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TMI Blog2015 (10) TMI 2785X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 (in short 'the Act') on 11.3.2014 creating a demand of Rs. 3,54,02,834/-. The assessee is engaged in the business of cement manufacturing. The Assessing officer noticed that assessee was not deducing tax at source while making the payments to transporters on account of freight charges, as required u/s 194C of the Act. The Assessing officer also noticed that assessee had made payment to the transporter namely Bilaspur District Truck Operators to the tune of Rs. 1,42,75,33672/- on account of freight charges without deducting the tax at source. The Assessing officer issued a show cause notice u/s 201(1) and 201(1A) of the assessee dated 5.3.2014 and in response to the said notice the assessee submitted the detailed reply dated 10.3.2014 which was not acceptable to the Assessing officer. According to Assessing officer, exemption from TDS in the case of transport contract is contained in section 194C(6) of the Act which reads as under:- "No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of contractor during the course of business of plying, hiring, or leasing goods carriages on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transport concern without deduction of tax at source. The Assessing officer also held that the assessee company is liable for interest u/s 201(1A) of the Act. Thus, the Assessing officer created a demand of Rs. 3,54,02,834./- u/s 201(1) and 201(1A) of the Act. 5. On appeal, the CIT(A) deleted the demand created u/s 201(1) and 201(1A) of the Act, observing as under:- "5. I have considered facts of the case. As the demand created u/s 201(1)/(1 A) in respect of payments made to H.P. Ex-Servicemen Corporation has been reduced to 'nil', the dispute remains only in respect of payments made to Bilaspur District Truck Operators Cooperative Transport Society Ltd. For appreciating the issue in proper prospective, it would be appropriate to reproduce relevant provisions of this Act. Hence, for the sake of ready reference, provisions of section 194C(6) and Explanation-(ii) below section 194C(7), provisions of section 44AE{1) and Explanation below section 44AE(7) of the Act are reproduced below: "194C. Payments to contractors. Any person responsible for paying any sum to any resident /hereafter in this section referred to as the contractor) for carrying out any work (includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1988 defines goods carriage as - "'goods carriage1 means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods". * PAN is furnished by the contractor to the payer i.e. deductor. * The deductor furnishes before the Income Tax Authority the details pertaining to the above contractor in the prescribed form. 5.2 In the instant case, the appellant had obtained PAN from the payee and furnished the same before the prescribed authority. Further, the goods carriages involved also satisfied the definition given in the Motor Vehicles Act. Therefore, the only issue to be decided is whether the payee i.e. Bilaspur District Truck Operators Co-operative Transport Society Ltd (hereinafter referred to as 'Society5) was engaged in the business of plying, hiring or leasing of goods carriage. The appellant has filed a copy of bye-laws of this Society, a perusal of which reveals that the main object of this Society is to provide goods and passenger carriages on hire and lease to anyone. This clearly implies that it is engaged in the business of plying, hiring and leasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee's paper book. It is claimed that in terms of Rule 31A(4)(v), the assessee has also furnished particulars of amount paid or credited to the transport cooperative society on which tax has not been deducted in its quarterly TDS return. Shri Soumen Adak, Ld. Counsel for the assessee submitted that the goods carriage involved also satisfies the definition of 'goods carriage' given in Section 2(14) of the Motor Vehicle Act, 1988. The term 'goods carriage' means any motor vehicle construed or adopted for use solely for the carriage of goods or any motor vehicle not so constructed or adapted when used for the carriage of goods. 7. In our view, the Ld. CIT(A) has correctly observed that the inference drawn by the Assessing officer that for the purpose of claiming the benefit of sub section (6) of section 194C, the assessee is required to satisfy the ownership criteria mentioned in Explanation (b) below section 44AE(7) is not correct. In our view, reference of Explanation to section 44AE(7) in section 194C is only in the context of definition of 'goods carriage'. Clause (a) of Explanation to Section 44AE(7) defines 'goods carriage' and clause (b) defines 'deemed ownership'. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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