TMI Blog2013 (5) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has collected Form 15-I from the truck operators but he could not produce them before the Assessing Officer, however, the same was produced before the Commissioner of Income-tax. The fact of non-production of Form 15-I cannot be taken as default committed by the assessee and as burdening the assessee with heavy taxable income. Since the assessee produced Form 15-I before the Commissioner of Income-tax and it was duly filled in, therefore, due credit is to be given. For this proposition, reliance is placed on the decision in the case of Shree Choudhary Transport Co. v. ITO [2009 (12) TMI 574 - ITAT JODHPUR]. In the case of Valibhai Khanbhai Mankad v. Deputy CIT [2011 (4) TMI 887 - ITAT, AHMEDABAD] wherein held that once the assessee has obtained Form No. 15-I from the sub-contractors, he is not liable to deduct TDS on the payment made to sub-contractors and no disallowance can be made under section 40(a)(ia) ; belated furnishing of Form No. 15J to the Commissioner of Income-tax is an act posterior in time to payments made to sub-contractors and, therefore, this cannot by itself undo the eligibility for exemption created in the second proviso to section 194C(3)(i) by virtue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing observations : The assessee has also incurred a total amount of ₹ 3,94,28,546 as lorry freight payment to drivers who had undertaken to submit Form 15-I. However, on verification, it is observed that Form 15-I was received to the extent of ₹ 3,06,79,523 only, out of which in some cases, aggregating to ₹ 16,76,700 the Form is incomplete. In other cases wherever TDS liability was there, the assessee has deducted tax at source and paid to the Government. In all cases where Form 15-I has been received by the company, it has not filed the prescribed Form 15J to the Department. As per the provisions of section 194C of the Act, wherever the hire charges exceeds ₹ 50,000 per party, the assessee was under obligation to deduct tax at source. However as observed by the tax auditor in Form 3CD, on an amount of ₹ 3,94,28,546, the assessee did not deduct tax at source allegedly on the ground that the lorry owners had undertaken to submit Form 15-I. The tax auditor further observed that the assessee had received Form 15-I to the extent of ₹ 3,06,79,523 only out of which in some cases, aggregating to ₹ 16,76,700 the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. However, the Assessing Officer has observed that out of ₹ 3,94,28,546 the assessee had furnished Form 15-I to the extent of ₹ 3,06,79,523 and no Form 15-I filed remaining balance amount of ₹ 87,49,023, which warrants disallowance under section 40(a)(ia) of the Act. Therefore, the Assessing Officer disallowed an amount of ₹ 87,49,023 under section of 40(a)(ia). In the course of the assessment, the Assessing Officer also wanted to examine the correctness of the Form No. 15-I and sent letters to the parties named in the Form No. 15-I to the stated addresses. All the letters have returned by the postal department with remarks such as no such person , insufficient address , unclaimed , incorrect address , etc. When it was put to the assessee, it was contended that in the business of transportation the lorries are purchased and sold frequently and it was quite possible that the person who transported goods may not be the owner of the lorry after sometime and in such circumstances the confirmation from such lorry owners is practically impossible. Being so, it was not delivered to the concerned person to whom the letters were sent. Accordingly, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 for the assessment year 2009-10 is bad in law, contrary to the facts and circumstances of the case. 10. The Commissioner of Income-tax (Appeals) had not at all adjudicated the said ground and decided the appeal on merits. Being so, it is proper to remit this reopening issue to the file of the Commissioner of Income-tax (Appeals) after considering the argument advanced by the parties. This ground is allowed for statistical purposes. 11. Coming to the merits of the issue raised, learned counsel for the assessee submitted that provisions of section 194C(2) are not applicable to the assessee's case as the assessee took the vehicles on hire charges, therefore, the provisions of section 194C(2) do not attract the case of the assessee. The provisions of section 194C are applicable to payments for carrying out any work, manpower is the sine qua non and without manpower, it cannot be said that work has been carried out. Under section 194C of the Act carrying out any work is the substance for making payment, a payment relating to such work, liable for deduction of tax at source. The provisions of section 194C are attracted only where any sum is paid for carrying out any w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s P. Ltd. v. CIT [1997] 224 ITR 677 (SC). 13. Without prejudice to the above, the learned authorised representative submitted that non-filing of Form No. 15-I is not fatal and if the assessee is able to file the same before the authorities by the time of assessment, which could be considered as due compliance of the Income-tax Act. It is submitted that the assessee has duly filed these Form 15-I before the Assessing Officer and the Commissioner of Income-tax (Appeals) and even after filing the said form finding errors, which are not material and Form 15J has to be accepted. It is submitted that what are the information required to grant relief to the assessee are very much available in the forms and the assessee's case to be considered for allowing of deduction claimed by the assessee. 14. The learned authorised representative submitted that as soon as the assessee is in possession of Form 15-I received from the truck owners, the assessee not required to deduct tax from such payments. Once deductibility of tax depends upon submission or non-submission of Form 15-I from the truck owners to the assessee, then non-compliance of the third proviso becomes merely technical with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passing of liability is not the only criteria to decide about the existence of sub- contract, yet this contention of the assessee read with the liability clauses of the work supports its submission that the individual vehicle owners are simply hirers of the vehicles. We find that the Commissioner of Income-tax (Appeals) is correct in holding that 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 undertaken by the assessee by spending their time, energy and by taking the risks associated with the main contract work and the payment made to the lorry owners stands at par with the payments made towards salaries, rent, etc. We find that the reasoning of the Assessing Officer to hold that the pay ment made for hired vehicles is a sub-contract payment is not correct and not based on relevant consideration and hence it cannot be said that the payments made for hired vehicles would fall in the category of payment towards sub-contract with the lorry owners. In that case the assessee is not liable to deduct tax at source as per the provisions of section 194C(2) of the Act and consequently the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Karnataka High Court concluded as under : 'In order to provide vehicles to a customer as per agreement, the assessee used to hire vehicles from others and hiring of vehicles by the assessee is in the nature of transport contract and hence, the dis allowance under section 40(a)(ia) was justified when no tax was deducted at source from payments made to those persons.' Further, following Smt. J. Rama's case [2012] 344 ITR 608 (Karn) of the hon'ble Karnataka High Court, we have taken a decision dated February 17, 2012 of the Income-tax Appellate Tribunal, Kolkata Bench in I.T.A. No. 199/Kol/2010 in the case of Deputy CIT v. Kamal Mukherjee Co. (Shipping) P. Ltd. [2012] 51 SOT 73 (Kol) (URO), wherein it is held as under (from headnotes) : '. . . Undoubtedly, these decisions do indicate that there is a workman employer relationship between the dock workers and the stevedores like assessee when they employ those workers, but be that as it may, the fact remains that the assessee has made payments to the CDLB for supply of these workers. As long as the assessee has made payments to the CDLB for supply of labour, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Bench of this Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT, wherein it is held that the TDS is to be deducted only in relation to payments which remains payable at the end of the year, i.e., 31st March of the relevant financial year. It was pointed out to learned counsel that the operation of the order of the Special Bench of this Tribunal in the case of Merilyn Shipping and Transports, is stayed by the hon'ble Andhra Pradesh High Court in I.T.T.A.M.P. No. 908 of 2012 in I.T.T.A. No. 384 of 2012 wherein the hon'ble High Court observed, 'Interim suspension notice' vide dated October 8, 2012. 5. On this, learned counsel for the assessee argued that effect of the order staying a pending appeal before any High Court does not amount to any declaration of law but is only binding upon the parties to that proceedings and such interim order does not destroy the binding effect of the principals as laid down in the order as a precedent because the interim order had no occasion to lay down any proposition of law. For this proposition, he relied on the case law of the hon'ble Calcutta High Court in the case of Pijush Kanti Chowdhury v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the apex court does not amount to any declaration of law but is only binding upon the parties to the said proceedings and at the same time, such interim order does not destroy the binding effect of the judgment of the High Court as a precedent because while granting the interim order, the apex court had no occasion to lay down any proposition of law inconsistent with the one declared by the High Court which is impugned.' 6. Even, the hon'ble Supreme Court in the case Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 75 Comp Cas 440 (SC) has analysed the difference between 'stay of operation' of an order and 'quashing of an order' and held that 'stay of order' of an appellate authority/court by a higher court means that the order passed by the appellate authority/lower court still continues to exist in law in spite of the stay and its existence is not destroyed. But where the order of the appellate/lower court is quashed and the matter is remanded back, it means that the appeal disposed of by the said order of the appellate authority/lower court would be restored and it can be said to be pending before the said authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (Appeals) in his order at pages 5 to 6 is reproduced as under : As directed by the Commissioner of Income-tax (Appeals), enquiries were caused by me through the ITI. During the assessment proceedings, an amount of ₹ 3,94,28,546 was added to income returned under section 40(a)(ia) of the Act, as Form 15-I produced at the time of assessment, which was obtained from the owners of the trucks, by the assessee are defective and confirmation letters sent to the truck owners, were unserved or no replies were received. I have verified the expenditure with regard to Form 15J and Form 15-I. The assessee-company is using specialised computer package for the transport companies called FCUBE for recording receipts and expenditure with the details of consignment. Consignee, consignor, from and to, paid/to pay consignment and details of lorry receipts, debit vouchers, transport challans and bills. Some of the transactions were verified randomly with the entries made in the computer pack age and found to tally with copies of lorry receipts, debit vouchers, transport challans, bills and the details of advance given, balance to be paid to the truck owners. Other ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sri K. K. Kempagullaiah was operating on his own from his residence. Hence he could not receive the letter. The address origi nally given at the time of registration was not the communication address of the self. Hence, the confirmation letters were not claimed by the addressee. As the assessee-company is maintaining every record with regard to receipts and expenditure on hire charges paid to the truck owners along with the details of debit vouchers, lorry receipts, transport chal lans, money receipts and bills, the expenditure incurred by the asses see-company in lorry hire charges can be said to be genuine and may be allowed. Randomly obtained xerox copies of debit vouchers, lorry receipts, transport challan, bills raised by the assessee-company are submitted herewith for kind perusal of the Commissioner of Income-tax (Appeals)-I/, Hyderabad. 22. After going through the report, the Commissioner of Income-tax (Appeals) observed that though the assessee received Form 15-I to the extent of ₹ 3,06,79,523, which is complete in all respects not ready to accept the same as the assessee did not file Form 15J and the same was filed belatedly on March 7, 2011. In our opin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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