Sri. J. Prashanth Hegde, Shimoga v. Addl,CIT, Shimoga

ITA 665/BANG/2010 | 2006-2007
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 66521114 RSA 2010
Assessee PAN INING1104W
Bench Bangalore
Appeal Number ITA 665/BANG/2010
Duration Of Justice 8 month(s) 7 day(s)
Appellant Sri. J. Prashanth Hegde, Shimoga
Respondent Addl,CIT, Shimoga
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 21-01-2011
Date Of Final Hearing 21-12-2010
Next Hearing Date 21-12-2010
Assessment Year 2006-2007
Appeal Filed On 14-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO. 665/BANG/2010 ASSESSMENT YEAR : 2006 - 07 SHRI J. PRASHANTH HEGDE 1 ST CROSS M ISSION COMPOUND SHIMOGA. VS. : APPELLANT THE ADDITIONAL COMMISSIONER OF INCOME - TAX SHIMOGA RANGE SHIMOGA. : RESPONDENT APP EL LA NT BY : SHRI A. SHANKAR ADVOCATE RESPONDENT BY : SHRI GANESH RAO A.K. ADDL. CIT(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) HUBLI IN ITA NO: 161/ CIT(A)/ HBL/08 - 09 DATED: 2.2.2010 FOR THE ASSESSMENT YEAR 2006 - 07. 2. T HE ASSESSEE IN HIS GROUNDS OF APPEAL H AS RAISED SEVEN GROUNDS OUT OF WHICH GROUND NOS:1 6 AND 7 BEING GENERAL IN NATURE AND NO SPECIFIC ISSUES INVOLVED THEY HAVE BECOME NON - CONSEQUENTIAL. INCIDENTALLY GROUND NO.5 IS NOT MAINTAINABLE AND THEREFORE DISMISSED AS ITA NO.665/BANG/10 PAGE 2 OF 18 CHARGING OF INTEREST U/S 2 34B OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. IN THE REMAINING GROUNDS THE ESSENCE OF THE ISSUE IS CONFINED TO THE EFFECT THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DISALLOWING RS.85.47 LAKHS UNDER SECTION 40(A)(IA) OF THE ACT. 3. BRIEFLY STATED THE ASSESSEE AN INDIVIDUAL A TRANSPORT CONTRACTOR AND CONTRACTOR FOR CUTTING AND PREPARATION OF WOOD FOR PAPER MILLS FURNISHED HIS RETURN OF INCOME FOR THE AY UNDER DISPUTE ADMITTING AN INCOME OF RS.17 61 554/ - BESIDES AGRICULTURAL INC OME OF RS.2.45 LAKHS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD DEBITED RS.1 34 49 861/ - UNDER THE HEAD TRANSPORTATION CHARGES . BEING QUERIED THE ASSESSEE HAD FURNISHED A LIST OF PARTIES ALONG WITH LOR RY NUMBERS AND PAYMENTS MADE ACCORDING TO WHICH EACH PAYMENT WAS SEPARATE TO THE LORRY DRIVER WHICH WAS BELOW RS.20000/ - IN ONE PAYMENT AND THUS IT WAS CLAIMED THAT NO TDS WAS EFFECTED FROM THOSE PAYMENTS. HOWEVER ANALYZING THE DETAILS FURNISHED THE AO NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS OF RS.98 78 494/ - OUT OF RS.1.34 CRORES TO THE VARIOUS LORRIES IN AGGREGATE OF MORE THAN RS.50 000/ - DURING THE PERIOD UNDER SCRUTINY. AFTER DELIBERATING THE ISSUE IN DEPTH AND ALSO CONSIDERING THE REPLIES G IVEN BY THE ASSESSEE ON VARIOUS OCCASIONS AS RECORDED IN HIS IMPUGNED ORDER THE AO HAD OBSERVED THUS (ON PAGE 5) ..THE ASSESSEE HAS FILED CONFIRMATION FROM THE WEST COAST PAPER MILLS LTD. WHERE IT IS FOUND THAT THEY HAVE PAID RS.17 62 679/ - TO THE VARI OUS LORRY DRIVERS ON BEHALF OF THE ASSESSEE AND THE SAME WAS DEDUCTED FROM THE PAYMENT MADE TO THE PARTY. THIS PAYMENT LIST IS COMPARED WITH THE LIST OF TRANSPORTATION CHARGES FILED BY THE ASSESSEE. IT IS FOUND THAT OUT OF RS.27 41 672/ - PAID TO THE PERS ONS WHERE LORRY NO. IS NOT MENTIONED IN THE LIST OF TRANSPORTATION CHARGES RS.13 23 189/ - IS INCLUDED IN THE CONFIRMATION ITA NO.665/BANG/10 PAGE 3 OF 18 FILED BY THE ASSESSEE FROM WEST COAST PAPER MILLS LTD. THERE IS ONE ENTRY OF RS.1 92 311/ - IN THE NAME OF WCPM DANDELI WHICH CLEARLY INDICATES THAT THE PAYMENT WAS DONE BY WCPML HENCE THE PAYMENT OF RS.15 15 500/ - (I.E. RS.1323189 + RS.192311) IS DEDUCTED FROM THE TOTAL PAYMENT OF RS.98 78 494/ - ON WHICH TDS HAS NOT BEEN DEDUCTED FROM THE AGGREGATE PAYMENT MADE DURING THE WHOLE YEAR TO VARIOUS PARTIES EXCEEDING RS.50000/ - FOR THE PURPOSE OF DISALLOWANCE U/S 40(A)(IA) OF THE I.T.ACT. THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE DRIVER OF THE SAME LORRY NO. HAS CHANGED AT THE TIME OF GIVING 2 ND /3 RD PAYMENT. THE LETTERS U/S 133(6) WERE ISSUED TO 78 DRIVERS OF THE I LIST WHERE TRANSPORTATION CHARGES HAVE BEEN PAID BUT 40 LETTERS HAVE COME BACK TILL TODAY. THIS ITSELF PROVES THAT THE NAME AND ADDRESS OF THE DRIVERS GIVEN BY THE ASSESSEE IS ARBITRARY AND IT IS NOT GENUINE. THERE IS NO DOUBT THAT THE TRANSPORTATION HAS BEEN DONE BUT THE NAME AND ADDRESS OF THE PERSONS GIVEN IN THE LIST ARE NOT GENUINE AND IT IS JUST CREATED TO SAVE HIMSELF FROM THE CLUTCHES OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.AC T 1961. THE LORRIES OPERATING IN THE FOREST AREAS ARE GENERALLY CONTROLLED BY SOME GROUP OF PERSONS WHO ARE WORKING AS COMMISSION AGENTS. THE ASSESSEE SHOULD HAVE DEDUCTED TDS FROM THE PAYMENT DONE TO THE SUB - CONTRACTOR U/S 194C(2) OF THE ACT BUT HE HAS FAILED TO DO SO. THE PAYMENT DONE TO THE ASSESSEE ARE COVERED BY TDS THEN FOR THE SAME WORK WHEN HE IS SUB - CONTRACTING TO OTHER PARTIES WHY TDS IS NOT BEING DEDUCTED? THE DISALLOWANCE UNDER THIS HEAD COMES TO RS.83 62 994/ - (I.E. RS.9878494 1515 500). ABOVE AMOUNT IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE UNDER THE ABOVE HEAD. 4. AGGRIEVED THE ASSESSEE TOOK UP THE ISSUE WITH THE LD. CIT (A) FOR SOLACE. THE CONTENTION OF THE ASSESSEE BEFORE THE CIT (A) WAS MORE OR LESS WHAT WAS PORTRAYED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AFTER DUE CONSIDERATION OF (I) LENGTHY SUBMISSION OF THE ASSESSEE (II) ANALYZING THE BOARD S CIRCULAR NO.715 AND ALSO THE FINDING OF THE HON BLE TRIBUNAL IN ITA NO.491/BANG/2008 IN THE CASE OF J ANANI TOURS & RESORTS PVT. LTD ON WHICH THE ASSESSEE PLACED STRONG RELIANCE; (III) THE PROPOSITION LAID DOWN BY THE HON BLE HIGH COURT OF MADRAS IN THE CASE OF ITO V. POOMPUHAR SHIPPING CORPORATION LIMITED AND (IV) THE REMAND REPORT OF THE AO THE LD. CIT (A) HAD ARRIVED AT A CONCLUSION THAT 4.2. IN VIEW OF THE FINDINGS GIVEN IN PARA 4 ABOVE AND THE DISTINCTION OF FACTS AS BROUGHT OUT IN PARA 4.1. ABOVE IT BECOME OBVIOUS THAT THE RATIO OF ITA NO.665/BANG/10 PAGE 4 OF 18 THE JUDGMENT OF THE HON BLE I.T.A.T. BANGALORE GIVEN IN THE CA SE OF M/S. JANANI TOURS & RESORTS (P) LTD. IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT. THE MATERIAL FACTS DISCUSSED IN PARA 4 AMPLY PROVE THAT THERE WAS AN ORAL AGREEMENT/CONTRACT BETWEEN THE TRUCK OPERATORS/DRIVERS IN WHOSE CASES THE AGGREGATE AMOUN T OF PAYMENT EXCEEDED RS.50 000/ - IN EACH CASE IN VIEW OF THE PROVISIONS OF SECTION 194C(2) OF THE ACT WHICH THE APPELLANT HAS FAILED TO DEDUCT. IT IS ALSO RELEVANT TO MENTION HERE THAT THE APPELLANT HAS DEDUCTED THE TAX AT SOURCE IN THE SUBSEQUENT YEARS IN RESPECT OF THE PAYMENTS MADE TO THE DRIVERS ON SIMILAR AND IDENTICAL SITUATIONS. THE ARGUMENT OF THE APPELLANT THAT THE TRANSACTION IS NOT COVERED BY THE DEFINITION OF CONTRACT ACT THEREFORE HAS NO SUBSTANCE. THE FAILURE TO DEDUCT TAX AT SOURCE ON SU CH PAYMENTS U/S 194C ENTAILS THE APPELLANT DISQUALIFIED FOR CLAIMING SUCH EXPENSES FOR PAYMENTS IN THE P & L ACCOUNT BY VIRTUE OF PROVISIONS OF SECTION 40(A)(IA) THEREFORE THE DISALLOWANCE MADE BY THE AO OF RS.83 62 994/ - IS JUSTIFIED HENCE CONFIRMED. 5. AGITATED WITH THE STAND OF THE LD. CIT (A) IN CONFIRMING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT BY THE AO THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. 5.1. DURING THE COURSE OF HEARING THE LD. A R HAD PUT - FORTH HIS ARGUMENTS IN AN E XHAUSTIVE AND ILLUSTRATIVE MANNER THE ESSENCE OF WHICH ARE SUMMARIZED AS UNDER: - THE ASSESSEE BEING IN THE BUSINESS OF TRANSPORTATION AND PREPARATION OF WOOD HIRES LORRIES FOR THE TRANSPORTATION OF WOODS AND BAMBOOS FROM THE FOREST TO THE PAPER MILLS BES IDES TRANSPORTING SOFT WOODS TO WEST COAST PAPER MILLS [WCPM]; - FOR THE PURPOSE OF TRANSPORTATION OF THE RAW MATERIALS TO THE PAPER MILLS THE ASSESSEE NEGOTIATES AND FIXES THE TRANSPORTATION CHARGES WITH THE LORRY DRIVERS BUT HOWEVER DOESN T ENTER INTO AN AGREEMENT WITH THE LORRY OWNERS; - THE LORRIES USED BY THE ASSESSEE FOR THE PURPOSE OF TRANSPORTATION WERE DIFFERENT AND AS AND WHEN THE LORRIES WERE REQUIRED HE DID NEGOTIATE AND FIX THE TRANSPORTATION CHARGES AND PAY THE MONIES DIRECTLY TO THE DRIVER S OF THE VEHICLES BUT NO AGREEMENT WAS ENTERED INTO WITH ANY OF THE LORRY OWNERS AS WHENEVER THE ASSESSEE REQUIRES VEHICLES THE SAME WILL BE HIRED BASED ON THE AVAILABILITY OF SUCH VEHICLES; - THERE MAY BE SOME INSTANCES WHERE THE ASSESSEE HAD HIRED THE SAME LORRY FOR MANY TIMES FOR THE PURPOSE OF TRANSPORTATION OF WOODS TO THE MANUFACTURING INDUSTRY WHICH ITA NO.665/BANG/10 PAGE 5 OF 18 DOES NOT MEAN THAT THE ASSESSEE HAD ENTERED INTO A CONTRACT WHEREBY THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AS PER S.194C OF THE ACT; - THAT FOR THE PU RPOSE OF BUSINESS AND ALSO TO FACILITATE GOOD SERVICE TO THE MANUFACTURING INDUSTRY HIRED LORRIES AND NEGOTIATED THE BEST PRICE WITH LORRY DRIVERS AND ON DELIVERY OF THE GOODS AT THE DESTINATION THE HIRE CHARGES WERE PAID BY THE ASSESSEE THAT IN MOST O F THE CASES ADVANCES WERE PAID TO THE DRIVERS OF THE VEHICLES TO FACILITATE THEM TO MEET THE EXPENSES TOWARDS FUEL AND INCIDENTALS; THAT THE DRIVERS AND OWNER OF THE SUCH VEHICLES LOOK FOR BETTER TRANSPORTATION CHARGES AND ALSO FREQUENCY OF HIRING OF VEH ICLES; - SINCE THE ASSESSEE WAS PAYING MORE TRANSPORTATION CHARGES COMPARATIVELY AND NORMALLY TRANSPORTING THE GOODS FREQUENTLY FROM THE FOREST AREA TO THE PAPER MILLS THE LORRY DRIVERS WITH A HOPE OF GETTING COMMENSURATE HIRE CHARGES WILL ALWAYS BE ACC ESSIBLE AT A SHORT NOTICE; - RELIES ON THE CASE LAWS OF: (A) M/S. JANANI TOURS & RESORTS (P) LTD. V. ACIT ITA NO.491/BANG/2008 DT.13.2.2009; (B) R.R. CARRYING CORPORATION V. ACIT 126 TTJ 240; & (C) DCIT V. SATISH AGGARWAL & CO. - 124 TTJ 542 - SINCE THE ASSESSEE HAD NOT ENTERED INTO ANY SORT OF AGREEMENTS WITH THE LORRY OWNERS EITHER INVOKING OF THE PROVISIONS OF S.194C OR THE APPLICABILITY OF S.40(A)(IA) OF THE ACT HAVE NO RELEVANCE UNDER THE FACTS AND CIRCUMSTANCES OF THE ISSUE ON HAND; - THE ASSESSEE HAD PROVID ED TO THE AO THE NAMES AND ADDRESSES AS FURNISHED TO HIM BY SUCH DRIVERS WHOSE VEHICLES HAVE BEEN HIRED BY THE ASSESSEE. SUMMONS ISSUED TO SUCH LORRY DRIVERS BY THE AO IT WAS ASCERTAINED WERE RETURNED UN - SERVED IN MOST OF THE CASES. THIS AMPLY PROVES THE ASSESSEE S ASSERTION THAT THE LORRY DRIVERS WERE NOT PERMANENT AND THAT NO CONTRACT OR ANY AGREEMENT WAS ENTERED INTO WITH SUCH DRIVERS OF VEHICLES AND THUS THE PROVISIONS OF S.194C OF THE ACT HAVE NO APPLICATION AT ALL; - THAT WHEN AS PERSON ENGAGED IN BUSINESS INCURRED AN EXPENDITURE WHICH WAS REVENUE IN NATURE WHOLLY AND EXCLUSIVELY FOR PURPOSES OF BUSINESS THERE WERE SEVERAL CHECKS AND BALANCES PROVIDED FOR TO ENSURE THAT ONLY LEGITIMATE EXPENSES WERE ALLOWED AS BUSINESS DEDUCTION AND IT WAS NOT AS IF EVERY CLAIM PREFERRED BY AN ASSESSEE WAS ADMISSIBLE AS DEDUCTION AND IF THE CLAIM DOES NOT FALL WITHIN THE NORMS SET IN THE SECTIONS ENACTED FOR THIS PURPOSE IT CANNOT BE ALLOWED AS A DEDUCTION. IN THESE CIRCUMSTANCES THE INTRODUCTION OF THIS SEC TION DEEMS EXPENDITURE AS INCOME. INCOME - TAX BEING A TAX ON INCOME THE DEEMING OF EXPENDITURE AS INCOME WAS NOT IN CONSONANCE WITH THE CANNONS OF TAXATION. THE EXPENDITURE INCURRED WAS AN OUTGO ON THE REVENUES OF A PERSON AND IF THE SAID OUTGO ITSELF WAS TAXED THEN THE SAID PROVISION VIRTUALLY CRIPPLES AN ASSESSEE ENGAGED IN BUSINESS BY CONVERTING AN OUTGO INTO INCOME THUS CHANGING THE VERY CONCEPT OF INCOME. S 194C MANDATES THAT ANY PERSON WHO ENGAGES THE SERVICES OF A CONTRACTOR ITA NO.665/BANG/10 PAGE 6 OF 18 OR A SUB - CONTRACTOR FOR ANY WORK TAX SHALL BE DEDUCTED BY HIM AT SUCH RATE AS MAY BE PRESCRIBED ON SUCH AMOUNT AS PAYABLE TO THE CONTRACTOR OR A SUB - CONTRACTOR; - IN THE EVENT OF NON - DEDUCTION OF TAX BY AN ASSESSEE PAYING SUCH AMOUNT TO THE CONTRACTOR OR SUB - CONTRACTOR HE S HALL BE LIABLE TO PAY INTEREST ON THE TAX DEDUCTIBLE AMOUNT AT THE RATE AS PRESCRIBED U/S 201(1A) OF THE ACT AND FURTHER PENALTY PROCEEDINGS CAN BE INITIATED AGAINST SUCH PERSON WHO HAD DEFAULTED ON PAYMENT OF TAX; - THE AMENDMENT TO S. 194C(3) OF THE ACT EXEMPTS A PERSON WHO OWNS NOT MORE THAN TWO GOODS CARRIAGES IN TERMS OF THE SECOND PROVISO TO S.194C. THUS IF A PERSON WAS IN THE BUSINESS OF GOODS TRANSPORT THEN ANY PAYMENT MADE TO AN INDIVIDUAL OWNING NOT MORE THAN TWO GOODS CARRIAGES THEN THE PERS ON PAYING HIRE CHARGES NEED NOT DEDUCT TAX AT SOURCE; - THAT THE AMENDMENT TO S.40 BY WAY OF INSERTION OF S. 40(A)(IA) OF THE ACT IS AGAINST ALL CANNONS OF PROPORTIONALITY AS ENUNCIATED IN A NUMBER OF RULINGS BY THE APEX COURT. - RELIES ON OM KUMAR V. UNI ON OF INDIA 2001 (2) SCC 386 - WITHOUT PREJUDICE THE DISALLOWANCE WAS PERMISSIBLE ONLY IF THE DEDUCTION WAS CLAIMED U/S 30 TO 38 AND IN THE INSTANT CASE ALL PAYMENTS TO DRIVERS OF VEHICLES IT HAD THE CHARACTER OF DIVERSION BY OVER - RIDING TITLE AT SOURC E IN FAVOUR OF THE DRIVERS AND HENCE THE SAME WAS ALLOWABLE U/S 28 ITSELF AS A TRADING LOSS AND HENCE THE APPLICABILITY OF THE PROVISIONS OF S.40(A)(IA) WAS ITSELF IN DOUBT. 5.2. TO BUTTRESS HIS ARGUMENTS THE LD. A R HAD FURNISHED A PAPER BOOK CONT AINING 1 104 WHICH CHIEFLY CONSIST OF VARIOUS CASE LAWS BESIDES A LIST CONTAINING THE DETAILS OF PAYMENTS MADE TOWARDS TRANSPORTATION CHARGES DURING THE PERIOD UNDER DISPUTE. 5.3. ON THE OTHER HAND THE LD. D R WAS VERY EMPHATIC IN HIS RESOLVE THAT THE ASSESSEE HAD GROSSLY FAILED TO DEDUCT TDS FROM THE PAYMENTS MADE TO SUB - CONTRACTORS U/S 194C(2) OF THE ACT AND HIS FAILURE HAS BEEN COHESIVELY BROUGHT TO LIGHT BY THE AO WHICH HAS BEEN SUBSTANTIATED BY THE WELL REASONING OF THE LD. CIT (A). IT WAS THEREFORE EARNESTLY PLEADED THAT THE STAND OF THE AUTHORITIES BELOW REQUIRES TO BE ITA NO.665/BANG/10 PAGE 7 OF 18 SUSTAINED AS THERE WAS NO CASE FOR THE ASSESSEE TO AGGRIEVE. TO DRIVE HOME HIS POINT THE LD. D R HAD PLACED STOUT RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS ON A S IMILAR ISSUE: (A) DEY S MEDICAL (U.P.) (P) LTD. V. UNION OF INDIA & ORS. (2009) 316 ITR 445: (2008) 216 CTR (ALL) 83; (B) SHREE CHOUDHARY TRANSPORT COMPANY V. ITO (2009) 225 CTR (RAJ) 125: (2009) 27 DTR 49 & (C) CIRCULAR NO.433 DT.25.9.1985 OF CBDT. 6. WE H AVE DULY CONSIDERED THE RIVAL SUBMISSIONS DILIGENTLY PERUSED THE RELEVANT RECORDS AND ALSO THE EVIDENCES PRODUCED BY THE EITHER PARTY IN THE SHAPE OF A PAPER BOOK/ COPIES OF CASE LAWS ETC. . 6.1. THE CASE OF THE REVENUE WAS THAT THE ASSESSEE HAD PAID RS.98.78 LAKHS OUT OF RS.1.34 CRORES CLAIMED UNDER THE HEAD TRANSPORTATION CHARGES TO THE VARIOUS LORRIES IN AGGREGATE OF MORE THAN RS.50 000/ - IN THE WHOLE YEAR AND AS SUCH THE ASSESSEE WAS OBLIGED TO DEDUCT TAX U/S 194C(2) OF THE ACT. HOWEVER ACCORD ING TO THE AO THE ASSESSEE HAD FAILED TO DO SO AND THUS HIS CASE WAS HIT BY THE PROVISIONS OF S. 40(A)(IA) OF THE ACT. 6.2. ON THE CONTRARY THE ASSESSEE WAS OF THE FIRM VIEW THAT HE WAS UNDER NO OBLIGATION WHATSOEVER TO DEDUCT TAX WHILE MAKING HIR E CHARGES TO THE LORRY DRIVERS WHO HAVE TRANSPORTED THE BAMBOOS FROM THE FOREST AREA TO THE PAPER MILLS AS HE HAD NOT ENTERED INTO ANY CONTRACT REMOTELY EVEN BY VERBAL. 6.3. AT THE OUTSET WE WOULD LIKE TO POINT OUT THAT EVEN THOUGH THE AO HAD ACKNOW LEDGED THAT THERE IS NO DOUBT THAT THE TRANSPORTATION HAS ITA NO.665/BANG/10 PAGE 8 OF 18 BEEN DONE BUT THE NAME AND ADDRESSES OF THE PERSONS GIVEN IN THE LIST ARE NOT GENUINE AND IT IS JUST CREATED TO SAVE HIMSELF FROM THE CLUTCHES OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT 1961 TO VIEW IT GENTLY THE WILD ALLEGATION OF THE AO IS LACKING CONVICTION IN THE SENSE THAT NO CORROBORATE EVIDENCE WAS BROUGHT ON RECORD EVEN TO REMOTELY SUGGEST THAT THERE WAS A STANDING CONTRACT/AGREEMENT BETWEEN THE ASSESSEE AND THE DRIVERS OF TH E V EHICLES OR EVEN A WHISPER OF AN ORAL AGREEMENT . NO DOUBT DURING THE YEAR UNDER DISPUTE THE ASSESSEE HAD CLAIMED TRANSPORT CHARGES FOR A WHOPPING SUM OF RS.1.34 CRORES. THE ASSESSEE HAD TIED UP WITH TWO PAPER MILLS NAMELY MYSORE PAPER MILLS LTD AT B HADRAVATHI AND WEST COAST PAPER MILLS LTD AT DANDELI FOR SUPPLY (TRANSPORTATION) OF BAMBOOS FROM THE FOREST AREA TO THEIR MILL PREMISES. AS THE MATERIALS BROUGHT ON RECORD THE ASSESSEE HAD NOT HIRED THE VEHICLES FROM THE OWNERS BY ENTERING INTO ANY CONTRA CT. HOWEVER SOME OF THE VEHICLES WHICH WERE HIRED BY THE ASSESSEE FOR WHICH THE AGGREGATE RENTS PAID IN A YEAR EXCEEDED RS.50 000/ - . I N THIS SITUATION THE PROVISIONS OF S.194C(3) WOULD ALSO HAVE A VITAL ROLE TO PLAY AS CLAIMED BY THE ASSESSEE. SECTI ON 194C(3) OF THE ACT IS REPRODUCED HEREBELOW FOR REFERENCE: S.194C (3) NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (1) OR SUB - SECTION (2) FROM: - (I) . PROVIDED THAT .. PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (2) FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB - CONTRACTOR DU RING THE COURSE OF BUSINESS OF PLYING HIRING OR LEASING GOODS CARRIAGES ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE ITA NO.665/BANG/10 PAGE 9 OF 18 PRE SCRIBED IF SUCH CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: HOWEVER THE ASSESSEE HAD ALSO NOT COME UP WITH ANY DOCUMENTARY BACKING AS REQUIRED BY THE ACT WHEN HE SEEKS SANCTUARY UN DER THE AMENDMENT TO SECTION 194C(3) OF THE ACT . 6.5. THE ASSESSEE S SUBMISSION WAS THAT WHILE ENGAGING THE VEHICLES ON HIRE THERE WERE POSSIBILITIES OF SAME VEHICLES (WITH SAME DRIVER OR A DIFFERENT DRIVER AT THE WHEELS) WHICH WERE HIRED FOR TRANSPOR T THE BAMBOOS ON PREVIOUS OCCASION(S) AVAILABLE SUBSEQUENTLY FOR HIRE. THIS CANNOT BE A SOLE REASON TO ARRIVE AT A CONCLUSION THAT THE ASSESSEE HAD ENTERED INTO A CONTRACT WITH SAME LORRY OWNER/DRIVERS AND MADE THE PAYMENTS IN AGGREGATE OF MORE THAN RS.50 000/ - IN AN YEAR. HOWEVER WHEN THE ASSESSEE HAD HIRED A VEHICLE TO TRANSPORT THE BAMBOOS FROM FOREST AREA TO THE DESTINATION PLACE THE ASSESSEE HAD ASSIGNED THE WORK (OF CARRYING THE BAMBOOS) TO THE DRIVER OF THE VEHICLE. THIS ASPECT HAS NOT BEEN THORO UGHLY EXAMINED BY THE AO AS TO WHETHER THE ASSESSEE HAD IN FACT ASSIGNED THE WORK OF CARRYING THE BAMBOOS OR HIRED THE VEHICLES FOR TRANSPORTATION. THE ASSESSEE S CONCEPT OF USE AND PAY TERM HAD PREVAILED IN THE TRANSACTION I.E. TO BE VERY PRECISE THE ASSESSEE HAD HIRED THE VEHICLES FOR WHICH THE PREVAILING HIRED CHARGES WERE PAID THEN AND THERE AND THUS NO WORK WAS ASSIGNED TO THE TRANSPORTERS. THIS ASSERTION OF THE ASSESSEE REQUIRES TO BE EXAMINED IN A COMPREHENSIVE MANNER. THE ASSESSEE HAD O BLIGED THE REVENUE IN FURNISHING A LIST CONTAINING THE NAMES AND ADDRESSES OF THE DRIVERS WHO HAVE TRANSPORTED THE BAMBOOS FROM THE ITA NO.665/BANG/10 PAGE 10 OF 18 FOREST AREA. AS CONCEDED BY THE AO OUT OF 78 DRIVERS TO WHOM LETTERS U/S 133(6) OF THE ACT SENT 38 DRIVERS HAVE ACKNOWLED GED THE SAME. THE IMPUGNED ORDER OF THE AO WAS ASTONISHINGLY SILENT AS TO WHETHER 38 DRIVERS WHO HAVE ACKNOWLEDGED THE LETTERS WERE SUBJECTED TO SCANNER AND IF SO WHAT WAS THE OUTCOME OF SUCH AN EXERCISE. THIS CRUCIAL ASPECT IT APPEARS HAD NOT BEEN PURSUED FURTHER TO NAIL THE ASSESSEE. INSTEAD THE AO MADE A SWEEPING REMARK THAT THE NAME AND ADDRESSES OF THE PERSONS GIVEN IN THE LIST ARE NOT GENUINE AND IT IS JUST CREATED TO SAVE HIMSELF FROM THE CLUTCHES OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT 1961 . 6.6. HOWEVER IN HIS REMAND REPORT DT.5.4.2009 TO THE CIT(A) THE AO HAD MAINTAINED THAT 5.2 OUT OF THE 11 PARTIES ONLY TWO PARTIES APPEARING IN SL.NOS: 5 & 11 NAMELY ANKABHOVI AND RAFIQ SAHI HAVE FILED THE REPLY AND THE L ETTERS IN THE REMAINING 8 CASES HAVE COME BACK UNSERVED. IN HIS SUBSEQUENT REPORT DT.2.6.09 THE AO STATES THAT FRESH LETTERS WERE AGAIN ISSUED TO 9 PARTIES U/S 133(6) OUT OF WHICH 7 PARTIES HAVE RESPONDED EXCEPT 2 PARTIES NAMELY SRI SURESH AND SRI SOMA NNA. HE HOWEVER HAS POINTED OUT THAT IN THE 7 REPLIES RECEIVED THE AMOUNTS SHOWN BY THE APPELLANT AND IN THE CONFIRMATION LETTERS DOES NOT TALLY. THE AO FURTHER STATES THAT ASSESSEE HAS FILED CONFIRMATION FROM 15 DRIVERS SHOWING TOTAL PAYMENT OF RS.2 5 4 833/ - . THE AO IN HIS SUBSEQUENT REPORT DT: 29.06.09 HAS STATED THAT ALL THE 11 PARTIES HAVE CONFIRMED THE TRANSPORTATION CHARGES HENCE MAY BE CONSIDERED ITA NO.665/BANG/10 PAGE 11 OF 18 FROM THE ABOVE ASSERTION OF AO S ONE COULD SAFELY ARRIVE AT AN UNBIASED CONCLUSION THAT THE ENTIRE ISSUE HAS BEEN HANDLED INCONSISTENTLY AND IN A HALF - BAKED MANNER. 6.7. LET US NOW TURN OUR ATTENTION TO THE REASONING OF THE LD. CIT (A) WHEREIN HE HAD STATED THAT 4.1. SECTION 194C STIPULATES THAT TAX IS REQUIRED TO BE DEDUCTED AT SOURCE WHE N A CONTRACT IS ENTERED INTO FOR CARRYING OUT ANY WORK IN PURSUANCE OF SUCH CONTRACT BETWEEN THE CONTRACTOR AND THE CONTRACTEE . WE ARE IN TOTAL AGREEMENT WITH THE ASSERTION OF THE CIT(A). HOWEVER IN THE INSTANT CASE NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD EITHER BY THE AO OR BY THE CIT (A) TO THE EFFECT THAT THE ASSESSEE HAD IN FACT ENTERED INTO A CONTRACT SO AS TO BRING THE ASSESSEE S CASE UNDER THE PURVIEW OF THE PROVISIONS OF S.194C OF THE ACT. THE REVENUE S THESIS THAT THE ASSESSEE MADE THE PAYMENTS OF TRANSPORTATION CHARGES WITHOUT EFFECTING TDS AND THUS HE HAD CONTRAVENED THE PROVISIONS OF S.194C OF THE ACT IN OUR CONSIDERED VIEW DOESN T HOLD WATER UNLESS THE REVENUE BRINGS ANY TANGIBLE PROOF TO THE FORE TO THE EFFECT THAT THE ASSESS EE DID ENTER INTO A CONTRACT. IN THIS REGARD THE REVENUE HAD FAULTED IN ITS ENDEAVOUR. 6.8. ON A GLIMPSE OF THE DETAILS OF PAYMENTS MADE TOWARDS TRANSPORTATION CHARGES WE FIND FOR EXAMPLE THAT THE VEHICLE BEARING NO. AP 07 1152 WAS HIRED ON 27.4.05 18.5.05 22.7.05 2.8.05 6.9.05 22.9.05 27.9.05 4.10.05 4.11.05 7.12.05 29.12.05 13.1.06 2.3.06 16.3.06 FOR WHICH HIRE CHARGES WERE PAID BELOW RS.20 000/ - ON EACH TRIP AND THAT THE NAMES AND ADDRESSES OF THE DRIVERS ON EACH TRIP WERE VARY. T HIS GOES TO ITA NO.665/BANG/10 PAGE 12 OF 18 PROVE THAT PAYMENT EXCEEDING RS.50 000/ - WAS TO A PARTICULAR VEHICLE. THERE WERE QUITE POSSIBILITIES AND ALSO NOT UNCOMMON THAT THE SAME VEHICLE WITH DIFFERENT DRIVERS ON DIFFERENT DATES COULD HAVE BEEN EMPLOYED TO TRANSPORT THE BAMBOOS. THE POSSIBILITY OF TAKING A TRUCK BY A FREELANCE DRIVER ON LEASE FROM ITS OWNER ON DAILY BASIS TO TRANSPORT THE BAMBOOS CANNOT ALSO BE RULED OUT. THESE ASPECTS HAVE NOT BEEN THOROUGHLY EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE REVENUE SHOUL D HAVE GONE TO THE BOTTOM OF THE ISSUE I.E.. TO ASCERTAIN THE OWNER(S) OF SUCH VEHICLES WHETHER SUCH OWNERS HAVE MAINTAINED MORE THAN TWO VEHICLES DURING THE RELEVANT PERIODS AND ALSO AS TO WHETHER THE TRANSPORTATION CHARGES FOR SUCH VEHICLES WERE RECEI VED THROUGH DRIVERS OR THROUGH OTHER CHANNELS ETC. 6.9. LET US HAVE A GLIMPSE OF WHAT JUDICIAL PRONOUNCEMENTS SAY ON A SIMILAR ISSUE. CASE LAWS RELIED ON BY THE ASSESSEE: (I) IN THE CASE OF CIT V. UNITED RICE LAND LTD. REPORTED IN (2008) 217 CTR (P &H) 332 THE HON BLE PUNJAB & HARYANA HIGH COURT WAS PLEASED TO OBSERVE THAT THERE BEING NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTERS FOR CARRIAGE OF GOODS NOT IT IS PROVED THAT ANY FREIGHT CHARGES WERE PAID TO THEM IN P URSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD QUANTITY OR PRICE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX UNDER S.194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS. (II) IN A SIMILAR ISSUE THE HON BLE TRIBUNAL IN THE CASE OF R.R. CARRYING CORPORATION V. ACIT R EPORTED IN (2009) 126 TTJ (CTK)240 HAD HELD THAT THE ASSESSEE WAS A TRANSPORTER EXECUTING ITA NO.665/BANG/10 PAGE 13 OF 18 VARIOUS CONTRACTS BY ENGAGING ITS OWN VEHICLES AND TRANSPORTER S VEHICLES. THE AO DISALLOWED THE PAYMENTS BY TAKING PAYMENTS MADE TO THE TRANSPORTER AS SUB - CONTRACT . THERE WAS NOTHING ON RECORD TO SUGGEST THAT ANY CONTRACT EXISTED BETWEEN THE ASSESSEE AND THE ALLEGED TRANSPORTER AS SUB - CONTRACTOR. THERE WAS NEITHER WRITTEN NOR ORAL AGREEMENT IN THIS REGARD. THERE WAS NO DISPUTE TO THE SETTLED LEGAL PROPOSITION THA T WRITTEN AGREEMENT WAS NOT COMPULSORY. EVEN ORAL AGREEMENT CAN BE INFERRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO HAD NOT MADE OUT ANY CASE THAT ON THE BASIS OF THE CONTRACT OF THE BUSINESS BY THE ASSESSEE THERE EXISTED CONTRACTOR AND SUB - C ONTRACTOR RELATIONSHIP BETWEEN THE ASSESSEE AND THE ALLEGED SUB - CONTRACTOR. THE AO HAD NOT MADE OUT THE CASE THAT THE ALLEGED SUB - CONTRACTOR HAD BEEN ENGAGED ON SOME DEFINITE TERMS AND CONDITIONS FOR EXECUTING THE WORK OF THE ASSESSEE. BASICALLY THE ASSE SSEE HAD ENGAGED DIFFERENT TRANSPORTERS FOR EXECUTING ITS DIFFERENT WORK. EVEN THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD ASSIGNED ANY PARTICULAR PORTION OF WORK TO A PARTICULAR TRANSPORTER. SO THE AO WAS NOT JUSTIFIED IN MAKING THE P ROVISIONS OF S. 40(A)(IA). (III) THE HON BLE TRIBUNAL HYDERABAD A BENCH IN THE CASE OF K.SRINIVAS NAIDU V. ACIT REPORTED IN (2010) 131 TTJ (HYD) (UO) 17 WAS VERY EMPHATIC IN ITS RESOLVE THAT IN THE ABSENCE OF EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE I NDIVIDUAL HAD MADE PAYMENT OF FREIGHT CHARGES TO THE OWNERS OF THE TRUCK IN PURSUANCE OF ANY CONTRACT AS A CONTRACTOR AND NOT AS A SUB - CONTRACTOR IT CANNOT BE HELD THAT THE ASSESSEE WAS A CONTRACTOR AND THE PROVISIONS OF S.194C(1) APPLIED TO SUCH PAYMENT AND NOT S.194C(2) HOWEVER AMOUNT HAVING BEEN PAID AND NOT PAYABLE S.40(A)(IA) COULD NOT BE INVOKED TO DISALLOW THE CLAIM. ITA NO.665/BANG/10 PAGE 14 OF 18 WITH DUE RESPECTS WE WOULD LIKE TO POINT OUT THAT THE JUDICIARY CITED SUPRA HAVE DEALT WITH ALMOST IDENTICAL ISSUES WHEREIN THE Y HAVE ARRIVED AT A CONCLUSION THAT IN THE ABSENCE OF ANY EVIDENCE OR PROOF THAT THE ASSESSEES HAVE ENTERED INTO ANY CONTRACT THE APPLICABILITY OF THE PROVISIONS OF S.194C OF THE ACT WERE VERY REMOTE. CASE LAWS RELIED ON BY THE REVENUE : (I) IN T HE CASE OF DEY S MEDICAL (U.P)(P) LTD. V. UNION OF INDIA AND ORS. REPORTED IN (2009) 316 ITR 445 (ALL) THE ISSUE PRIMARILY BEFORE THE HON BLE COURT WAS THE CONSTITUTIONAL VALIDITY OF S. 40(A)(IA) OF THE ACT. IT WAS HELD BY THE HON BLE COURT THAT - IT IS NOT DISPUTED THAT ON THE PAYMENTS MADE BY THE PETITIONER WHICH ARE IN DISPUTE IN THE PRESENT CASE. IT WAS LIABLE TO DEDUCT AT SOURCE BY VIRTUE OF S.194C FAILING WHICH S.40(A)(IA) PROVIDES THAT SUCH PAYMENT SHALL NOT BE ALLOWED TO BE DEDUCTED FROM COMPUTA TION OF TOTAL INCOME AND SHALL BE TREATED TO BE THE INCOME OF THE ASSESSEE. ONCE A DEDUCTION OF A PARTICULAR AMOUNT IS NOT ALLOWABLE UNDER THE ACT IT IS LIABLE TO BE TAXED AND MERELY BECAUSE SOME OTHER PERSON MAY ALSO BE LIABLE TO TAX AFTER RECEIVING THE SAID AMOUNT IN ONE OR THE OTHER MANNER IT CANNOT BE SAID THAT FORMER ASSESSEE IS ENTITLED FOR EXEMPTION AND CANNOT BE TAXED. NO AUTHORITY IS SHOWN PROVIDING THAT SUCH TAXATION IS NOT PERMISSIBLE IN LAW AND IS BAD EVEN OTHERWISE. MOREOVER DESPITE REPEAT ED QUERY THE COUNSEL FOR THE PETITIONER COULD NOT SHOW AS TO HOW AND IN WHAT MANNER IT CLAIMS S.40(A)(IA) TO BE ULTRA VIRES. IT COULD NOT SHOW ANY LEGISLATIVE INCOMPETENCE IN ENACTING SUCH PROVISION. VIRES OF AN STATUTE CAN BE CHALLENGED ON THE GROUND O F LEGISLATIVE INCOMPETENCE. IT IS NOT SHOWN THAT S. 40(A)(IA) IS NOT WITHIN THE LEGISLATIVE COMPETENCE OF THE PARLIAMENT AND FURTHER COUNSEL FOR THE PETITIONER ALSO COULD NOT SHOW THAT THE SAID PROVISION IN ANY MANNER IS VIOLATIVE OF ANY PROVISION OF T HE CONSTITUTION INCLUDING FUNDAMENTAL RIGHTS. THERE IS THUS NO MERIT IN THE WRIT PETITION AND SAME IS LIABLE TO BE DISMISSED. ITA NO.665/BANG/10 PAGE 15 OF 18 (II) THE ISSUE BEFORE THE HON BLE HIGH COURT OF RAJASTHAN IN THE CASE OF SHREE CHOUDHARY TRANSPORT COMPANY V. ITO REP ORTED IN (2009) 225 CTR (RAJ) 125 WAS THAT THE ASSESSEE HAVING EXECUTED A CEMENT TRANSPORTATION CONTRACT HIRED THE SERVICES OF TRUCK OWNERS THERE EXISTED SUB - CONTRACTS BETWEEN THE ASSESSEE AND THE TRUCK OWNERS AND THEREFORE THE HON BLE COURT HELD THAT S.194C WAS APPLICABLE AND THE PAYMENTS MADE IN RESPECT OF SUCH CONTRACTS WITHOUT DEDUCTION OF TAX AT SOURCE U/S 194C WERE RIGHTLY DISALLOWED U/S 40(A)(IA) OF THE ACT & (IV) THE REVENUE HAS BEEN TOILING WITH THE IDEA OF TAKING SANCTUARY UNDER CIRCULAR NO.43 3 WHEREIN IT HAS BEEN CLARIFIED THAT THE PROVISIONS OF S.194C ARE WIDE ENOUGH TO COVER ORAL CONTRACTS ALSO. AS ALREADY POINTED OUT BY US THE AO HAD NOT BROUGHT ANY TANGIBLE AND FLAWLESS DOCUMENTARY EVIDENCE ON RECORD TO NAIL THE PRESENT ASSESSEE THAT H E HAD IN FACT ENTERED INTO AN ORAL CONTRACT WITH THE DRIVERS OF THE VEHICLES. 6.10. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS ANALYZED IN THE PRECEDING PARAGRAPHS WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE ISSUE REQ UIRES FRESH AND COMPREHENSIVE CONSIDERATION AS TO WHETHER ASSESSEE WAS REQUIRED TO DEDUCT TAX U/S 194C OF THE ACT WHILE MAKING PAYMENTS OF HIRE CHARGES TO THE DRIVERS OF THE VEHICLES /TRUCKS WHO TRANSPORTED THE BAMBOOS FROM THE FOREST AREA TO THE PAPER MILL S AT BHADRAVATHI AND DANDELI. THE LD. AO IS DIRECTED TO MAKE A CLEAR FINDING AS TO WHETHER THE PAYMENTS MADE ARE FOR HIRING THE VEHICLES /TRUCKS OR IN ITA NO.665/BANG/10 PAGE 16 OF 18 PURSUANT TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION. IF IT IS ESTABLISHED THAT THE PAYME NTS ARE MADE IN PURSUANT TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION THEN THERE SHOULD BE A FURTHER EXAMINATION AND DETERMINATION OF THE ACTUAL CONTRACTOR I.E. (I) THE OWNER OF THE VEHICLE/TRUCK (REPRESENTED BY THE DRIVER OR SELF). (II) THE DRIVER OF THE VEHICLE/TRUCK WHO MIGHT HAVE TAKEN THE VEHICLE ON HIRE FROM THE OWNER. (III) THE PERSON WHO HAS ACTUAL CONTROL OF THE VEHICLE/TRUCK WHO MIGHT HAVE HIRED THE VEHICLE/TRUCK FROM THE OWNER. IT IS PERTINENT TO MENTION HERE THAT IF THE ASS ESSEE HAD ONLY HIRED OUT THE VEHICLE/TRUCK AND IS IN POSSESSION AND CONTROL OF THE VEHICLE/TRUCK AND THEREBY CARRY OUT THE WORK OF TRANSPORTATION HIMSELF THE PROVISIONS OF SECTION 194C OF THE ACT WILL NOT APPLY. ACCORDINGLY THE ISSUE IS REMITTED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOOK INTO ALL TH E S E ISSUE S IN TOTALITY AS DELIBERATED UPON SUPRA AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH DOCUMENTS REQUIRED UNDER THE AMENDED SECTION 194C(3) OF THE ACT AND CLAIM BENEFIT ACCORDINGLY IF FOUND ELIGIBLE. 7. WITH REGARD TO THE ASSESSEE S GRIEVANCE THAT THE AO WAS NO T JUSTIFIED IN DISALLOWING CARTING CHARGES OF RS.1 84 424/ - U/S 40(A)(IA) OF THE ACT WE FIND THAT THE ASSESSEE HAD DEDUCTED IN THE P & L ACCOUNT RS.11.54 LAKHS BEING CARTING AND ROAD WORK. THE STAND OF THE AO WAS THAT THESE ARE NOTHING BUT THE LABOUR P AYMENT FOR PREPARATION OF ROAD IN THE JUNGLE . ITA NO.665/BANG/10 PAGE 17 OF 18 WHEN THE ASSESSEE WAS QUERIED TO FURNISH THE NAMES AND ADDRESSES OF THE PERSONS ALONG WITH AMOUNT PAID/PAYABLE FOR THE ENTIRE PERIOD IT WAS NOTICED BY THE AO THAT ASSESSEE HAD PAID RS.1 84 424/ TO ONE CHINNA PPA ON 2.5.2005 FOR WHICH NO TDS WAS DEDUCTED AND THUS THE AO HAD RESORTED TO DISALLOW THIS SUM U/S 40(A)(IA) OF THE ACT. 7.1. AS COULD BE SEEN FROM THE GROUNDS OF APPEAL BEFORE THE CIT (A) THIS ISSUE HAD NOT BEEN RAISED FOR ADJUDICATION AND THERE WAS ALSO NO TRACE OF ANY MENTION OF THIS AMOUNT IN THE IMPUGNED ORDER OF THE LD. CIT (A). 7.2. DURING THE COURSE OF HEARING BEFORE THIS BENCH TOO NO DETAILS OR THE JUSTIFICATION OF SUCH A CLAIM WERE FORTH - COMING. IN THE ABSENCE OF ANY DETAILS WE ARE OF THE VIEW THAT THE AO WAS JUSTIFIED IN HIS STAND. DISALLOWANCE OF RS.1 84 424/ - MADE BY THE AO U/S 40A(IA) IS SUSTAINED. 8. IN THE RESULT THE ASSE SSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY 2011 . SD/ - SD/ - ( GEORGE GEORGE K. ) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 21 ST JANUARY 2011 . DS/ - ITA NO.665/BANG/10 PAGE 18 OF 18 COPY TO: BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE. 1. APP EL LANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE