Ita/138/2013 Of The Commissioner Of Income Tax-1 v. M/S Pioneer Peresonalised Holiday P. Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 26TH DAY OF FEBRUARY 2018 / 7TH PHALGUNA, 1939 ITA.No. 138 of 2013 AGAINST THE ORDER IN ITA NO.623/2011 OF THE INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH DATED 11-01-2013 APPELLANT/RESPONDENT:- THE COMMISSIONER OF INCOME TAX-1, COCHIN. BY ADVS.SRI.P.K.R.MENON, SR.COUNSEL, GOI (TAXES) SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/APPELLANT:- M/S. PIONEER PERESONALISED HOLIDAYS PVT.LTD PIONEER HOUSE, 5TH CROSS ROAD, W/ISLAND, COCHIN 620 003. R. BY ADV. SRI.JOSEPH MARKOSE (SR.) R. BY ADV. SRI.V.ABRAHAM MARKOS R. BY ADV. SRI.BINU MATHEW R. BY ADV. SRI.TOM THOMAS (KAKKUZHIYIL) R. BY ADV. SRI.ABRAHAM JOSEPH MARKOS R. BY ADV. SRI.ABRAHAM VARGHESE THARAKAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26-02-2018, ALONG WITH ITA NO.176 OF 2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS:- ANNEXURE A COPY OF THE ASSESSMENT ORDER UNDER SECTION 143 (3) DATED 01.12.2009 PASSED BY THE ASSESSINGOFFICER FOR THE ASSESSMENT YEAR 2007-2008.143 (3) DATED 01.12.2009 PASSED BY THE ASSESSINGOFFICER FOR THE ASSESSMENT YEAR 2007-2008. ANNEXURE B COPY OF THE CIT(A)'S ORDER NO.121/R-1/CIT-11/2009-10 DATED 21.11.2011 FOR THE ASSESSMENT YEAR 2007-2008.COPY OF THE CIT(A)'S ORDER NO.121/R-1/CIT-11/2009-10 DATED 21.11.2011 FOR THE ASSESSMENT YEAR 2007-2008. ANNEXURE C COPY OF THE ITAT'S ORDER ITA NO.623/COCH/2011 DATED11.01.2013 FOR ASSESSMENT YEAR 2007-2008.11.01.2013 FOR ASSESSMENT YEAR 2007-2008. RESPONDENT'S EXHIBITS:- NIL //TRUE COPY// P.A. TO JUDGE K. VINOD CHANDRAN & ASHOK MENON, JJ.------------------------------------------I.T.A. Nos.138 & 176 of 2013------------------------------------------Dated this the 26[th] day of February, 2018JUDGMENT K. Vinod Chandran, J. Both the Income Tax Appeals are with respect tothe very same issue the slight difference on factsin so far as the assessee in ITA No.176 of 2013hiring vehicles for carriage of goods and theassessee in ITA No.138 of 2013 hiring vehicles forcarriage of passengers. The assessee in ITA No.176of 2013 is a transporting contractor and theassessee in ITA No.138 of 2013 is a tour operator.The order of the Tribunal in ITA No.176 of 2013 wasfollowed in ITA No.138 of 2013. Hence we deal withthe facts as available in ITA No.176 of 2013. 2. The questions of law as framed by this Court on 04.12.2013 at the time of admission are asfollows: “1. a) Whether on the facts andcircumstances of the case and as notedin the letter (Annexure E) i. is not reliance by theassessing officer on S.194C and dis-allowanceunderS.40(a)(ia)inaccordance with law? b) Did the ITAT have materials andevidence to interfere with the factsfound by the assessing officer basedon the letter of the assessee and isnot the finding and conclusion of theITAT to the contrary perverse? 2. a) Whether on the facts and inthe circumstances of the case and theAssessment order being confined to thesubmissions and the letter noted inparagraph 3 of the order, theCommissioner of Income Tax [Appeals]and the Tribunal are right in law inconsideringaltogetherdifferentcontentions raised for the first timeand taking a decision?” 3. The addition made by the Assessing Officer was on account of the Tax Deduction at Source (TDS)not having been done for the vehicles hired by the I.T.A. Nos.138 & 176 of 2013 b) Did the ITAT have materials andevidence to interfere with the factsfound by the assessing officer basedon the letter of the assessee and isnot the finding and conclusion of theITAT to the contrary perverse? 2. a) Whether on the facts and inthe circumstances of the case and theAssessment order being confined to thesubmissions and the letter noted inparagraph 3 of the order, theCommissioner of Income Tax [Appeals]and the Tribunal are right in law inconsideringaltogetherdifferentcontentions raised for the first timeand taking a decision?” 3. The addition made by the Assessing Officer was on account of the Tax Deduction at Source (TDS)not having been done for the vehicles hired by the I.T.A. Nos.138 & 176 of 2013 respective assessees. The assessee in ITA No.176 of2013 had been transporting goods for one M/s.LogosLogistics (P) Ltd. The assessee had its ownvehicles and had been supplying them for suchtransport. Whenever the assessee's vehicles are notsufficient, the assessee used to hire vehicles fromindividual owners. The batta of the driver and thediesel for the transport was expended by theassessee. Hire charges were paid to the individualowners, which were reimbursed by the principalM/s.Logos Logistics. Likewise in ITA No.138 of2013, the assessee carried out tour operations byits own vehicles and when the assessee requiredanother vehicle, then it was hired and again thedriver was paid by the assessee and so was thediesel expenditure met by the assessee. 4. The Appellate Authority and the Tribunal in I.T.A. Nos.138 & 176 of 2013 the same voice reversed the order of the AssessingOfficer. The Tribunal also noticed Section 194-I ofthe Income Tax Act, 1961 [for brevity, the Act],which inter alia made mandatory deduction of TDS inrespect of any income obtained by way of rent being2% for the use of any machinery, plant orequipment; with effect from 01.06.2007. TheTribunal hence found that the dis-allowance made bythe Assessing Officer was not proper. 5. We are of the opinion that the Tribunal wasperfectly correct in so deciding the issue. Section194C of the Act speaks of any payment made to anyresident, referred to as a contractor, for carryingout any work including supply of labour, inpursuance of a contract between the contractor anda specified person. Here, the contract if at all,is between the assessee and the principal being I.T.A. Nos.138 & 176 of 2013 M/s.Logos Logistics (P) Ltd. In the case of ITANo.176 of 2013 between the assessee and theindividual persons, who had subscribed to the tourprogramme. The dis-allowance was with respect tothe expenses claimed, in so far as the hiring ofvehicles carried out by the respective assessees. The expenses claimed by the assessee weredisallowed as a consequence of the non-deduction ofTDS and an addition was made, to the extentprovided for in Section 40(a)(ia). 6. The hiring of vehicles, on the conditions above noticed, does not fall within the ambit ofSection 194C of the Act. We also notice that from01.06.2007 definitely deduction would have to bemade at source even for hiring of vehicles asSection 194-I of the Act stands amended to bring insuch transactions also. The questions of law for I.T.A. Nos.138 & 176 of 2013 6 the subject assessment years is answered against the revenue and in favour of the assessee. Both the Income Tax Appeals would stand rejected. Sd/- K. VINOD CHANDRAN, JUDGE. Sd/- ASHOK MENON, JUDGE. sp/26/02/18 //True Copy// P.A. To Judge