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2016 (8) TMI 1046 - ITAT KOLKATA

2016 (8) TMI 1046 - ITAT KOLKATA - TMI - TDS u/s 194C - non tds on Vehicle Hire Charges - disallowance u/s. 40(a)(ia) - Held that:- We find from the facts and circumstances of the case that the provision of section 194C(2) could not be made applicable as there was no contract between the assessee and the individual dumper owners and hence, the invocation of provision of section 40(a)(ia) cannot be made applicable. We find that the invocation of provisions of section 40(a)(ia) is to be decided on .....

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m the market mostly through brokers. We find that there was no material to suggest that the other dumper owners / drivers who were arranged through brokers by the assessee were involved in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risk associated with the main contract work. No contract, either verbal or written, is entered into with the owners / drivers in these cases of purely temporary transporting arrangements. - Decided in .....

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tity of these parties or the genuineness of the transactions. Details of the parties were available with him. On that there is no dispute. If the A.O.has any doubt regarding the creditworthiness of these parties he could have made requisite enquiries. No such enquiry appears to have been done. In view thereof , without conducting such enquiries, to hold that the concerned parties have no creditworthiness, as the A.O. has done, cannot be justified.- Decided in favour of assessee - I.T.A No. 29/Ko .....

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order dated 12.11.2010. 2. The first issue to be decided in this appeal of revenue is as to whether the Ld. CIT(A) is justified in deleting the disallowance made by AO in the sum of ₹ 4,98,86,342/- u/s. 40(a)(ia) of the Act in the facts and circumstances of the case. 2.1. The brief facts of this issue are that the assessee firm is engaged in business of transportation of raw material from Railways Goods siding from racks to various factories by help of Dumpers and Pay Loaders. The assesse .....

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re charges to be paid to Dumper Driver is settled with no other condition to be fulfilled. There being no contract as such with such brokers, dumper owners/drivers, no tax at source was deducted as no part of burden of contract the firm has with factory owners whose goods are to be delivered was to be shared by such dumper owners picked from local market. However, as per ld AO, this payment of ₹ 498,86,642/- is covered by section 194C and no tax being deducted, he disallowed the same u/s. .....

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s argued before the AO that in absence of any contract with the parties concerned, there was no obligation on the part of the assessee to deduct tax at source from the payments made to those parties. The ld AO observed that it would be worthwhile to analyze whether the activities of the assessee of taking the vehicles /Trucks on hire constituted a contract. The said analysis is as under:- a) An offer- As offer by the assessee or his employees or brokers to the vehicle operators for taking on hir .....

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of commitments- The goods i.e must be delivered without 1055 or pilferage. g) Actual performance - The goods are actually transported as per the terms and conditions. The ld AO observed that a perusal of the above would show that all the elements of a contract existed when the assessee was engaging transport vehicles for transporting. As per section 194C, tax is to be deducted in case of Verbal contracts also. It may also be pointed out that verbal contracts are also valid contracts under the I .....

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office which has not been done in the case under consideration as under. Accordingly, the ld AO proceeded to make disallowance u/s 40(a)(ia) of the Act in the sum of ₹ 4,98,86,342/- for violation of section 194C of the Act . 2.2. The ld CITA appreciated the contentions of the assessee that there was no verbal or written contract entered into with the owners / drivers of these dumpers used on hire by the assessee and hence the provisions of section 194C of the Act could not be applied and .....

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s exist. The moment a vehicle is hired a verbal contract for carriage of goods automatically entered into. Further appeal is therefore suggested on this issue. 2.3. The ld DR vehemently relied on the order of the ld AO and argued that the ld AO had clearly brought on record that all the elements of a valid contract were fulfilled by the assessee in the instant case and thereby there is a contract entered into by the assessee and hence, the provisions of section 194C have been violated by the ass .....

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the case of CIT vs Stumn India in ITA No. 127 of 2009 dated 16.8.2010 in support of his arguments. 2.4. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed and hence, the same are not reiterated for the sake of brevity. We find from the facts and circumstances of the case that the provision of section 194C(2) could not be made applicable as there was no contract between the assessee and the individual dumper owners an .....

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86,342/- , depending on the exigencies of circumstances, the assessee had made payments towards hire charges on temporary basis on various occasions which was done from the market mostly through brokers. We find that there was no material to suggest that the other dumper owners / drivers who were arranged through brokers by the assessee were involved in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risk associated with the main cont .....

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₹ 41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be sadd .....

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of the case. 3.1. The brief facts of this issue is that the assessee had shown the current liabilities and provisions to the tune of ₹ 7,81,73,883 and out of that, the current liabilities for the vehicle hire charge is ₹ 6,93,29,686. The ld AO issued notices u/s 133(6) of the Act to the following three parties:- Sl. No. Name of the person Opening Balance Transaction Paid during the year TDS deducted Amount as shown as on 31.03.2008 1. Priyanka Transport Nil 1,56,89,951 1,09,42,038 1, .....

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re charges and since the parties did not respond to notice u/s 133(6) of the Act, the closing balance representing the charges payable by assessee to them as on 31.3.2008 alone were brought to tax which is admittedly not in accordance with law. It was also contended before the ld CITA that the assessee had duly complied with the TDS provisions in respect of expenses incurred with these three parties and this fact is also accepted by the ld AO in his assessment order. The ld CITA appreciated the .....

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said parties could be forwarded to establish the creditworthiness for entering into a transactions of such big magnitude. The above findings were brought to the notice of the assessee also. The Ld. CIT(A) failed to appreciate the facts brought on record by the AO. Further appeal is therefore suggested on this issue. 3.2. The ld. DR vehemently relied on the order of the ld AO and the ld AR vehemently relied on the order of the ld CITA. 3.3. We have heard the rival submissions and perused the mate .....

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appellant's case is that the A.O. has treated these balances as cash credits and while doing so he has allowed the amounts paid to these parties during the year and has added back only the outstanding balances. The appellant has also mentioned that TDS was made on the payments given to these parties during the year and this fact was also noted by the A.O. in his assessment order. The A.O. has relied on the cases of: a) Baisnab Charan Mohanty [212 ITR 199 (Ori.)] b) Precision Finance (P.) Lt .....

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