I.T.O.(T.D.S.) WARD 1(4), Wardha v. M/S RAYMOND UCO DENIM PVT. LTD.(FABRIC DIVISION0, Yavatmal

ITA 351/NAG/2015 | 2013-2014
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 35123914 RSA 2015
Assessee PAN NGPUO1513B
Bench Nagpur
Appeal Number ITA 351/NAG/2015
Duration Of Justice 9 month(s) 7 day(s)
Appellant I.T.O.(T.D.S.) WARD 1(4), Wardha
Respondent M/S RAYMOND UCO DENIM PVT. LTD.(FABRIC DIVISION0, Yavatmal
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 30-09-2016
Assessment Year 2013-2014
Appeal Filed On 23-12-2015
Judgment Text
1 ITA NOS. 351 & 352/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH NAGPUR BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NOS.351 & 352/NAG/2015 ASSESSMENT YEARS : 2013 - 14 & 2014 - 15. THE INCOME - TAX OFFICER M/S RAYMOND UCO DENIM PVT. LTD. (TDS) WARD - 1(4) WARDHA. VS. (FABRIC DIVISION) - C1 MIDC LOHARA DIST. YAVATMAL. TAN NGPUO1513B. APPELLANT. RESPONDENT. APPELLANT BY : S MT. AGNES P. THOMAS. RESPONDENT BY : S HRI P.M. GANDHI. DA TE OF HEARING : 2 6 - 09 - 2016 DATE OF PRONOUNCEMENT : 30 TH SEPT. 2016 O R D E R TH ESE ARE REVENUES APPEALS AGAINST THE COMMON ORDER OF LEARNED CIT(APPEALS) DATED 09 - 10 - 2015 FOR THE CONCERNED ASSESSMENT YEARS. 2. THE COMMON ISSUES RAISED READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS JUS TI FI ED I N DELETING THE DEMAND OF RS. 26 49 147/ - FOR A.Y. 2013 - 14 & RS. 19 03 716 / - F OR AY. 2014 - 15 RAISED U / S 201/201(LA)OF THE ACT? 2. W HE T HER ON THE FACTS A N D CIRCUMSTANCE S O F THE CAS E THE LD.CIT ( A ) IS JUSTIFIED I N NOT APPREC I ATING THAT THE PHRASE I N SECT I ON 194C (6 ) ' D U RIN G T H E COURSE OF PLYING HIR I NG AND LEASING OF GOODS CARRIAGES' DOES NOT APP L Y T O CONTRACTOR ON L Y BUT TO BOTH THE PART I ES I . E. PRINC I PAL AS WELL AS CONTRACTOR? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) I S JUS TIF I ED IN HOLDING THAT ONLY CONTRACTOR SHOULD BE I N THE L I NE OF BUSIN E SS OF PL YI N G 2 ITA NOS. 351 & 352/NAG/2015. HIRING AND LEASING OF GOODS CARRIAGES WHEREAS THE SECTION 194C(6 ) N O W H ER E MENTION THAT ONLY CONTRACTOR SHOULD BE IN THE BUSINESS OF PL YI NG HIR ING A N D L E AS I NG OF GOODS CARR I AGES? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD.CIT ( A ) I S JUS TIFIED I N IGNORING THE TRUE SPIRIT IN WHICH SECTION 194C(6) W AS BROUGHT TO TH E STATUTE W.E . F. 1 - 10 - 2009 PARTICULARLY WHEN PRIOR TO INTRODUCTION OF THIS S E CT ION TDS WAS BEING MADE ON IDENTICAL PAYMENTS TO TRANSPORTERS? 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) IS JU S TIFI ED I N NOT APPRECIATING THAT BY VIRTUE OF AMENDMENT TO SECTION 194C (6 ) W . E . F. 1 - 6 - 2015 AN E X EMPTION HAS BEEN PROVIDED TO TRANSPORTE R S O W N I NG UP T O 10 GOODS CARRIAGES AND PRIOR TO THAT DATE THERE WAS NO E X EMPTION PROV I D ED U/S 194C (6) OF THE ACT FROM TDS TO ANY PERSON? 6. WH E THER ON THE FACTS AND C I RCUMSTANCES OF THE CASE TH E LD . CIT ( A ) IS J USTIF IE D IN N O T APPREC I ATING TH E FACT TH A T TH E C IRCULA R N O. 5/20 1 0 DAT E D - 3.06.2 010 IS I RRE L EVANT IN ASSESSEE'S CASE AS ALMOST ALL THE PAYMENTS W ER E MAD E T O B I G TRANSPORTERS WHO ARE OUT OF THE PURV IEW OF SECTION 44AE ? 7. WH ETHE R ON T H E FAC T S A N D C I R C UM S T A N CES O F HE CA S E LD CIT(A) IS JUSTIFIED IN AD MI TT I NG FRESH G R O UN DS R EGA RD I N G DOUB L E TA X A T I ON WITHOUT GIVING AN OPP O RTUN I TY TO THE A . O. S IN CE T H E SA I D G ROUN D S W E R E N O T R A I SE D B E F OR E THE A . O . DUR I NG PROCEED I NGS U / S 201 / 201A ? 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) I S JUST IFIED I N NO T APPRECIATING THE RULING OF 1 S T PROVISO TO SECTION 201(1) AND HOLDING THA T O N US I S ON REVENUE TO DEMONSTRATE THAT TA X ES HAVE NOT BEEN RECOVERED FRO M THE PER S ON WH O HA D P R I M A RY LI AB IL I T Y TO P A Y TA X I . E. CONT R ACTO R? 3 . BRIEF FACTS OF THE CASE ARE THAT THE TAX DEDUCTOR ASSESSEE IS A COMPANY REGISTERED UNDER THE COMPANIES ACT 1956 AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COTTON YARN DENIM FABRICS AND ALLIED ACTIVITIES HAVING ITS MANUFACTURING FACILITIES AT YAVATMAL AND CAP TI VE POWER PLANT. THE TRANSPORTATION OF RAW MATERIAL AND CONSUMABLES FROM VENDORS TO FACTORY PREMISES ARE MADE THROUGH VARIOUS ROAD TRANSPORTERS. THE CO MPANY HAS NOT DEDUCTED TAX AT SOURCE (TDS) FROM THE PAYMENTS MADE TO SUCH TRANSPORTE R S WHO HAVE FURNISHED THEIR PERMANENT ACCOUNT NUMBER (PAN) IN VIEW OF PROVISIONS OF SUB - SECTION (6) OF SECTION 194C OF THE ACT. 3 ITA NOS. 351 & 352/NAG/2015. 4. THERE WAS A SURVEY IN THE ASSESSEES PREM ISES AND IT WAS ENQUIRED AS TO WHY TDS HAS NOT BEEN DEDUCTED AT SOURCE FROM PAYMENTS MADE TO THE TRANSPORT OPERATORS. THE ASSESSEE RESPONDED AS UNDER : ' WE ARE IN RECEIPT OF ABOVE SHOW CAUSE NOTICE ASKING US TO JUSTIFY WHY NO TAX IS DEDUCTED AT SOURCE U/S 194C OF THE INCOME TAX ACT 1961 BY THE COMPANY ON FREIGHT CHARGES PAID TO THE CONTRACTORS WHO ARE ENGAGED IN THE GOODS CARRIAGES FOR THE F . Y . 2012 - 13 FY . 2013 - 14 AND FROM APRIL 2014 TO NOVEMBER 2014 . IN THIS REGARD WE WO ULD LIKE TO STATE AS UNDER - AS PER SEC. 194C OF THE INCOME TAX ACT 1961 ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT CONTRACTOR FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN A SPECIFIC PERSON AND THE RESIDENT CONTRACTOR IS REQUIRED TO DEDUCT TAX AT SOURCE . BY VIRTUE OF EXPLANATION (IV) THE EXPRESSION ' WORK ' SHALL ALSO INCLUDE AMONG OTHER THINGS CARRIAGE OF GOODS AND/ OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAI/WAYS . AS PER SECTION 194C (6) OF THE INCOME TAX ACT 1961 ' NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGES ON FURNISHING OF PERMANENT ACCOUNT NUMBER TO THE . . . P ERSON PAYING OR CREDITING SUCH SUM ' FROM THE ABOVE READING OF SEC . 194C OF THE INCOME TAX ACT 1961 IT IS VERY ;: ; : - .. : . : ;; : ?' CLEAR THAT IF THE ASSESSEE PAYS TO A TRANSPORT CONTRACTOR WHO HAS SUBMITTED TO HIM PERMANENT ACCOUNT NUMBER THEN THERE IS NO L I ABILITY ON THE DEDUCTOR TO DEDUCT TAX U/S 194C OF THE INCOME TAX ACT 1961 . WE WOULD LIKE TO SUBMIT THAT THE COMPANY HAS NOT DEDUCTED TAX ON TRANSPORT CONTRACTOR WHO HAS SUBMITTED PERMANENT ACCOUNT NUMBER . THUS THERE IS NO NON - COMPANIES OF TDS PROVISIONS BY US WHILE MAKING PAYMENTS TO TRANSPORT CONTRACTOR U/S 194C OF THE INCOME - TAX ACT 1961. 4 ITA NOS. 351 & 352/NAG/2015. HOWEVER THE AO WAS NOT SATISFIED. HE HELD THAT THE DEDUCTOR SHOULD BE IN THE BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGE FOR THE BENEFIT OF SECTION 194C(6) TO BE AVAILABLE. THE ASSESSING OFFICER CONCLUDED AS UNDER : SECTION 194C(6) HAS BEEN INTRODUCED FROM 01.10.2009 REPLACING THE SECOND PROVISO TO SECTION 19 4C(3)(I) OF THE INCOME TAX ACT 1961. PRIOR TO THE AMENDMENT THE POSITION WAS THAT IF ANY PERSON DURING THE COURSE OF PLYING HIRING OR LEASING GOODS CARRIAGES MAKES PAYMENT TO A SUB - CONTRACTOR THEN TDS NEED NOT BE MADE IF SUCH SUB CONTRACTOR FURNISHES A DECLARATION THAT HE HAS NOT OWNED MORE THAN TWO TRUCKS. THUS THE PERSON WHO IS IN THE BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGES HAD TO MAKE TDS IN RESPECT OF PAYMENTS MADE TO SUB - CONTRACTORS WHO OWNED MORE THAN TWO TRUCKS. SINCE THIS CAUSED HARDSHIP TO SMALL OPERATORS THE ACT HAS BEEN AMENDED BY INTRODUCING SECTION 194C(6). IN THE EXPLANATORY NOTES IT IS CLEARLY MENTIONED THAT THE ACT IS AMENDED TO EXEMPT PAYMENTS TO TRANSPORT OPERATORS (AS DETAILED IN SECTION 44AE) FROM THE PURVIEW OF TDS. HOWEVER THIS WOULD ONLY APPLY IN CASES WHERE THE OPERATOR FURNISHES HIS PAN TO THE DEDUCTOR. 5. UPON ASSESSEES APPEAL THE LEARNED CIT(APPEALS) ELABORATELY DISCUSSED AND CONSIDERED THE ISSUE. HE CONCLUDED AS UNDER : 7. 6.6 THEREFORE THE SECTION HAS BEEN PROPOSED TO BE AMENDED W.E.F 1ST JUNE 2015 TO EXPRESSLY PROVIDE THAT THE RELAXATION UNDER SUB SECTION (6) OF SECTION 194C OF THE ACT FROM NON - DEDUCTION OF TAX SHALL ONLY BE APPLICABLE TO THE PAYMENT IN THE NATURE OF T RANSPORT CHARGES (WHETHER PAID BY A PERSON ENGAGED IN THE BUSINESS OF TRANSPORT OR OTHERWISE) MADE TO A CONTRACTOR WHO IS ENGAGED IN THE BUSINESS OF TRANSPORT AND WHO IS ELIGIBLE TO COMPUTE INCOME AS PER THE PROVISIONS OF SECTION 44AE OF THE ACT AND WHO SHALL ALSO FURNISH A DECLARATION TO THIS EFFECT ALONG WITH HIS PAN . IT MAY BE NOTED THAT ONLY AMENDMENT PROPOSED IN SECTION 194C(6) IS SUBS TITUTION OF EXISTING WORDS 'ON FURNISHING OF' BY 'WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGE AT ANY T IME DURING THE PREVIOUS YEAR AND FURNISHES A DECLARATION TO THAT EFFECT ALONG WITH. THE AMENDMENT DOES NOT ALTER ANY POSITION WITH REGARDS TO STATUS OF TRANSPORT OPERATOR AS A RECIPIENT OF TRANSPORT CHARGES FOR 6.8 WITH THIS AMENDMENT AND CLARIFICATION IT IS ABUNDANTLY CLEAR THAT NON - DEDUCTION OF TAX WHILE MAKING PAYMENT TO TRANSPORT OPERATORS FOR TRANSPORT CHARGES 5 ITA NOS. 351 & 352/NAG/2015. W.E.F. 1 - 10 - 2009 IS ABSOLUTELY AS PER THE PROVISIONS OF SECTION 194C (6) AND THERE CANNOT BE A NY DEFAULT IN THIS REGARD IF THE PAN OF TRANSPORTER HAS BEEN COLLECTED AND REPORTED BY THE DEDUCTOR. 6.9 THEREFORE THE INTERPRETATION OF LD. ITO WHILE TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' FOR NON DEDUCTION OF TAX WHILE MAKING FREIGHT PAYMENT TO TRANSPORT OPERATORS IS NOT AS PER LAW TO T H E EXTENT IT NOT ONLY INTERPRETS THE PROVISION IN AN ERRONEOUS MANNER BUT ALSO CONTRA R Y TO LEGISLATIVE INTENT AND BINDING CBDT CIRCULARS . IN VIEW OF THE ABOVE THE ORDER PASSED BY ID. AO U/S 201(1) AND 201(1 A) OF THE ACT HOLDING THE APPELLANT AS 'ASSESSEE IN DEFAULT' IN RESPECT OF TRANSPORT CHARGES PAID TO TRANSPORT OPERATORS WITHOUT DEDUCTION OF TDS IN COMPLIANCE WITH PROVISIONS OF SECTION 194C(6) IS REQUIRED TO BE CANCELLED. IN SUCH FACTS THE ACTION OF THE ID. AO OF RAISING THE DEMAND FOR TAX OF RS. 26 49 147/ - & RS. 19 03 716/ - U/S 201(1) AND INTEREST TO RS. 6 86 816/ - & RS. 3 55 979/ - U/S 201(LA) OF THE ACT FOR AY 2013 - 14 & AY 2014 - 15 RESPECTIVELY IS HELD TO BE ERRONEOUS AND IS THEREFORE DIRECTED TO BE DELETED. 7. FURTHER IT HAS TO BE NOTED THAT THE APPELLANT HAD PROVIDED COMPLETE DETAILS IN RESPECT OF EACH OF THE TRANSPORT OPERATORS INCLUDING THEIR INVOICES PAN ETC. AND HENCE IT HAD DULY DISCHARGED THE ONUS CAST UPON IT AND THAT IT C ANNOT BE TREATED AS AN ASSESSEE IN DEFAULT TILL IT IS FOUND THAT DEDUCTEES HAD ALSO FAILED TO PAY SUCH TAX DIRECTLY. IT IS EVIDENT THAT THE DETAILS OF ALL THE PERSONS FROM WHOM TAX WAS REQUIRED TO BE DEDUCTED WAS AVAILABLE ON RECORD BEFORE THE LD . A . O. AND THE ONUS WAS ON THE A.O. TO ASCERTAIN THE FACTS RELATED TO PAYMENT OF TAX ON INCOME OF THE TRANSPORT CONTRACTORS DIRECTLY FROM THE RECIPIENT OF SUCH INCOME. RELIANCE IN THIS REGARD IS PLACED ON HINDUSTAN COCA COLA BEVERAGES PVT. LTD VS CIT 293 ITR 2 26 JAGRANPRAKASHAN LTD VS. DCIT 21 TAXMANN.COM 489 AND AGRA ITAT JUDGMENT IN THE CASE OF ALLAHABAD BANK VS. ITO BEARING ITA NOS . 448 TO 454/ AGRA /2011 . 6. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. IN THIS REGARD I MAY GAINFULLY REFER TO SECTION 194 C (6) AS UNDER : NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGES [WHERE SUCH CONTRACTORS OWN TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISH A DECLARATION TO THAT EFFECT ALONG WITH] HI S PERMANENT ACCOUNT NUMBER TO THE PERSON PAYING OR CREDITING SUCH SUM. 8. FROM THE ABOVE IT IS CLEAR THAT TDS IS NOT TO BE DEDUCTED FROM THE PAYMENT MADE TO TRANSPORTERS WHO FURNISHED PAN. THE ASSESSING OFFICER HAS WRONGLY INTERPRETED THAT THIS PROVISION IS APPLICABLE TO TAX DEDUCTED BY ASSESSEE 6 ITA NOS. 351 & 352/NAG/2015. WHO ARE ENGAGED IN TRANSPORT BUSINESS. THIS IN MY CONSIDERED OPINION IS AN ERRONEOUS INTERPRETATION NOT SUSTAINABLE IN LAW. IN MY CONSIDERED OPINION LEARNED CIT(APPEALS) HAS CORRECTLY APPRECIATED THE LAW AND THE F ACTS OF THE CASE AND THE SAME DOES NOT NEED ANY INTERFERENCE. ACCORDINGLY I UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 9. IN THE RESULT THESE APPEALS BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPT. 2016. SD/ - ( SHAM IM YAHYA) ACCOUNTANT MEMBER. NAGPUR DATED: 30 TH SEPT. 2016. COPY FORWA RDED TO : 1. M/S RAYMOND UCO DENIM PVT. LTD. (FABRIC DIVISION C1 MIDC LOHARA DIST. YAVATMAL - 445001 . 2. I.T.O. (TDS) WARD - 1(4) WARDHA. 3. C.I.T. - 2 NAGPUR. 4. CIT(APPEALS) - II NAGPUR. 5. D.R. ITAT NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH NAGPUR. WAKOD E.