL AREA HARIDWAR UTTARAKHA ND . 3. CIT(A)-I DEHRADUN. 4. CIT CONCERNED. 5. DR ITAT C BENCH NEW DELHI 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT DELHI ORDER PRONOUNCED IN OPEN COURT