TMI Blog2022 (11) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract between the assessee and the transporters and, therefore, no deduction of TDS u/s.194C of the Act is called for - HELD THAT:- In the present case, the assessee has not produced PAN details in respect of the contractors to an extent of Rs.28.74 crores. In this regard, we are of the view that the interest of justice would be served if the assessee is granted another opportunity to produce the PAN details before the AO in the light of sub-clause(6) of the provisions of section 194C. In these circumstances, the order of the ld CIT(A) on this issue stands reversed and the issues are restored to the file of the AO for granting the assessee adequate opportunity to produce the PAN details as required under sub-clause(6) of Section 194C of the Act in respect of the transport contract. TDS u/s 194H - disallowance of commission paid on account of non-deduction of TDS - HELD THAT:- AO has asked the assessee to produce the proof. The assessee has produced only handmade vouchers which were not verifiable. A perusal of the order of the ld CIT(A) shows that the ld CIT(A) has given a categorical finding that the assessee has not given even the name and address to whom, the commission h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on the rent paid to Shri B.K.Palei, the disallowance made by the AO and deleted by the ld CIT(A) was liable to be restored. 4. In reply, ld AR submitted that wrong mentioning of section is a wrong application of jurisdiction. The wrong application of jurisdiction cannot be corrected by the ld CIT(A). It was the submission that as the Assessing Officer had applied wrong jurisdiction when he mentioned the provisions of section 194C in place of section 194 I, ld CIT(A) was right in deleting the addition. 5. We have considered the rival submissions. Wrong mentioning of section does not amount to wrong application of jurisdiction. Lack of jurisdiction is in respect of procedure of assessment. Once an assessment has been validly initiated, typographical errors could take place in respect of mentioning of particular section. Admittedly, the Assessing Officer has invoked his powers u/s.40(a)(ia) of the Act for the purpose of making the disallowance on account of non-deduction of TDS. Admittedly, reference to the relevant section under which TDS should have been done is wrong. This does not excuse the assessee for non-deduction of TDS. This being so, we are of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes it clear that the appellant was to transport the goods (cement) of the consignor company; and in order to execute this contract, the appellant hired the transport vehicles, namely, the trucks from different operators/owners. The appellant received freight charges from the consignor company, who indeed deducted tax at source while making such payment to the appellant. Thereafter, the appellant paid the charges to the persons whose vehicles were hired for the purpose of the said work of transportation of goods. Thus, the goods in question were transported through the trucks employed by the appellant but, there was no privity of contract between the truck operators/owners and the said consignor company. Indisputably, it was the responsibility of the appellant to transport the goods (cement) of the company; and how to accomplish this task of transportation was a matter exclusively within the domain of the appellant. Hence, hiring the services of truck operators/owners for this purpose could have only been under a contract between the appellant and the said truck operators/owners. Whether such a contract was reduced into writing or not carries hardly any relevance. In the given sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission that as the bills have been raised and the payments have been made clearly shows that the contract exists and the assessee having not deducted TDS u/s.194C and having failed to produce the PAN details, the ld CIT(A) order deleting the disallowance is liable to reversed and that of the AO restored.] 8. Ld CIT DR has filed written submission as follows: At the outset, it is submitted that the issue in the present appeal as regards application of 194C r.w.s 40(a)(ia) to the transport contracts is covered in the favour of revenue by the decision of Hon ble Supreme Court in the case of Shree Choudhary Transport Company vs ITO (118 taxmann.com 47). The observations of the Hon ble Supreme Court in paras 15,15.1 15.2 are reproduced as under: 15. In order to maintain that the appellant was under no obligation to make any deduction of tax at source, it has been argued that there was no oral or written contract of the appellant with the truck operators/owners, whose vehicles were engaged to execute the work of transportation of the goods only on freelance and need basis. The submission has been that the question of TDS under Section 194C(2) would have arisen only if the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k operator/owner became a sub-contractor for the purpose of the work in question. The AO, CIT(A) and the ITAT have concurrently decided this issue against the appellant with reference to the facts of the case, particularly after appreciating the nature of contract of the appellant with the consignor company as also the nature of dealing of the appellant, while holding that the truck operators/owners were engaged by the appellant as subcontractors. The same findings have been endorsed by the High Court in its short order dismissing the appeal of the appellant. We are unable to find anything of error or infirmity in these findings. ii.) As regards the finding of the CIT(Appeals) that there was no written contract between the assessee and transport contractors, reliance is placed on the decision of the Hon'ble Jharkhand High Court in the case of CIT vs. Md. Tabarak (61 taxmann.com 94) which held as under: We are not in agreement with this arguments canvassed by learned counsel for the respondent, for the following reasons:- (a) The words used u/s 194C of the Act, 1961 any person responsible for paying any sum to any resident (hereafter in this section referred to as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in this case. Payments have been made for spare parts, tyres and tubes, batteries, for engine, for motors auto body, for leaf spring etc. during the financial year 2008-09. Looking to this aspect of the matter, no error was committed by the Income Tax Commissioner, while dismissing the appeal preferred by the respondent-assessee. Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi has failed to appreciate the cumulative effect of the evidences on record. We are not in agreement with the arguments canvassed by the counsel for the respondent-assessee mainly for the reasons that section 40(a)(ia) to be read with section 194C of the Income Tax Act, 1961 have not been incorporated to increase the morality of the assessee. In a taxing Statute, once there is a breach of section, the consequences are bound to follow happen. Looking to the provisions of Section 194C of the Income Tax Act, 1961 if the amount is paid in pursuance of the contract -which may be oral also, Section 194 C of the Income Tax Act,1961 is applicable. In the facts of the present case when aforesaid huge amount is paid towards vehicle hire charges in one year and also towards loading and unloading charges h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our types of contracts, namely (1) contracts made in writing (2) contracts made orally (3) contracts by implication or implied contracts and (4) quasi contracts. Thus, the contracts envisages in section 194C are not limited to written contracts and all payments made in pursuance of written, oral, implied or quasi contracts are covered under section 194C. Thus, a contract need not be in writing; even an oral, implied or quasicontract is good enough to invoke the provisions of section 194C of the Act. iv.) Further the Hon'ble Karnataka High Court has observed in the case of Smt. J. Rama vs. CIT (344 ITR 608) that Law does not stipulate the existence of a written contract as a condition precedent for invoking the provisions of section 194C with respect to payment of TDS. It was held that a contract need not be in writing. It may be inferred from the conduct of the parties. It may be oral or implied also. This view is also supported by the decision of Hon'ble Kolkata ITAT in the case of DCIT vs. Kamal Mukherjee Co. (Shipping) (P.) Ltd. (20 taxmann.com 670), DCIT vs. Five Star Shipping Agency (P.) Ltd. (59 taxmann.com 369) and the decision of the Hon'ble Rajkot Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cies or truck drivers and the same is hit by provisions of section 194C. In the present case, the assessee has not produced PAN details in respect of the contractors to an extent of Rs.28.74 crores. In this regard, we are of the view that the interest of justice would be served if the assessee is granted another opportunity to produce the PAN details before the AO in the light of sub-clause(6) of the provisions of section 194C. In these circumstances, the order of the ld CIT(A) on this issue stands reversed and the issues are restored to the file of the AO for granting the assessee adequate opportunity to produce the PAN details as required under sub-clause(6) of Section 194C of the Act in respect of the transport contract to an extent of Rs.28.74 crores. 11. In the result, appeal of the revenue stands partly allowed for statistical purposes. ITA No.340/CTK/2018: Assessee s appeal 12. It was submitted by ld AR that two issues are involved in the assessee s appeal, first being against the action of the ld CIT(A) in confirming the disallowance of commission paid to an extent of Rs.45,63,980/- on account of non-deduction of TDS u/s.194H of the Act. The second issue was in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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