ITO, Panipat v. Smt. Rukhmani Devi Prop., Panipat

ITA 5408/DEL/2011 | 2005-2006
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 540820114 RSA 2011
Bench Delhi
Appeal Number ITA 5408/DEL/2011
Duration Of Justice 3 month(s) 28 day(s)
Appellant ITO, Panipat
Respondent Smt. Rukhmani Devi Prop., Panipat
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Allowed
Bench Allotted F
Tribunal Order Date 30-03-2012
Date Of Final Hearing 02-02-2012
Next Hearing Date 02-02-2012
Assessment Year 2005-2006
Appeal Filed On 02-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI A.N.PAHUJA ACCOUNTANT MEMBER ITA NO: 5408/DEL/2011 A.Y. : 2005-06. ITO WARD 1 PANIPAT VS. RUKHMANI DEVI PROP.M/S SHAKTI TRANSPORT CO. 21 KARTA SHAH NAGAR MODEL TOWN PANIPAT (APPELLANT) (RESPO NDENT) APPELLANT BY : SHRI B.R.R.KUMAR SR.D.R. RESPONDENT BY : SHRI SUSHIL BHUSHAN GUPTA ADV. O R D E R PER DIVA SINGH JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER DT. 28.9.2011 OF CIT(A) KARNAL PERTAINING TO A.Y. 2005-06. 2. THE SOLE ISSUE AGITATED BY THE REVENUE IN THE PR ESENT APPEAL READS AS UNDER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.48 08 150/- MA DE U/S 40(A)(IA) FOR THE ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE U/S194C(2) FO THE I.T.ACT. 3. THE RELEVANT FACTS AS DISCUSSED IN THE IMPUGNED ORD ER ARE SET OUT IN PARA 3.01 WHICH READ AS UNDER 3.01. AS DISCUSSED ABOVE THE FACTS ARE THAT DURIN G THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT SHE WAS IN CONTRACT WITH GANNON DUNKERLEY & CO.LTD. FOR TRA NSPORTING THE MATERIAL OF ABOVE COMPANY FROM VARIOUS PLACES T O WORK SITES AT IOCL PANIPAT. TO EXECUTE THE ABOVE CONTR ACT WORK SHE APPROACHED TO DIFFERENT TRUCK OWNERS FOR TRANSPORTI NG THE ITA 5408/DEL/11 PAGE 2 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT MATERIAL AND HER CONTRACT WITH THEM WAS STARTED WIT H THE LOADING OF MATERIAL AND CEASED AS SOON AS THEY UNLO ADED THE MATERIAL AS SPECIFIED IN THE GR AND THUS EACH AND EVERYTRIP WAS SEPARATE CONTRACT. IT WAS FURTHER SUBMITTED TH AT NATURE OF ABOVE CONTRACT FALLS UNDER THE CATEGORY OF CONTRACT BETWEEN AN INDIVIDUAL AND A CONTRACTOR. IT WAS THEREFORE SU BMITTED THAT PAYMENT MADE TO TRUCK OWNERS FOR EACH TRIP WAS BEYO ND THE PREVIEW OF TDS. FROM THE SUBMISSIONS MADE BY THE A SSESSEE THE A.O. HOWEVER NOTED THAT THE PAYMENTS MADE ON A CCOUNT OF CARTAGE WAS THE PAYMENTS MADE BY A CONTRACTOR TO A SUB- CONTRACTOR AND AS SUCH THE ASSESSEE WAS REQUIRED T O DEDUCT TAX AT SOURCE AS PER S.194C(2). THE JUDGEMENT REFE RRED TO BY THE ASSESSEE WAS HELD TO BE DISTINGUISHABLE BY THE A.O. BEING NOT IDENTICAL IN FACTS. THE ASSESSEE WAS FURTHER A SKED TO FURNISH THE DETAILS OF PAYMENT AGGREGATING TO RS. 5 0 000/- IN A FINANCIAL YEAR SINCE THE PROVISIONS WAS AMENDED W.E .F. 1.10.2004 AS PER WHICH THE PAYMENT MADE AGGREGATING TO RS.50 000/- OR MORE IN A FINANCIAL YEAR ARE LIABLE FOR TDS U/S 194C(2) IN ;THE CASE OF PAYMENT TO A SUB CONTRACTOR . THE ASSESSEE FURNISHED THE RELEVANT INFORMATION. SINCE THE TAX WAS NOT DEDUCTED AT SOURCE FROM THESE PAYMENTS THE SAM E WAS DISALLOWED U/S 40A(IA) OF THE ACT WHICH IS CHALLENG ED VIDE GROUND NO.3 OF THE APPEAL. 4. IN APPEAL BEFORE THE CIT(A) IT WAS AGITATED THAT THE A.O. HAS CONCLUDED THAT TAKING TRUCKS BY THE ASSESSEE AMOUN TS TO A SUB CONTRACT. THE RELIANCE PLACED BY THE ASSESSEE ON M YTHRI TRANSPORT CO. VS ACIT AND KAVITA CHUG VS ITO KOL HAS BEEN HELD TO BE INAPPLICABLE BY THE AO WITHOUT ASSIGNING ANY REASONS. 4.1. THE CIT(A) REQUIRED THE ASSESSEE TO PRODUCE CO PY OF THE AGREEMENT ENTERED INTO WITH THE PRINCIPAL. COPY OF THE SAME AS PER PARA 3.03 OF THE IMPUGNED ORDER WAS FILED ALONG WITH THE COVERING LE TTER DT. 19.8.2011. THE CONTENTS OF THE SAID LETTER ARE REPRODUCED IN T HE SAID PARA THEY READ AS UNDER. COPY OF AGREEMENT WITH GANNON DUNKERLEY &CO.LTD. I S ENCLOSED. THE ASSESSEE HAD ENTERED INTO AGREEMENT FOR TRANSPORTAT ION OF STONE GRIT AND ITA 5408/DEL/11 PAGE 3 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT SAND FROM YAMUNANAGAR FOR THERE HCU PROJECT IOCL RE FINERY THE RELEVANT MAIN CONDITIONS ENTERED INTO THE CONTRACT ARE AS UN DER. I) PAYMENT FOR TRANSPORTATION OF MATERIAL WAS BY VOLUM E II) MEASUREMENT OF MATERIALS SHALL BE AS PER ACTUAL SIT E MEASUREMENT. III) THE PAYMENTS SHALL BE ON MONTHLY BASIS. IV) THE BILLS TO BE SUBMITTED BY 5 TH OF EVERY MONTH. V) CASH RETENTION WILL BE MADE FROM ALL TRANSPORTATION BILLS AND THE SAME SHALL BE RELEASED AFTER COMPLETION OF PROJECT. 4.2. ACCORDINGLY CONSIDERING THE TWO ORDERS OF THE TRIBUNAL IN PARAS 3.05 AND 3.06 THE ISSUE WAS CONCLUDED IN ASSESSEES FAVOUR VIDE PARA 3.07 HOLDING AS UNDER. 3.07. IN VIEW OF THE FACTS SUBMITTED ABOVE AND T HE DECISIONS OF THE ITAT IT IS HELD THAT THE PAYMENT S MADE BY THE APPELLANT FOR TRANSPORTING THE MATERIAL BY HIRI NG THE TRUCKS CANNOT BE SAID TO BE THE PAYMENT MADE TO A S UB CONTRACTOR AND HENCE PROVISIONS OF S.194C(2) ARE N OT APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLAN T. FURTHER AS DISCUSSED ABOVE THE PROVISIONS OF S.104C(1) ARE ALSO NOT APPLICABLE BEING THE SAME BECAME APPLICABLE IN THE CASE OF PAYMENT MADE BY AN INDIVIDUAL OR HUF W.E.F. 1.6.200 7. THE ADDITION MADE BY THE A.O. U/S 40(A)(IA) CAN THEREF ORE NOT BE SUSTAINED AND HENCE IS HEREBY DIRECTED TO BE DE LETED. GROUNDS OF APPEAL NO.3 IS AS SUCH ALLOWED. 5. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. WHEREAS THE LD.SR.D.R. CONTENDED THAT THE FACTS OF MYTHRI TRANSPORT CO. VS ACIT ARE DISTINGUISHABLE AND THE PRESENT CASE IS A CASE OF PAYMENT TO A SUB CONTRACTOR. THE LD.A.R. ON THE OTHER HAND RE LYING UPON THE IMPUGNED ORDER CONTENDED THAT THE TRUCK OWNERS NEVE R STEPPED INTO THE SHOES OF THE ASSESSEE AND AT ALL TIMES THE ASSESSEE WAS AVAILABLE FOR THE PERFORMANCE OF THE CONTRACT TO THE PRINCIPAL AS SUC H THE PRINCIPLE LAID ITA 5408/DEL/11 PAGE 4 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT DOWN IN MYTHRI TRANSPORT CO. FULLY CONCLUDES THE ISSUE IN FAVOUR OF THE ASSESSEE. LD.A.R. AS SUCH WAS REQUIRED TO FILE A C OPY OF THE AGREEMENT FILED BY THE ASSESSEE BEFORE THE CIT(A) WHICH IS TH E SUBJECT MATTER FOR CONSIDERATION IN THE PRESENT PROCEEDINGS. THE SAME HAS NOT BEEN MADE AVAILABLE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET WE WOULD LIKE T O REFER TO THE ORDER OF THE CO-ORDINATE BENCH RENDERED IN THE CASE OF MYTHR I TRANSPORT CO. 124 ITD 40 (VISAKHAPATNAM BENCH). A PERUSAL OF SAME SH OWS THAT THE FACTS AVAILABLE IN THE SAID CASE WERE THAT THE ASSESSEE A TRANSPORT CONTRACTOR ENTERED INTO AN AGREEMENT WITH PARTIES WHEREBY THE ASSESSEE UNDERTOOK TO TRANSPORT BITUMEN FROM THE PRINCIPALS TO VARIOUS POINTS AS PER THEIR DIRECTIONS. FOR CARRYING OUT THE CONTRACT BUSINESS SO OBTAINED THE ASSESSEE CLAIMED TO HAVE NOT MAINTAINED SUFFICIENT NUMBER OF TANK LORRIES AND THEREFORE ENGAGED THE LORRIES BELONG ING TO THE OTHER PARTIES APART FROM USING ITS OWN TANK LORRIES. THE BILLS W ERE RAISED BY THE ASSESSEE WITH THE PRINCIPALS CONTENDED DETAILS SUC H AS LORRY NUMBER TONNAGE OF PRODUCT TRANSPORTED THE DISTANCE COVERE D AND THE RATE PER TONNE PER RUNNING KILOMTER. THE AMOUNT RECEIVED FR OM THE PRINCIPALS REFERABLE TO THE TRANSPORT MADE ON ITS OWN LORRIES FELL WITHIN THE GROSS RECEIPTS ACCORDING TO THE ASSESSEE AND THE AMOUNT R ECEIVED ON THE BILLS RAISED BY THE ASSESSEE PERTAINING TO HIRED VEHICLES COULD NOT BE TREATED AS COMMISSION. THE A.O. HELD THAT THE PAYMENTS MAD E TO SUB ITA 5408/DEL/11 PAGE 5 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT CONTRACTORS HAD TO BE DEBITED TO THE P&L ACCOUNT. SINCE THERE WAS NO DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE TO THOSE SUB CONTRACTORS AS PER PROVISIONS OF S.194C(2) PROVISI ONS OF S.40(A)(IA) WOULD CAME INTO PLAY WHEREBY THE PAYMENTS MADE TO SUB CO NTRACTORS COULD NOT BE ALLOWED AS DEDUCTION. ACCORDINGLY THE AO DETER MINED THE AMOUNT THAT ATTRACTED DISALLOWANCE U/S 40(A)(IA) AND DISAL LOWED THE SAME. ON APPEAL THE COMMISSIONER (APPEALS) HELD THAT SINCE THE TANK LORRIES TAKEN ON HIRE WERE UTILIZED FOR THE PURPOSES OF THE BUSIN ESS OF THE EXECUTION OF THE CONTRACT DURING THE ENTIRE CONTRACT PERIOD SAM E WAS IN THE NATURE OF SUB CONTRACT AND ANY PAYMENTS MADE TO SUCH TANK LOR RY OWNERS WOULD COME WITHIN THE PURVIEW OF S.194C. THE CIT(A) HELD THAT BY NOT DEDUCTING TAX ON ;SUCH PAYMENTS THE ASSESSEE HAD V IOLATED THE PROVISIONS OF S.40(A)(IA). THE COMMISSIONER (APPEA LS) THEREFORE CONFIRMED THE ORDER OF THE A.O. 6.1. SEIZED OF THE ABOVE FACTS THE COORDINATE BENC H HELD THAT FOR ATTRACTING THE PROVISIONS OF S.194C (2) THE FOLLOWI NG CONDITIONS WERE TO BE SATISFIED:- (A) THE ASSESSEE SHOULD BE A CONTRACTOR; (B) THE ASSESSEE IN HIS CAPACITY AS A CONTRACTOR SHOULD ENTER INTO A CONTRACT WITH A SUB-CONTRACTOR FOR CARRYING OUT TH E WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR; (C) THE SUBCONTRACTOR SHOULD CARRY OUT THE WHOLE O R ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR; (D) PAYMENT SHOULD BE MADE FOR CARRYING OUT THE WH OLE OR ANY PART OF THE WORK. ITA 5408/DEL/11 PAGE 6 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT 6.2. THE FACTS IN THE CASE OF MYTHRI TRANSPORT WER E THAT THE ASSESSEE TRANSPORT CONTRACTOR ENTERED INTO AN AGREEMENT WITH PARTIES WHEREBY IT UNDERTOOK TO TRANSPORT BUSINESS TO VARIOUS POINTS A S PER THEIR DIRECTIONS. THE LORRIES USED FOR THE SAID PURPOSE ACCORDING TO THE ASSESSEE WERE SPECIALLY DESIGNED WITH PROPER HEATIN G ARRANGEMENTS. IT WAS CLAIMED THAT SINCE THE ASSESSEE DID NOT HAVE TH E REQUIRED NUMBER OF LORRIES IT HAD TO HIRE LORRIES FROM OTHERS WHO SIMP LY PLACED THE VEHICLES AT THE DISPOSAL OF THE ASSESSEE. THE ASSESSEE ALONE U NDER ITS CONTROL AND SUPERVISION HAD EXECUTED THE WHOLE OF THE CONTRACT. ACCORDING TO THE ASSESSEE THE INDIVIDUAL LORRY OWNERS HAD NOT CARRIE D OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE RELEVANT FACT S EXTRACTED FROM THE HEAD NOTE ARE AS UNDER:- IN THE INSTANT CASE THE ASSESSEE WAS A TRANSPORT CONTRACTOR AND HAD ENTERED INTO AN AGREEMENT WITH PARTIES WHEREBY IT UNDERTOOK TO TRANSPORT BITUMEN TO VARIOUS POINTS AS PER THEIR DIRECTIONS. ACCORDI NG TO THE ASSESSEE THE LORRIES USED FOR THE SAID PURPOSE WERE SPECIALLY DESIGNED WITH PROPER HEATING ARRANGEMENTS. THE CLAIM OF ASSESSEE WAS THAT SINCE IT DID NOT HAVE REQUIRED NUMBER OF LORRIES IT HAD TO HIRE LORRIES FROM OTHERS WHO SIM PLY PLACED THE VEHICLES AT THE DISPOSAL OF THE ASSESSEE . THE ASSESSEE ALONE UNDER ITS CONTROL AND SUPERVISION HAD EXECUTED WHOLE OF THE CONTRACT. ACCORDING TO THE ASSESSEE THE INDIVUDAL LORRY OWNERS HAD NOT CARRIED OUT ANY PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. (PARA 8.2) THE STRINGENT CLAUSES OF THE WORK ORDER SUGGESTED THAT THE ASSESSEE WOULD BE SOLELY RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS COMMITTED BY IT AND/OR IT S EMPLOYEES.(PARA 8.4) ITA 5408/DEL/11 PAGE 7 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT IT WAS NOT ESTABLISHED BY THE REVENUE THAT OTHER LORRY OWNERS FROM WHOM THE VEHICLES WERE HIRED HAD ALSO BEEN FASTENED WITH ANY OF THE ABOVE SAID LIABILITY. IN A SUB CONTRACT A PRUDENT CONTRACTOR WOULD INCLUDE ALL THE LIABILITY CLAUSES IN THE AGREEMENT ENTERED INTO BY HIM WITH THE SUB CONTRACTOR. THE ASSESSEE HAD ALSO CLAIMED BEFORE THE TAX AUTHORITIES THAT THE RESPONSIBILITY IN THE WHOLE PROCESS LAY WITH IT ONLY. THOUGH THE PASSING OF LIABILITY WAS NOT THE ONLY CRITERIA TO DECIDE AB OUT THE EXISTENCE OF A SUB CONTRACT YET THIS CONTENTIO N OF THE ASSESSEE READ WITH THE LIABILITY CLAUSES OF THE WORK ORDER SUPPORTED ITS SUBMISSION THAT THE INDIVIDUAL VEHICLE OWNERS WERE SIMPLE HIRERS OF THE VEHICLES. (PARA 8.5.) 7. IN THE FACTS OF THE PRESENT CASE IT IS SEEN THAT NO EFFORT HAS BEEN MADE BY THE ASSESSEE TO DEMONSTRATE HOW THE FACTS A RE PARI MATERIA. AS EVIDENTLY IN THE FACTS OF MYTHRI TRANSPORT NOT ONLY THERE WAS A SHORTAGE OF THE TRANSPORT VEHICLES BUT ALSO THE HIRED VEHICL ES HAD TO BE FITTED WITH SPECIALLY DESIGNED TANKS TO ENSURE REQUISITE HEATIN G ARRANGEMENTS AND ON A PERUSAL OF VARIOUS CLAUSES OF THE CONTRACT IT WAS EVIDENT THAT THE ASSESSEE WOULD BE SOLELY RESPONSIBLE FOR ALL ACTS A ND DEFAULTS. THE SAID FINDING IS MISSING IN THE IMPUGNED ORDER. ACCORD INGLY FOR THE REASONS ;GIVEN HEREINABOVE THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED TO THE FILE OF CIT(A) TO PASS A SPEAKING O RDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUN ITY OF BEING HEARD. ACCORDINGLY THE DEPARTMENTAL GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS AL LOWED FOR STATISTICAL PURPOSES. ITA 5408/DEL/11 PAGE 8 OF 8 A.Y. 2005-06 MS.RUKMANI DEVI PANIPAT ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- (A.N.PAHUJA) (DIVA SINGH) ACCOUNTNAT MEMBER JUDICIAL MEMBE R DATED: 30 TH MARCH 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY. REGISTRAR