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2013 (11) TMI 1695 - ITAT AHMEDABAD

2013 (11) TMI 1695 - ITAT AHMEDABAD - TMI - IT(SS)A No. 37 to 40/Ahd/2013, IT(SS)A No. 115 to 118/Ahd/2013 - Dated:- 15-11-2013 - N. S. Saini (Accountant Member) And Kul Bharat (Judicial Member) For the Revenue : T. P. Krishnakumar CIT-DR For the Assessee : Tushar Hemani ORDER These cross appeals are filed by the assessee and the Revenue against the consolidated order of the CIT(A)-III, Ahmedabad dated 14.12.2012. 2. In the assessee s appeal, the sole issue involved is that the learned CIT(A) ha .....

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certain cases, the assessee-company had made freight payments to brokers in cash in excess of limits prescribed under section 40A(3) of the Act. The AO issued show cause notice to the assessee as to why such payment should not be disallowed under section 40A(3). The explanation given by the assessee was not accepted by the AO for the reasons that the provisions of section 40A(3) were applicable in the relevant assessment years, where the assessee incurred any expenditure and in respect of which, .....

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it has been omitted w.e.f. 25.7.1995. The AO also noted that the exceptions are now provided under section 40A(3) itself. In the second proviso, it has been provided that no disallowance shall be made in such cases and under such circumstances, as may be prescribed. Such cases and circumstances have been specified in Rule 6DD of the I.T. Rules. He submitted that sub-clauses (1) and (2) of Rule 6DD(j) was deleted w.e.f. 25.7.1995 and that prior to the amendments, the rule making authority had giv .....

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o avail to the assessee. The AO further noted that the legislature never intended to exclude the transporters from the ambit of the provisions of section 40A(3) of the Act and they were always within the purview of the provisions of the said section inspite of the difficulties and problems faced by them. The AO also noted that the case laws relied upon by the assessee-company were not applicable to the facts of the case of the assessee, as these decisions have been given with regard to assessmen .....

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llowance of deduction inspite of breach of the provisions of section 40A(3) no exceptional circumstances have been prescribed. In view of the above reasons, the AO disallowed the payment in excess of ₹ 20,000/- made during the years under consideration in violation of provisions of section 40A(3) of the Act. 4. The assessee in the appeal before the learned CIT(A) made written submissions, which are quoted in para-5 of the order of the learned CIT(A), which reads as under: 5. Appellant in i .....

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r own fleet of Trucks and (ii) by hiring out side Trucks (Transportation of goods by arranging/hiring outside trucks accounts for our major turnover freight income, approx. 78%) Thus, to the extent of transportation of clients goods by own Trucks, it is our own transportation work. However, when the transportation of goods for clients is done by us by hiring outside trucks, our role for all practical purposes is of agent for our client. We collect the agreed freight charges from our clients and .....

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ses like diesel, R.T.O. salaries of drivers etc. are debited. However, for sake of convenience entire freight received and paid is routed through profit & loss account. This accounting system, of routing freight payments and receipts through our books of accounts is adopted and followed by us for accounting convenience. However, the fact remains that in respect of engaging outside trucks what we get is freight difference in the nature of commission for hiring trucks for the customer. Sir, in .....

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bstantiate our above contentions, we are enclosing herewith the following charts showing break ups:- (1) Break up of freight income showing income from own trucks and from trucks hired (2) Break of expenditure for own Trucks and towards freight charges etc. for outside trucks (3) Statement of gross income earned from own trucks and from outside hired trucks. The Chart-I shows % of Income from Trucks hired to total freight income received by the company yearwise as under- A.Y. % of outside Freigh .....

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own trucks and. by hiring outside trucks. On perusal of the said chart you will find that, we have earned difference of freight received and paid ranging from 2.79% to 3.83% on the total freight income received and which, is in the nature of commission income for hiring trucks for our clients. As stated hereinabove, as well as observed and narrated in the judgement referred above, just for accounting convenience entire freight income including in respect of outside trucks as well as freight pay .....

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ed herein below squarely applies to the facts of our case. (i) G.A. Road Carriers v. I.T.O ITAT Hyderabad Bench ' B' (2011) 44 SOT 145 (Hyd.) In the judgement referred above, in Para 9 of its order, IT AT has stated as under: Since, we held that the assessee-firm was not wrong in excluding the transaction relating to freight charges received from the consignors and paid to the vehicle owners from, its profit and loss account, the only other issue that remains to be adjudicated upon is wh .....

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red by the assessee., the whole of the receipts computed on the basis of IDS certificates could not be attributed as receipt on account of plying of trucks on assessee's own account and the total receipts computed on the basis of TDS certificates could not be considered as assessee's own receipts for the purpose of section 44AB of the Income Tax Act. The ratio laid down in this case supports the contentions of the assessee. Further in para 10 of its order IT AT has opined as under:- In o .....

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freight charges constituted the assessee-firm's gross business receipts or trading turnover. Similarly, the routing of freight charges paid by the consignors and payments made by the assessee-firm to the vehicle owners through its bank account would not constitute the receipts and expenses as part of any trading transaction of the assessee firm. The payments made to the vehicle owners therefore would not constitute assessee's business expenditure for the purpose of computation of profit .....

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inent to note that fixing of rate between the beedi manufacturers and the assessee-firm has nothing to do with the nature of relationship. It may be possible that as a matter of convenience the rates might have fixed by both these persons. In this Judgement it was held as under:- After considering the totality of the facts and circumstances of the case, the disallowance made under section 40A(3) of the Act for the assessment year under consideration cannot be sustained. Hence the addition made o .....

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interest of justice and equity, the disallowance made U/s. 40A(3) shall be considered unwarranted by your honour we request you to delete the addition. WITHOUT PREJUDICE TO THE ABOVE. : II. During assessment proceedings, appellant vide its letter dt. 21/12/2011 has made submissions which is reproduced hereunder in brief: 1. As stated in to Reply to show cause notice of A.Y. 2007-08 to A.Y. 2010-11, the payments in cash excess of limits stipulated in section 40A has been made as the truck was goi .....

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having their identity and vehicle. We are enclosing herewith yearwise list of total such payments. 2. Note as to intentions of the legislature to introduce section 40A(3) BY Finance Bill, 1968. 3. A. Further we have stated that, we are engaged in transport Industry wherein we are required to transport goods of our client from various destination to the receiving destinations and in the process, we are required to hire the outside trucks. In most of the cases single person owns 1 or 2 trucks onl .....

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ing far off long haul Journey ^requires to expend heavily on toll taxes, diesel, lodging and boarding, contingencies etc. and hence they are not willing to come unless payment of entire stipulated freight advance is paid in cash. In view of peculiar circumstance of the transport Industry, broker/driver/owner insist for entire stipulated freight payment in cash only and sometime show their inability to book our goods, if cash payment terms are not agreed upon. However, in our case, business being .....

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. Further to substantiate our contention i.e. to establish identity and existence of the receiver and to prove genuineness of the cash payment made exceeding the limits prescribed in section 40A(3) as stated in the subject matter of this reply the receiver of such payments has on our request has confirmed the payments received, their insistence for cash payment and their identity proofs. We have received confirmation letters in most of the cases. Copies of letters are enclosed herewith for your .....

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outside trucks. We are giving hereunder the figures of total freight payments and freight payment made in excess of stipulated limits in section 40A(3) for the reasons stated herein above. A.Y. Total Freight Payments Payment Exceeding Int. stipulated limit % to total 2007-2008 554489346 5349447 0.96 2008-2009 808868968 705918 0.08 2009-2010 1039293196 69247389 6.66 2010-2011 847691269 9485912 1.10 On perusal of the figures* stated herein above your honour will find that the % of such payments ar .....

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the practical difficulties, the brokers insist for freight payment in cash for onward payment to drivers/driver cum owners of the Truck in the circumstances mentioned herein in para 3 above. As stated above, the brokers who hire trucks for us act as agent for us and the section 40A(3) read with Rule 6DD permits the same and hence the payments made exceeding ₹ 20,000/- (and ₹ 35,000/- after 1/10/2009) ought not-to have been disallowed by A.O. We request your honour to appreciate our s .....

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of the recipient of freight having PAN. It can be very well said that the freight received by them from us might have been shown by the recipients as their income. And in the scenario of disallowance of payments u/s. 40A(3) of this magnitude, may result in double taxation, which was held many a courts, is not permissible .under the taxations Jaws of the land. b. Sir, we are in the business of transportation of goods by trucks owned by us as well as from truck hired from other truck owners throug .....

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s of the appellant have been carefully considered, The fact that payments exceeding Rs,20,000/- in cash have been made by appellant remains undisputed. Appellant has argued that these payments were made to truck drivers who insisted payment in cash. This argument of the appellant is not acceptable because appellant has not made payments to individual truck owners but to various brokers through whom the trucks were engaged. In such a case, appellant cannot argue that payments were required to be .....

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y vehicle owners. In his case, neither freight payments made to truck drivers constituted any business expenses nor the reimbursement of freight charges from the customers formed turnover in his books of accounts. Under such circumstances it was held by Hon'ble ITAT that nature of business of appellant is of an agent. However, in the case of appellant, the entire freight charges from the customers have been included in his books of accounts, as turnover and all the freight payments made to t .....

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sclosed sources. It is not for estimation of income of appellant. Therefore, the argument that GP will increase abnormally after making disallowance u/s. 40A(3) is not acceptable. 6.3 In view of above mentioned facts and for reasons given by AO in detail in the assessment order as mentioned above, I hold that the disallowance made u/s. 40A(3) for all the 4 years is justified. Disallowance of ₹ 10,69,889/for A.Y. 2007-08, ₹ 7,05198/- for A.Y. 2008-09, ₹ 6,92,47,389/- for A.Y. 20 .....

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and hence, he made the impugned additions. He submitted that the assessee was engaged in the business of transportation, and has entered into contract with M/s.Hindustan Lever Ltd., Reliance, Kalpataru, etc. for transportation of goods. Copies of few such agreements are placed at page nos.77 to 102 of the paper book. He submitted that consequent to the aforesaid arrangement, such goods are transported through trucks owned by it as well as through hired trucks. It was submitted that as regard pa .....

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opies of such show cause notice with respect to disallowance u/s.40A(3) for all the four years are placed at page nos.33 to 49 of the paper book. It was further argued that the assessee has also brought this fact to the notice of the AO as well as ld. CIT(A) that payments were made to brokers vide its written submissions, copies of which are placed at page no.11 to 26 of the paper book. In view of the above, it was contended that there was no violation of provisions of section 40A(3) r.w.s. Rule .....

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he payment viz. the drivers/owners of the truck have insisted for cash payments as they have to travel huge distance and cash was required for meeting with the expenditure and exigencies during the trips. For this, reliance was placed para 2.2. of the assessment order. It was further submitted that as per clause- k of Rule 6DD of the IT Rules, no disallowance u/s.40A(3) can be made where cash payment was to be made to an agent who in turn was required to make cash payment on behalf of the assess .....

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n carved out as per Rule 6DD(k) clearly gets invoked and no disallowance u/s.40A(3) is called for and the same be deleted. He placed reliance on the decision of the ITAT, Ahmedabad bench in the case of Vijaykumar P. Desaid (Individual & HUF) - ITA No.46 to 57/Ahd/2013 and 85 to 96/Ahd/2013 consolidated order dated 29.8.2013, and also on the decision of the Hon ble Madras High Court in the case of CIT Vs. Sri Shanmuga Ginning Factory 37 taxmann.com 422 (Mad.). In the alternative, the learned .....

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nce, assessee recorded freight income received from the companies as well as the freight expenses paid through brokers. It is submitted that what the assessee earns as income is merely the freight difference and the same is in the nature of commission. When the assessee earns merely freight difference, the freight paid to the brokers is not its expenditure at all. Once the payments are not in the nature of expenditure, there is no question of disallowance of any expenditure invoking the provisio .....

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, the AO observed that the assessee has made cash payments for freight charges to brokers, which was in excess of the limit prescribed under section 40A(3) of the Act. He, therefore, by invoking the provisions of section 40A(3) of the Act, made disallowance of ₹ 10,69,899/- for A.Y.2007-2008, ₹ 7,05,198/- for A.Y.2008-2009 ₹ 6,92,47,389/- for A.Y.20092010 and for A.Y. 2010-2001 ₹ 94,85,912/-. On appeal, the learned CIT(A) has confirmed the action of the AO, on the ground .....

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payments to individual truck owners but to various brokers through whom the trucks were engaged, and therefore, the case of the assessee was not covered by the exceptions mentioned in Rule 6DD. The alternative arguments of the assessee that if the disallowance is made under section 40A(3), the GP will go abnormally high, was also not accepted by the learned CIT(A) on the ground that the disallowance under section 40A(3) of the Act was a technical disallowance for violation of specific provision .....

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₹ 20,000/- and all of them had confirmed that they were acting as agents on behalf of these two assessees for making purchases on their behalf and they were getting commission in the range of 0.75% to 1%, They had also confirmed that they were receiving cash payment from these two assessees and were in turn making cash payment to the raddiwalas from whom they were making purchases on behalf of these two assessees. These facts are noted by the learned CIT(A) from the remand report in the re .....

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It was also confirmed that they were taking commission ranging from 0.5% to 0.75% on supply of waste papers to the assessee. In the light of these facts, it is seen that the provisions of clause (k) of Rule 6DD of the IT Rules are squarely applicable and hence, in the facts of the present case, no disallowance u/s 40A (3) of the Act is justified. Hence, on this aspect, we do not find any reason to interfere in the order of the learned CIT(A). Accordingly, we confirm his order on this aspect, we .....

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thing producing effect iii) broker, delegate, envoy, executor, functionary, go between, intermediary, mediator, middleman, negotiator, proxy, representative, surrogate, trustee. Therefore, a broker is akin to an agent. Thus, the facts of the case are identical to the facts, which were in the case of Vijaykumar P. Desai (supra), and therefore, the decision in that case is squarely applicable to the facts of the assessee s case. Hence, respectfully following the above-cited decision of the Tribuna .....

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O observed that the assessee-company has made freight payments in some cases without deducting TDS as per the provisions of section 194C of the Act. He asked the assesseecompany to explain the reasons for the same. After considering the replies of the assessee, the AO disallowed the ₹ 54,00,379/- for A.Y.2007-2008, for A.Y. 2008-2009 ₹ 51,55,864/-, for 20092010 ₹ 1,26,94,479/- and for A.Y 2010-2011 of ₹ 76,08,948/-. 12. On appeal before the learned CIT(A), the assessee su .....

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ny nor do they step in the shoes of the assessee before them. They were independent contractors in respect of particular job allotted to them and not at all a subcontractor on behalf of assessee in respect of main contract undertaken by the assessee from the main contractor. It was argued that various trucks owners to whom the payments are made cannot be termed as subcontractor of the assessee, and hence, there was no liability on the part of the assessee to make TDS from payments made to them, .....

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y the assessee, could not be made liable to deduct TDS under section 194C in respect of the payments to other truck owners. He further placed reliance on the decision of the Hon ble Punjab and Haryana High Court in the case of CIT Vs. United Rice Land Ltd., (2008) 174 Taxmann 286, wherein it was held that the Tribunal had clearly stated that nothing has been brought on record by the AO to prove that there was any written or oral agreement between the alleged parties for carriage of goods. In vie .....

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e was also placed on the decision of the Punjab and Haryana High Court in the case of CIT Vs. Ess Kay Construction Co. (2004) 267 ITR 618 (P&H) wherein it was held that there was no direct contract between original contractor and the ultimate payees, therefore, would not result the contract being executed for the application of section 194C(2). Further reliance was also placed on the decision in the case of CIT Vs. D. Rathinam, (2011) 197 Taxmann 486, CIT Vs. Bhagwati Steels, (2011) 198 Taxm .....

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ents are made to the individual truck owners for hiring the trucks for transportation of goods from one point to another, the payee cannot be considered as sub-contractor, and therefore, the provision of section 194C are not applicable, and hence, disallowance cannot be made by invoking the section 40(a)(ia) of the Act. It was further submitted that because of nature of the business and volume involved in numbers as well as geographically, there is no track of Form 15I in spite of best efforts w .....

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but not available, and hence same might have been classified as not liable for TDS. It was further submitted that provisions of section 194C were not applicable and disallowance made under section 40(a)(ia) of the Act to the extent of freight expenses paid was not justified and required to be deleted, as the amounts were not payable, but actually paid, for which reliance was placed on the decision of the Ahmedabad Bench of the Tribunal in the case of N.K. Jewellers in ITA No.638/Ahd/2009 for A. .....

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IT(A) after considering the submission of the assessee has vacated the disallowance by observing as under: 7.2. Facts of the case and arguments of appellant have been carefully considered. The appellant company entered into various contracts with Hindalco Industries, Hindustan Lever Ltd. and Sterlite Industries (I) Ltd., etc. for transportation of goods. Appellant company alone was responsible for executing these contracts. It was only for fulfillment of these contracts that vehicles were hired .....

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ndertaken a contract to provide forklift on hire to his principals, on which he has received hire charges. Besides his own forklift vehicles, he has also hired forklift vehicles from the outside parties for which he has paid hire charges to them: and has been claimed as expenditure. In such a case, the assessee is solely responsible for executing the contract with the persons to whom he has given forklift vehicles on hire and it is only for fulfillment of this contract that he has also engaged t .....

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des sub-contract. For application of provisions of section 194C in this case it has to be seen, whether the assessee has entered into any kind of sub-contract with the outside parties from whom he has hired the forklift vehicles on random basis to fulfill his own commitment towards his principals. There is no material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and .....

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Har.) ITO Vs.Bhoruka Roadlines Ltd.(2009) 117 ITO 311 ITAT (Mumbai) CIT Vs. Ess Kay Construction Co. (2004) 2671TR 618/140 Taxmann 442 (Punj. & Har.) (e) CIT v. D. Rathinam (2011) 197 Taxman 486/9 Taxman.Com. 239 (Madras) (f) CIT vs. Bhagwati Steels(2011) 198 Taxman 275/I Taxman. Corn. (Punj. & Har.) (g) Mythri Transport Corp. v. ACIT(2010) 124 ITO 40 (ITAT Visakhapatnam) In view of this legal and factual position, AO is not justified to hold that disallowance u/s.40(a)(ia) needed to be .....

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lowed the decision of Special Bench in the case of Merilyin Shipping & Transports vs. ACIT in ITA No. 477/Vi7J2008. I therefore, hold that AO is not justified to make disallowance u/s. 40a(ia) for various years in respect of amounts which have been already paid during the year. Respectfully following the above mentioned decision of ITAT, Ahmedabad Bench in the cake of N.K. Jewellers, AO is directed to delete disallowance of ₹ 54,00,379/- for A.Y. 2007-08. Similarly, the disallowance of .....

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viding contracted service, it obtained services of others to complete assignment. The assessee did not deduct any TDS from payment made to such vehicles owners. The AO disallowed said payment under section 40(a)(ia) on the ground that the assessee had not deducted tax out of that payment under section 194C. It was held that whether vehicles hire charges paid by assessee to various vehicles owners for carriage passengers by buses on mini buses would amount to work within meaning of section 194C a .....

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essee alone is responsible for executing such contracts without any right of sub-contract. Such goods are transported through trucks owned by it as well as through trucks hired from other truck owners. The assessee has not entered into any contract with truck owners/drivers whose trucks have been taken on hire by it. The assessee avails services of such other trucks only for the purpose of transportation of goods and duty of such truck owners/drivers is restricted merely to carry off the concern .....

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. During the transit of goods through such trucks not owned by the assessee, entire risk and rewards lie with the assessee. Such truck owners/drivers have not contributed to any work, over and above, rendering their trucks on hire along with drivers, and therefore, the provision of section 194C do not come into play and consequently, no disallowance under section 40(a)(ia) is called for. Reliance was placed on the following judgments: i) CIT Vs. Poompuhar Shipping Corpn Ltd., 282 ITR 3 (Mad); ii .....

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deducted by the assessee. Asstt.Year Amount (Rs.) 2007-2008 54,00,379/- 2008-2009 51,55,864/- 2009-2010 1,26,94,479/- 2010-2011 76,08,948/- The contention of the assessee was that the assessee had entered into contract with companies such as Hindustan Lever Ltd., Reliance, Kalpataru etc. for whom the transporting of goods was done by the assessee under contract. The assessee was liable to carry out the work of transportation of goods itself, and was not allowed to sub-contract the same to other .....

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4C from the payment made to the truck owners, whose trucks were hired by the assessee. This explanation of the assessee did not find favour with the AO, who made the disallowance by invoking the provisions of section 40(a)(ia) of the Act for non-deduction of TDS. 16. On appeal, the learned CIT(A) deleted the disallowance on the ground that the company had entered into various contracts Hindalco Industries, Hindustan Lever ltd. and Sterlite Industries Ltd. for transportation of goods, and the ass .....

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der section 40(a)(ia) was required to be made in the case of the assessee. He also held that the Ahmedabad Bench of the Tribunal in the case of N.K. Jewellers (supra) has held that no disallowance under section 40(a)(ia) of the Act could be made in respect of amounts which were payable as on 31st Mach of every year and these provisions cannot be invoked to make disallowance in respect of amounts which have been actually paid during the year without TDS. 17. We find that the Ahmedabad Bench of th .....

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renders the work of carriage of goods or passengers by any mode of transport other than railways. In the case before us, it is evident that the assessee had only hired out the vehicles and rendered the services of transportation of goods i.e. LPG cylinders by itself at its own risk and reward. At this juncture we may peep into the decision of the Hon ble Madras High Court in the case of CIT Vs Poompuhar Shipping Corporation Ltd. [2006] 282 ITR 3 (Mad). The gist of the aforesaid decision is repr .....

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of compensation and the latter agrees to return the property after the expiry of the agreed period. The Explanation to section 194C was introduced with effect from July 1, 1995. There is no principle of interpretation which would justify reading the Explanation as operating retrospectively, when the Explanation comes into force with effect from a future date. The assessee, a Tamil Nadu Government Undertaking, was engaged in the business of transportation of coal from the ports of Haldia, Visakh .....

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making payment of hire charges to the shipping companies. The Assessing Officer treated the assessee as in default and directed the assessee to pay the tax under section 201(1) of the Income-tax Act and also levied interest under section 201(1A). The Commissioner (Appeals) and the Tribunal held that section 194C was not applicable. On appeal to the High Court: Held, dismissing the appeal, that the payment of hire charges for taking temporary possession of the ships by the assessee-company would .....

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to the owners of the vehicles. The owner of the vehicle s role extends only to the limited function of providing the vehicles along with staff to the appellant for hire charges. The movements of the vehicles with the goods are at the command of the appellant. The appellant also undertakes the risk involved in the work of transportation it renders with the help of the hired vehicles. All these facts can be clearly established in the present case before us from the contract executed between the a .....

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d it has to provide the details of the vehicles pressed for the operation. The appellant has to transport the cylinders according to the schedule and route stipulated by M/s.HPCL. The appellant has to ensure that the trucks provided for transportation of LPG cylinders shall comply with all legal formalities. The appellant shall also arrange for the applicable insurance policies. The applicant shall also ensure the drivers of the vehicles have proper authorization to drive the trucks with such ha .....

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.3 operation of trucks: The appellant shall obtain the requisite road permits and other permits applicable for transportation of goods. The appellant shall bear the entire operational cost of the trucks etc. Item No. 4 Loss/damages of cylinders The appellant shall be solely responsible for the safe custody of the cylinders. Item No.5: Utilization of trucks The appellant shall operate all the trucks for all the stations awarded to it and it shall inform M/s. HPCL if any truck is withdrawn. Item N .....

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r transshipment. Item No.8: Security deposit/bank guarantee The appellant is to provide to M/s. HPCL bank guarantee for a specific amount for a specific period in order to cover losses, damages, expenses etc. arising out of the appellant s negligence to observe any terms and conditions in the contract. Item No.9: Subletting The appellant shall not sublet any work entrusted to him except with the written consent of M/s. HPCL. 8. Thus, following the decision of the Hon ble Madras High Court referr .....

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les have performed any work other than hiring their vehicles to the appellant. For the above said reasons we allow the appeal of the assessee in its favour and delete the addition of ₹ 1,05,83,555/- made by the learned AO which was further confirmed by the learned CIT(A). 18. Further, the Ahmedabad Bench of the Tribunal in the case of Gujarat Roadlines Vs. ITO (supra) has held as under: 4. We have heard the rival submissions, perused the orders of the authorities below and considered the m .....

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ried out by the assessee and not by the owners of the trucks. The owners of the trucks had only hired their vehicles to the assessee by receiving hire charges while as the work of transportation has been carried on by the assessee. The risk and reward for the performance of the job lies with the assessee and not with the owners of the trucks. In such circumstances, provisions of Section 194 C of the IT Act will not be attracted and consequently provisions of Section 40(a) (ia) of the IT Act also .....

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ied on the decision in the case of CIT Vs Poompuhar Shipping Corporation Ltd. 282 ITR 3. On perusing the assessment order, the decisions cited by the learned AR and from her arguments, we do not have any hesitation to hold from the facts and circumstances of this case that the assessee has only hired the vehicles for carrying out its job of transportation of goods for its clients and therefore, the addition made by the learned AO for ₹ 7,57,740/- deserves to be deleted. It is ordered accor .....

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ired vehicles. Further, relevant ingredients in the contract to establish that the assessee was assigned the job of transportation and it had performed the job of transportation of its own trucks, can be summarized as under as per the contract entered into by the assessee. A. Scope of Work 1. This contact covers collection, transportation and delivery of Continuous Cast Copper wire Rods, Copper cathodes, Spent Anodes and other copper products by road from our units located at Silvassa (Piparia & .....

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reight of this slab on prorate basis. 2. The monthly quantity required to be transported will depend on our requirements and it may vary from month to month and will be offered for transportation at our discretion. We do not guarantee any minimum volume of work for any destination. 3. Loading of material at our Silvassa works will be done by us and its unloading at destination shall be arranged by our customers. However, in case of any unloading charges/varai charges paid by the transporter, it .....

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r stamp. B. Duties and Responsibilities of Transport Contractor: 1. You will have to keep daily contact with our logistics section at our Silvassa work for taking dispatch plan. you are required to depute your representatives with a mobile phone every day at our plants during dispatch hours. The schedule for trucks will be communicated to your representative time to time on daily basis. This representative shall co-ordinate between your local branch & our logistics team for smooth dispatches .....

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y requested on the previous day for the next day should report at our works positively by 9 am. For requisitions placed up to 6 pm for the particular day. the truck should be placed on same day within 3 hrs. of the receipt of intimation. 4. The transporter will be fully responsible for the material to be transported till the goods are delivered to our client s premise or our depots in good condition. In case of part load, transshipment in route should not exceed more than two. In this process. I .....

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ng to the transporter. 5. In case of stock transfer, the transporter will have to initially pay the applicable octroi (if any), wherever it is required and then collect the same from us after submitting supporting documents. In case of others, buyer shall arrange clearance of material from octroi posts through their nominated agents. Transporter has to contact the agent of the buyer on contact numbers given by our logistics Department. 6. Our consignments are sent on FREIGHT PRE PAID basis to ou .....

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rty. all freight settlement will be done by yourselves and consignee directly. Our company will not be responsible for the payment of freight or any disputes arising from this transaction. C. Period of Contract: The Contract will be valid from 01.03.2008 to 30.06.2008. The contract may be extended further at our discretion on the same terms and conditions. Renewal of the contract period, We reserve the right to curtail the above period and terminate the contract without assigning any reason ther .....

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verage run in km per litre of diesel. Any increase of decrease shall be affected only if diesel price increase/decrease is by one rupee onward from the present rate (march 2008/1st fortnight rate of diesel at SilvassaRs.35.01/litre). You shall submit one bill in first week of every month for the transactions carried out during the last month. You have to submit your bills with all necessary acknowledged lorry receipts to us for which the payment will be released within 15 days form the date of r .....

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Arrange for final investigation report within 90 days from the date of F.I.R. Over & above the security deposit. Company will withhold equivalent to the loss of goods form your bill. till all the claim amount is not received from the insurance company. F. Security Deposit: 1. You have to submit a security deposit of ₹ 50,00,000(Rs Fifty lacs) in the form of demand Draft or a Bank Guarantee drawn on any Indian Nationalised Bank & valid for the period of 16months. 2. Validity of the .....

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acement or delayed placement of trucks : Sterlite reserves the right to arrange for transportation from any other transport company in the event of the contracted transporter failing to place the trucks within the specified time in which the additional cost and risk will be of defaulting transport. Penalty of ₹ 500/- per trucks will be charged for non-placement of the truck & the same will be deducted from defaulting transporter s bill. H. Insurance : Insurance for vehicle is the sole .....

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rter s account. Transporter is liable for getting clean receipt on L.R. Any weight variance should be settled on the spot at the time of making delivery to consignee. Transporter has the rights to weight the material to satisfy he customer. J. Transit period: Transit period shall be calculated from release time of the vehicle mentioned on Excise Invoice. penalty on account of delay shall not be imposed where transit period for destination falls after 6 pm, provided material is delivered on the n .....

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ivery: The Transport will be liable to pay penalty @Rs. 500 per truck per day if the consignment is not delivered within the specified time subject to clause A(4) and K. L. Assigning or sub-letting of contract : This contract shall not be assigned or transferred or sublet in any manner whatsoever by the transporter. M. Load bridging: The lorry hired for movement under FTL should contain company s material only. If any other material is found to be carried in transit check or get surfaced in in d .....

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the differences by mutual consultation. In the event of their inability to resolve the dispute, it will be referred to an arbitrator named by mutual consent. The award of Arbitrator so appointed shall be final and binding on both the parties to the contract. P. Claims & Disputes: Any claim of Dispute arising out of contract shall be subject to the jurisdiction of court of Dadra & Nagar Haveli, Silvassa and shall be binding to both the parties in the contract. Q. Extra Delivery Charges: I .....

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porter shall place his owned & dedicated attached trucks as per the list submitted. Each lorry should be in good working condition with smooth platform, stepney and tarpaulin. Every truck should have proper statutory documents related to the RTO Authority & these documents are required to be produced at our factory gate on demand for verification purpose. Every truck placed should have valid PUC certificate issued by authorized Center. 2. Transporter shall take a photograph of every truc .....

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ransporter to hand over the Duplicate For Transporter copy of excise Invoice to the party safely to able them to avail CENVAT benefit. If the same is lost in transit the equivalent amount of Excise Duty will be deducted from transporter s bill. 4. The transporter shall comply with the provisions of the Employee Provident Fund Act, ESI Act, Workmen Compensation Act. Etc, and all other applicable statutory and regulations from time to time and ensure safety of their staff to protect against any ac .....

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re usage of these cards for the destination having transit time of more than two days. You have to ensure minimum three swipe per card with interval of one swipe per day. List of the swiping centers also will be provided to you in advance for handing over the same to the drivers. In case your driver fails to swipe the card for three times, penalty of ₹ 100/- per truck/card will be imposed on you. However in case of swiping of the card three times during the transit, you will be paid an inc .....

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ished goods consignments, you should take care of following points while placement of the trucks. • You shall submit list if your owned & dedicated attached vehicle to us. We will load only those vehicles which are available in the list. In case of addition of new fleets, you will have to give us list of such vehicles in advance. • Your office staff should properly cross check the engine number, chassis number & registration number of the vehicle mentioned on the registration d .....

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at our plant only with original registration documents, PUC & driver s license. These documents required to be presented at our security gate on demand for verification purpose. • Your representative deputed at our factory should take proper photograph Of the truck along with its driver & cleaner he should also ensure Covering of our material properly with help of tarpaulin and rope before Exit of the loaded vehicle from our factory gate. • The vehicle supplied by you and loade .....

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icable all terms & Conditions for dispatches of finished goods are applicable for inbound Material also you shall preferably place one escorting person when rejected copper is dispatched by our customer in loose form. • In case of loss of material due to theft or hijacking,10% penalty on value Of lost material will be imposed on transporter. This penalty will not be imposed if the same material is recovered, released from concern legal Authorities (if any) & deliver to us by the tra .....

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