ACIT, Firozabad v. Shri Avnessh Kumar Singh, Firozabad

ITA 592/AGR/2008 | 2005-2006
Pronouncement Date: 04-02-2011 | Result: Dismissed

Appeal Details

RSA Number 59220314 RSA 2008
Assessee PAN ADJPS1069D
Bench Agra
Appeal Number ITA 592/AGR/2008
Duration Of Justice 2 year(s) 5 month(s)
Appellant ACIT, Firozabad
Respondent Shri Avnessh Kumar Singh, Firozabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 04-02-2011
Date Of Final Hearing 18-01-2011
Next Hearing Date 18-01-2011
Assessment Year 2005-2006
Appeal Filed On 03-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO.592/AGR/2008 ASST. YEAR: 2005-06 ASSTT. COMMISSIONER OF INCOME TAX VS. M/S AVNEES H KUMAR SINGH CIRCLE-5 FIROZABAD. PROP. KRISHNA BULK MOVERS 76 CHAUBEY JI KA BAGH FIROZABAD. (PAN : ADJPS 1069 D). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR JR. D.R. RESPONDENT BY : SHRI K.C. AGARWAL ADVOCATE ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 07.07.2008 BY WHICH THE CIT(A) DELETED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(IA) READ WITH SECTION 194(C)(2) OF THE I NCOME-TAX ACT 1961 (THE ACT HEREINAFTER) AMOUNTING TO ` 12 31 511/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE TRANSPORTATION OF LPG CYLINDERS FROM ANY WHERE IN INDIA FROM THE BOTTLING PLANTS DEPOTS AND OTHER OPERATING BASIS TO THE CUSTOMERS OF SHV ENERGY (P) LTD. HYDERABAD AS PER AGREEMENT DATED 14.08.2003 EXECUTED WITH THE SAID COMPANY. THE ASSESSEE HAS TO PROVIDE TRUCKS EITHER OWNED OR OPERATED BY IT TO THE COMPANY TO TRANSPORT THE LPG CYLINDERS AS PER CLAUS E 1(B) OF THE AGREEMENT ON THE TERMS AND CONDITIONS AGREED IN THE AGREEMENT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN THE TRANSPORT FREIGHT RECEIPT OF ` 95 78 551/- WHEREAS AS PER FORM 16A FILED FROM SHV ENERGY PVT. 2 LTD. AVALON COSMETICS AND INDIAN OIL CORPORATION L IMITED THE TOTAL AMOUNT PAID OR CREDITED BY THE COMPANIES TO THE ASSESSEE WAS ` 1 34 95 598/-. HE ENQUIRED OF THE DIFFERENCE. THE ASSESSEE POINTED OUT THAT THE DIFFERENCE OF ` 38 00 511/- WAS BECAUSE THERE WERE OUTSIDE TANKERS RUN BY THE ASSESSEE ON FREIGHT COMMISSION BASIS DURING THE YEAR UNDER WHICH THE ASSESSEE HAS CHARGED ONLY COMMISSION FROM THOSE PERSONS WHEREAS THESE PA RTIES DEDUCTED TDS ON THE FULL AMOUNT OF FREIGHT PAID BY THEM. THE AMOUNT ON WHICH THE COMM ISSION WAS RECEIVED BY THE ASSESSEE WAS ` 36 23 872/-. THE BALANCE DIFFERENCE OF ` 1 76 643/- WAS ON ACCOUNT OF THE FACT THAT THE ASSE SSEE WAS FOLLOWING THE MERCANTILE SYSTEM WHILE THE PARTI ES ISSUED TDS CERTIFICATES ON PAYMENT BASIS. SOMETIMES AMOUNT RECEIVED IS LESS AND SOMETIMES IT IS HIGHER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TURNOVER OF THE ASSESSEE WAS MORE THA N ` 40 00 000/- AND THEREFORE THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT THE TDS ON THE AMOUN T CREDITED OR PAID TO THE OWNERS OF THE RESPECTIVE VEHICLES OF FREIGHT IN VIEW OF SECTION 1 94C(2). HE ACCORDINGLY DISALLOWED A SUM OF ` 12 31 511/- UNDER SECTION 40(IA) OF THE ACT. THE A SSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT SECT ION 194C PROVIDES THAT IF ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RECIPIENT FOR CARRYING OUT ANY WORK IN PURSUANCE TO CONTRACT BETWEEN THE CONTRACTORS AND OTHER PERSONS SHALL BE LIABLE TO DEDUCT TDS AS PROVIDED IN THE ACT. THE ASSESSEE IN THE INSTANT CASE IS AN AGENT OF VEHICLE OWNERS AND RECEIVING THE PAYMENT FROM THE COMPANIES IN RESPECT OF FREIGHT ON BEHALF OF HIS PRINCIPAL THE TANKER OWNERS AND BILLING THE COMPANIES IN RESPECT OF FREIGHT OF THOSE TANKERS ON BEHALF OF THOSE TANKER OWNERS. THE ENTRY IS MADE IN THE BOOKS WHEN THE AMOUNT IS B ILLED TO THE COMPANIES AND IS CREDITED TO THE VEHICLE OWNERS ACCOUNT AND DEBITED TO THE COMPANYS ACCOUNT AND WHEN THE AMOUNT OF FREIGHT IS RECEIVED FROM THE COMPANIES ON THEIR BILLS IT IS C REDITED TO THE COMPANYS ACCOUNT WHEN IT IS PAID BACK TO THE TRUCK OWNER IT IS DEBITED TO THEIR ACC OUNT AND THE ASSESSEE CHARGES THE COMMISSION FOR AGENCY BUSINESS CONDUCTED BY HIM ON THEIR BEHAL F BY DEBITING TO THEIR ACCOUNT AND CREDITING 3 FROM COMMISSION ACCOUNT. REFERRING TO SECTION 40(I A) IT WAS SUBMITTED BEFORE HIM THAT SECTION 40(IA) IS ONLY LIMITED TO THE DISALLOWABILITY OF DE DUCTION IN COMPUTING THE CHARGEABLE INCOME WHEN THE AMOUNT IS PAID TO THE CONTRACTOR NO TAX W AS DEDUCTED WHEREAS IT WAS DEDUCTIBLE. THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION OF THE EXPEN DITURE UNDER ANY HEAD OF INCOME UNDER SECTIONS 30 TO 38 IN HIS BOOKS OF ACCOUNTS. THEREF ORE SECTION 40(IA) IS NOT APPLICABLE. THE ASSESSEE IS ACTING AS AN AGENT OF THE PRINCIPAL VEH ICLE OWNERS FOR RUNNING THE VEHICLE THEREFORE HE IS NOT LIABLE TO TDS ON BEHALF OF THE PRINCIPAL. HE IS SIMPLY CHARGING COMMISSION WHEREAS THE PROPER TDS ON THIS AMOUNT HAS ALREADY BEEN DEDU CTED BY THE COMPANIES ON THE AMOUNT BILLED BY THE ASSESSEE ON BEHALF OF THE PRINCIPAL. THUS THERE IS NO LOSS TO THE REVENUE. THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER AFT ER GETTING THE REMAND REPORT FROM THE ASSESSING OFFICER :- I HAVE PERUSED THE RECORDS AND HAVE GONE THROUGH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER FIROZABAD. I HAVE ALSO PERUSED THE COPIES OF CONTRACT FREIGHT AND FREIGHT COMMISSION ACCOUNT FIL ED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND COPY FILED BEFORE ME AND FIND THAT THE FREIGHT CHARGED BY THE ASSESSEE ON HIS OWN TRUCKS AND ALSO FREIGHT COM MISSION ACCOUNT IN WHICH THE ASSESSEE HAS DULY CREDITED THE COMMISSION CHARGED O N THE FREIGHT FROM VARIOUS TRUCKS OF THE PRINCIPALS PLIED BY THE ASSESSEE AND THE FREIGHT IN RESPECT THEREOF IS DIRECTLY CREDITED TO THE ACCOUNT OF THOSE PRINCIPAL S WHO OWN THE TRUCK THE AMOUNT OF COMMISSION CHARGED BY THE ASSESSEE AND TH E EXPENSES INCURRED FOR PLYING OF THOSE TRUCKS PLIED ON THEIR BEHALF ARE DE BITED TO THEIR ACCOUNT. I FIND THAT AS PER THE SYSTEM OF ACCOUNTANCY FOLLOWED BY T HE ASSESSEE THE ASSESSEE WAS ACTING AS AN AGENT FOR THE PRINCIPALS FOR WHOM THE TRUCKS WERE PLIED BY THE ASSESSEE ON THEIR BEHALF AND THE COMMISSION WAS CHA RGED FROM THEM AND THE FREIGHT EARNED BY THEM WAS DIRECTLY CREDITED TO THE IR ACCOUNT AND DEBITED TO THE ACCOUNTS OF VARIOUS COMPANIES TO WHOM THE BILLS OF FREIGHT WERE ISSUED ON THEIR BEHALF AND THE COMMISSION WAS CHARGED FROM PRINCIPA LS FOR PLYING THE TRUCKS IS DULY CREDITED BY THE ASSESSEE TO HIS PROFIT & LOSS ACCOUNT AS INCOME. THE TOTAL COMMISSION CHARGED AMOUNTED TO RS.2 50 439/- WHICH IS CREDITED TO THE PROFIT & LOSS ACCOUNT. THE APPELLANT ALSO FILED BEFORE THE A SSESSING OFFICER THE COPIES OF VARIOUS ACCOUNTS OF THE PRINCIPALS SHOWING SYSTEM O F ACCOUNTANCY FOLLOWED BY THEM SINCE LONG. LAST YEAR ALSO THE SAME SYSTEM WA S FOLLOWED BUT NO OBJECTION WAS RAISED BY THE ASSESSING OFFICER. 4 I ALSO FIND THAT THE APPELLANT HAS NOT CLAIMED ANY EXPENDITURE IN RESPECT OF TRUCK FREIGHT EARNED BY THE PRINCIPALS IN HIS PROFI T & LOSS ACCOUNT. I AM IN AGREEMENT WITH THE ASSESSEE THAT IN ASSESSEE'S CASE THE PROVISIONS OF SECTION 40(IA) ARE NOT APPLICABLE. SECTION 40(IA) IS ONLY LIMITED TO THE DISALLOWABILITY OF DEDUCTION IN COMPUTING THE CHARGEABLE INCOME WHEN T HE AMOUNT IS PAID TO THE CONTRACTOR AND NO DEDUCTION OF TDS IS MADE. IN THI S CASE THE APPELLANT HAS NOT CLAIMED DEDUCTION IN RESPECT OF THE EXPENSES UNDER ANY HEAD OF INCOME U/S 30 TO 38 IN THE BOOKS OF ACCOUNT. HE IS ACTING AS AN AGE NT FOR THE PRINCIPALS AND HE IS NOT LIABLE TO TDS ON BEHALF OF THE PRINCIPALS. HE IS SIMPLY CHARGING THE COMMISSION FROM THE PRINCIPALS. ON THE OTHER HAND THE TDS HAS ALREADY BEEN DEDUCTED BY THE COMPANIES ON THE TOTAL PAYMENT MADE BY THEM. EITHER ON ASSESSEE'S OWN TRUCKS OR ON THE TRUCKS OF THE PRINC IPALS AND THUS THERE IS NO LOSS OF REVENUE TO THE GOVERNMENT. IN VIEW OF THESE FACTS THE ADDITION MADE BY THE A SSESSING OFFICER IS WHOLLY UNJUSTIFIED AND IS HEREBY DELETED. 3. THE LD. D.R. RELIED ON THE ORDER OF THE ASSESSIN G OFFICER WHILE THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND IT WAS VEHEM ENTLY CONTENDED THAT THE REVENUE HAS NOT SUBMITTED ANY EVIDENCE WHICH IS CONTRARY TO THE FIN DING GIVEN BY THE CIT(A) THAT THERE WAS ANY SUBCONTRACT BETWEEN THE OTHER TRUCK OWNERS AND THE ASSESSEE TO CARRY OUT THE TRANSPORTATION AGREEMENT. THE ASSESSEE HIMSELF HAS EXECUTED THE C ONTRACT AND ARRANGED THE TRUCKS OF THE OTHER PARTIES FOR WHICH OUR ATTENTION WAS DRAWN TOWARDS COPY OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE. THE BILLS FOR TRUCK FREIGHT WERE INVOICE D BY THE ASSESSEE. FOR THIS ALSO OUR ATTENTION WAS DRAWN TOWARDS COPY OF THE ACCOUNTS. OUR ATTENT ION WAS ALSO DRAWN TO CLAUSE NO.16 OF THE AGREEMENT ACCORDING TO WHICH THE AGREEMENT WAS NO T TRANSFERABLE. RELIANCE WAS PLACED ON THE FOLLOWING CASES : I) MYTHRI TRANSPORT CORPORATION VS. ACIT (2009) 124 TTJ (VISAKHA) 970 II) CIT VS. UNITED RICE LAND LTD. (2008) 174 TAXMAN 286 (P&H) III) DATTA DIGAMBER SAHAKARI KAMGAR SANSTHAN LTD. V S. ACIT (2002) 83 ITD 148 (PUNE) IV) CIT VS. SIRMOUR TRUCK OPERATORS UNION (2010) 19 5 TAXMAN 62 (HP) V) GOVIND SINGH MATHURA VS. ITO MATHURA APPEAL N O.TDSA NO.13/AGRA/2007 ORDER DATED 06.02.2009 OF AGRA BENCH VI) MRS. KAVITA CHUG VS. ITO (2010) 134 TTJ (KOL) 1 03. 5 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONG WITH ORDERS OF THE TAX AUTHORITIES AS WELL AS THE VARIOUS CASE LAWS RELIED ON AND CITED BEFORE US. WE FIND THAT THE CASE OF THE ASSESSEE IS DULY COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF MYTHRI TRANSPORT CORPORATION VS. ACIT 124 TTJ (VISAKHA) 970 IN WHICH THE FACTS INVOLVED ARE THE SAME. IN THE SAID CASE THE TRIBU NAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER :- '8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE BEFORE US MAY BE DECIDED IF WE ANSWER FOLLOWING QUE STION: WHETHER THE VEHICLES HIRED BY THE ASSESSEE IN EXEC UTION OF THE TRANSPORT CONTRACT CAN BE TERMED AS A SUB-CONTRACT AND CONSEQUENTLY THE ASSESSEE IS LIABLE TO DEDUCT TAX FROM THE PAYMENT MADE FOR SUCH VEHICLES UNDER S.194C(2) OF THE ACT ? IN THE INSTANT CASE THE ASSESSING OFFICER HAS INV OKED THE PROVISIONS OF S.40(A)(IA) TO DISALLOW THE PAYMENTS MADE FOR HIRED LORRIES AS ACCORDING TO HIM SUCH PAYMENTS REPRESENT PAYMENT TO SUB-CONTRACTORS LIA BLE FOR TDS UNDER S.194C(2) OF THE ACT AND THE ASSESSEE HAS FAILED TO DEDUCT TD S UNDER S.194C(2). SECTION 194C(2) OF THE ACT WHICH IS RELEVANT IN THIS CONTE XT READS AS UNDER : ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN IN DIVIDUAL OR AN HUF) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HER EAFTER IN THE SECTION REFERRED TO AS THE SUB-CONTRACTOR) IN PURSUANCE OF A CONTRAC T WITH THE SUB-CONTRACTOR FOR CARRYING OUT OR FOR THE SUPPLY OF LABOUR FOR CARRY ING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLY ING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO S UPPLY SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRA CTOR 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.' 8.1 ACCORDING TO OUR UNDERSTANDING S. 194C{2) IS ATTRACTED IF ALL THE FOLLOWING CONDITIONS ARE 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 THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR. 6 (C) THE SUB-CONTRACTOR SHOULD CARRY OUT THE WHOLE OR 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. 8.2. AS STATED EARLIER THE ASSESSEE HEREIN IS A TR ANSPORT CONTRACTOR AND HAS ENTERED INTO AN AGREEMENT WITH PARTIES WHEREBY THE ASSESSEE UNDERTOOK TO TRANSPORT BITUMEN TO VARIOUS POINTS AS PER THEIR DI RECTIONS. ACCORDING TO THE ASSESSEE THE LORRIES USED FOR THE SAID PURPOSE ARE SPECIALLY DESIGNED WITH PROPER HEATING ARRANGEMENTS. THE CLAIM OF THE ASSESSEE IS THAT SINCE IT DID NOT HAVE REQUIRED NUMBER OF LORRIES IT HAD TO HIRE LORRIES FROM OTHERS WHO SIMPLY PLACED THE VEHICLES AT THE DISPOSAL OF THE ASSESSEE. THE ASSESSEE ALONE UNDER ITS CONTROL AND SUPERVISION HAS EXECUTED WHOLE OF THE CONTRACT . ACCORDING TO THE ASSESSEE THE INDIVIDUAL LORRY OWNERS HAVE NOT CARRIED OUT AN Y PART OF THE WORK UNDERTAKEN BY THE ASSESSEE. 8.3 (I) THE FOLLOWING ARE THE BASIS OF THE AO TO C OME TO THE CONCLUSION THAT THE PAYMENT MADE FOR HIRED LORRIES IS A SUB-CONTRACT PA YMENT LIABLE FOR TDS UNDER S. 194C(2} OF THE ACT: (A) THE ASSESSEE HAS ENTERED INTO A CONTRACT WITH THE PARTIES AND ALL PAYMENTS ARE MADE TO THE ASSESSEE ONLY. (B) THE ASSESSEE IS CLAIMING THE TOTAL TDS CREDIT FOR THE GROSS RECEIPT WHERE TDS WAS DEDUCTED. (C) THE LORRY OWNERS ARE IN NO WAY CONNECTED WITH THE PARTY WHO GIVES WORK TO THE ASSESSEE. AS THE ASSESSEE COULD NOT MANAGE THE WORK WITH ITS OWN LORRIES IT TOOK ON HIRE LORRIES BELONGING TO OTHER S ON SUB-CONTRACT TO CARRY OUT ITS CONTRACT WORK FOR WHICH PAYMENT IS MADE BY THE ASSESSEE. THERE IS NO CONTACT OR RELATIONSHIP OF ANY KIND BETWEEN THE CLIENT (PRINCIPAL COMPANY) AND THE SUB-CONTRACTOR. (II) LEARNED CIT(A) HAS CONFIRMED THE ORDER OF THE AO WITH FOLLOWING REASONINGS : (A) THE TANKER LORRIES TAKEN ON HIRE WERE UTILIZED FOR THE PURPOSES OF THE BUSINESS OF THE EXECUTION OF THE CONTRACT DURING TH E ENTIRE CONTRACT PERIOD. . (B) THE TANKER LORRY OWNERS WERE PAID ONLY AFTER R ECEIPT OF THE BILLS FROM THE CONTRACTEES AFTER RETAINING THE COMMISSION. (C) THE TANKER LORRY OWNERS ENABLED THE APPELLANT TO EXECUTE THE CONTRACT WORK. 7 8.4 THE ASSESSEE HAS PLACED A COPY OF WORK ORDER D T. 12 TH FEB. 2005 ISSUED BY A COMPANY NAMED 'RBM-PATI JOINT VENTURE'. WE HAVE G ONE THROUGH THE SAID WORK ORDER AND NOTICE THE FOLLOWING POINTS: (A) THE SCOPE OF WORK INCLUDES LOADING OF BITUMEN 60/70 AT VIZAG TRANSPORTATION AND DELIVERING AT RBMP CAMP SITE AT 56 KMS. AND 35 KMS. ON NH-6. AS SUCH THREE TYPES OF WORK ARE INCLUDED IN THE SCOPE OF WORK. (B) TANKER LORRY SHALL HAVE PROPER HEATING ARRANGE MENT. THE COMPANY RESERVES THE RIGHT TO ARRANGE ANY OTHER MEANS OF TR ANSPORTATION IN CASE OF NON-PLACEMENT/DELAY IN PLACEMENT OF LORRY. ANY EXT RA PAYMENT MADE FOR EXECUTION OF SUCH WORK WILL BE RECOVERED FROM THE A SSESSEE. (C) THE ASSESSEE SHALL NOT ENGAGE AND/OR ALLOW ITS PERSONNEL IN ANY FRAUDULENT ACTIVITY IN PERFORMING THE WORK ORDER. THE COMPANY IS AT LIBERTY TO DEDUCT ANY REASONABLE AMOUNT IF ANY FRAUD OR CHEATING IS DISCOVERED. (D) THE ASSESSEE IN ANY CIRCUMSTANCE SHOULD NOT DIVULGE OR MAKE PUBLIC IN ANY WAY ANY OF THE BUSINESS TRANSACTIONS TO OTHER PARTIES. (E) IN THE EVENT OF ANY UNREASONABLE DELAY OR IF T HE CONSIGNMENT IS NOT DELIVERED THE COMPANY SHALL BE ENTITLED TO DEDUCT ANY SUM AND/OR THE VALUE OF CONSIGNMENT FROM THE OUTSTANDING BILLS OF THE ASSESSEE. NO CLAIM WHATSOEVER DUE TO IDLING OF LABOUR EQUIPMENT VEHI CLES AND ANY OTHERS SHALL BE ENTERTAINED BY THE COMPANY UNDER ANY CIRCU MSTANCE. . (F) THE ASSESSEE SHALL COMPLY WITH ALL EXISTING AC TS RULES REGULATIONS ETC. RELATING TO LABOUR TRAFFIC AND TRANSPORT. IN CASE OF ANY LIABILITY ARISING TO THE COMPANY AS PRINCIPAL EMPLOYER DUE TO FAILURE N EGLIGENCE OR/AND ACCIDENT BY TRANSPORTER THE SAME SHALL BE RECOVERA BLE FROM THE ASSESSEE. THE ABOVE STRINGENT CLAUSES SUGGEST THAT THE ASSESS EE IS SOLELY RESPONSIBLE FOR ALL THE ACTS AND DEFAULTS COMMITTED BY THE ASSESSEE AND /OR ITS EMPLOYEES . 8.5 IT IS NOT ESTABLISHED BY THE REVENUE THAT OTHE R LORRY OWNERS FROM WHOM THE VEHICLES WERE HIRED HAVE ALSO BEEN FASTENED WI TH ANY OF THE ABOVESAID LIABILITIES. IN A SUB-CONTRACT A PRUDENT CONTRACT OR WOULD INCLUDE ALL THE LIABILITY CLAUSES IN THE AGREEMENT ENTERED INTO BY HIM WITH T HE SUB-CONTRACTOR. THE ASSESSEE HAS ALSO CLAIMED BEFORE THE TAX AUTHORITIE S THAT THE RESPONSIBILITY IN THE WHOLE PROCESS LIES WITH IT ONLY. THOUGH THE PASSING OR LIABILITY IS NOT THE ONLY CRITERIA TO DECIDE ABOUT THE EXISTENCE OF SUB-CONTR ACT YET THIS CONTENTION OF THE ASSESSEE READ WITH THE LIABILITY CLAUSES OF THE WOR K ORDER CITED ABOVE SUPPORTS ITS SUBMISSION THAT THE INDIVIDUAL VEHICLE OWNERS ARE S IMPLE HIRERS OF THE VEHICLES. 8.6 AS PER THE PROVISIONS OF S. 194C(2) AS EXPLAI NED IN PARA 8.1 SUPRA THE SUB-CONTRACTOR SHOULD CARRY OUT THE WHOLE OR ANY PA RT OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE DICTIONARY MEANING OF THE WORDS 'CARRY OUT' IS TO 'CARRY INTO PRACTICE'; 'TO EXECUTE'; 'TO ACCOMPLISH'. IT SIGNI FIES A POSITIVE INVOLVEMENT IN THE 8 EXECUTION OF THE WHOLE OR ANY PART OF THE MAIN WORK BY SPENDING HIS TIME MONEY ENERGY ETC. AND FURTHER TAKING THE RISKS IN CARRYI NG ON THE SAID ACTIVITY. IN THE INSTANT CASE THERE IS NO MATERIAL TO SUGGEST THAT THE OTHER LORRY OWNERS INVOLVED THEMSELVES IN CARRYING OUT ANY PART OF THE WORK UND ERTAKEN BY THE ASSESSEE BY SPENDING THEIR TIME ENERGY AND BY TAKING THE RISKS ASSOCIATED WITH THE MAIN CONTRACT WORK. IN THE ABSENCE OF THE ABOVESAID CHA RACTERISTICS ATTACHED TO A SUB- CONTRACT IN THE INSTANT CASE THE PAYMENT MADE TO T HE LORRY OWNERS STANDS AT PAR WITH THE PAYMENTS MADE TOWARDS SALARIES RENT. ETC. HENCE THE REASONING OF THE TAX AUTHORITIES WHICH IS STATED IN PARA 8.3 SUPRA TO HOLD THAT THE PAYMENT MADE FOR HIRED VEHICLES IS A SUB-CONTRACT PAYMENT IN OU R OPINION IS NOT CORRECT END NOT BASED ON RELEVANT CONSIDERATIONS. HENCE IN OUR CO NSIDERED OPINION IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HIRED VEHIC1ES WOUL D FALL IN THE CATEGORY OF PAYMENT TOWARDS A SUB-CONTRACT WITH THE LORRY OWNER S. IN THAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE AS PER THE P ROVISIONS OF S. 194C(2) ON THE PAYMENTS MADE TO THE LORRY OWNERS FOR LORRY HIRE. CONSEQUENTLY THE PROVISIONS OF S. 40(A)(IA) SHALL NOT APPLY TO SUCH PAYMENTS. 8.7 AS WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE REASONS STATED ABOVE IN OUR OPINION CONSIDERATION OF OTHE R CONTENTIONS OF THE ASSESSEE AS WELL AS THE REVENUE IS NOT NECESSARY. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. 5. SIMILAR VIEW HAS BEEN TAKEN BY THIS TRIBUNAL IN THE CASE OF GOVIND SINGH MATHURA VS. ITO MATHURA IN TDSA NO.13/AGR/2007 FOR THE ASSESSM ENT YEAR 2005-06 IN WHICH ALSO THIS TRIBUNAL AFTER DISCUSSING THE PROVISIONS OF SECTIO N 194C HAS HELD AS UNDER :- THE CONTENTION OF LD. A.R. IS FOUND TO BE CORRECT. THE ASSESSEE IS THE CONTRACTOR QUA IOCL. THE ASSESSEE HAS TAKEN SOME V EHICLES ON HIRE SIMPLICITER FOR RUNNING OF WHICH THE DRIVERS THE FUEL AND THEI R MAINTENANCE WAS BEING DONE BY THE ASSESSEE HIMSELF. THE IOCL HAS DEDUCTED TDS OF THE ENTIRE PAYMENT. THERE IS NO FURTHER CONTRACT BETWEEN THE ASSESSEE A ND THESE FIVE PAYEES. IT IS IMMATERIAL IF THE VEHICLES ARE HIRED FOR THE ENTIRE YEAR OR FOR A DAY. THERE IS A SORT OF DRY UNDERSTANDING BETWEEN THE ASSESSEE AND THE OTHER FIVE PAYEES. SO THE ABOVE SECTION IS NOT ATTRACTED TO THIS CASE. HENCE WE ARE OF THE CONSIDERED OPINION THAT WHEN SECTION 194C IS NOT APPLICABLE T HE CONSEQUENTIAL SECTION I.E. 201(1) AND 201(LA) ARE ALSO NOT APPLICABLE. WE ALL OW THIS GROUND OF APPEAL AFTER SETTING ASIDE THE FINDING OF LD. CIT(A) AND DELETE/ CANCEL THE LEVY UNDER THESE SECTIONS. 9 6. THE DECISION OF THE CO-ORDINATE BENCH IS BINDING ON US. WE ACCORDINGLY RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH CO NFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND TAKEN BY THE REVENUE. 7. SO FAR THE OTHER ISSUE RELATING TO THE DELETION OF ADDITION OF ` 1 76 643/- IS CONCERNED AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING TH E MATERIAL ON RECORD WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE C IT(A). THE CIT(A) HAS DULY APPRECIATED THE FACTS OF THE CASE AS WELL AS ACCOUNTING SYSTEM FOLL OWED BY THE ASSESSEE AND CAME TO THE CONCLUSION AFTER RECEIVING THE REMAND REPORT FROM T HE ASSESSING OFFICER THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE METHOD OF ACCOUNTING WHILE THE TDS CERTIFICATES WERE ISSUED BY THE PARTIES ON PAYMENT BASIS AND THE DIFFERENCE WAS DUL Y RECONCILED BY THE ASSESSEE. IN VIEW OF THIS FINDING OF FACTS BEING RECORDED BY THE CIT(A) AND N O CONTRARY EVIDENCE OR MATERIAL WAS BROUGHT TO OUR KNOWLEDGE BY THE LD D.R. WE CONFIRM THE ORD ER OF THE CIT(A). 8. IN THE RESULT APPEAL FILED BY THE REVENUE STAND S DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2011) . SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 4 TH FEBRUARY 2011 PBN/* 10 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY