Ita/821/2010 Of Commissioner Of Income Tax-I, Ludhiana v. M/S Truck Operator Union

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 821 of 2010 (O&M)Date of decision: 25.1.2016 Commissioner of Income Tax I, Ludhiana ..-.-- Appe M/s Truck Operator Union, Adda Jodhan Mandi, Ludhiana ..-.-Responde CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MRS. JUSTICE RAJ RAHUL GARG TiWhether Reporters ofthe local papers may be allowed to see thejudgment?judgment? 2 To be referred to the Reporters or not? 5.Whether thejudgment should be reported in the digest? Present: Mr. Rajesh Katoch, Advocate for the appellant.None for the respondent. |None for the respondent. | Ajay Kumar Mittal,J. inThis appeal has been preferred by the appellant-revenue undersection 260A of the Income Tax Act, 1961 (in short, “the Act’) against theorder dated 24.2.2010, Annexure A.III passed by the Income Tax AppellateTribunal, Chandigarh Bench 'B', Chandigarh (for brevity, “the Tribunal’) inITA No.761/CHD/2009 for the assessment year 2006-07 claiming following substantial question of law:- 1) Whether on the facts and circumstances of the case, theHon'ble Income Tax Appellate Tribunal is justified in law inholding that the provisions of section 194CV are notHon'ble Income Tax Appellate Tribunal is justified in law inholding that the provisions of section 194CV are not applicable to the payments made by the assessee to the truckoperators on account of transportation charges ignoring thefact that the payments were of sub contractual nature?operators on account of transportation charges ignoring thefact that the payments were of sub contractual nature? i1)Whether on the facts and circumstances of the case, theHon'ble Income Tax Appellate Tribunal is justified in law indeleting the addition of LC63,10,197/- made in view of theprovisions of section 40(a)(ia) of the Income Tax Act, 196]aS no tax at source was deducted by the assessee on subcontractual payments, as required under section 194C of theIncome tax Act, 1961?Hon'ble Income Tax Appellate Tribunal is justified in law indeleting the addition of LC63,10,197/- made in view of theprovisions of section 40(a)(ia) of the Income Tax Act, 196]aS no tax at source was deducted by the assessee on subcontractual payments, as required under section 194C of theIncome tax Act, 1961? i11)Whether on the facts and circumstances of the case, theHon'ble Income Tax Appellate Tribunal is justified in law inholding that the assessee was not liable to deduct tax atsource on payments made to truck operators as there was noliability to apply for TAN and also for furnishing FormNo.15-]>?Hon'ble Income Tax Appellate Tribunal is justified in law inholding that the assessee was not liable to deduct tax atsource on payments made to truck operators as there was noliability to apply for TAN and also for furnishing FormNo.15-]>? 2 Briefly, the facts as narrated in the appeal may be noticed. The respondent-assessee is a firm which derives income by taking tenders fromvarious food agencies for transferring the bags of food-grains from theirgodowns to other palaces. It filed its return of income for the assessmentyear in question on 12.9.2006 declaring Income of|2,96,680/-which wasprocessed under section 143(1) of the Act on 3.7.2007. During the relevantperiod as per profit and loss account, the assessee received=a$5,19,255/-astransportation charges. As per TDS certificates, the contractual receiptsfrom various government agencies were shown at=a$4,92.855/-.Accordingto the Assessing Officer, these payments were covered under Section 194Cof the Act. Out of this payment, the assessee further debited=a78,77,384/-as transportation expenses. Payment ofLy79,77,384/- was made to 174transporters involved in the work carried out by the assessee. The AssessingOfficer considered the payments made by the assessee to the truck operators ITA No.821 of 2010(0&M)?as sub contractual payments and thus provisions of Section 194C of the Actwere held to be applicable. It was pleaded before the Assessing Officer thatall the truck operators owned not more than two trucks and hence no taxwas deductible. With regard to second proviso to sub section 3 of Section194C of the Act, it was pleaded before the Assessing Officer that theassessee was not eligible for obtaining TAN and hence could not file Form15-J before the Commissioner of Income Tax after obtaining 15-I Formfrom the truck operators. The assessee was eligible tor obtaining TAN onlywhen it had deducted tax as it could apply for the same within one monthafter deduction of tax as prescribed under section 203A read with Rule114A(3) of the Income Tax Rules, 1962. After considering the replysubmitted by the assessee, the Assessing Officer concluded that the assesseewas required to deduct tax at source as per the provisions of section 194Cof the Act on sub contractual payments made to the truck operators which itfailed and therefore, the entire sub contractual payments in excess ofL50,000/- which worked out to.zy63,10,197/-were disallowed in view of theprovisions of section 40(a)(ia) of the Act. Thus, an addition ofTL63,10,1977/was made to the income of the assessee. Assessment was completed undersection 143(3) of he Act vide order dated 11.11.2008, Annexure A.1 atincome ot -65,66,877/-.An addition ofan63,10,197/- was made by theAssessing Officer under section 40(a)(ia) of the Act by disallowing thepayments made to the Truck operators in excess ofa50,000/- treating thesepayments as sub contractual payments on which no tax was deducted atsource by the assessee as required under Section 194C of the Act.Agegrieved by the order, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) |CIT(A)], who vide order dated ITA No.821 of 2010(0&M) 11.5.2009, Annexure A.II allowed the appeal holding that provisions ofsection 194C of the Act were not applicable to the payments made by theassessee to the truck operators and deleted the disallowance of ©L63,10,197/-made under section 40(a)(ia) of the Act. Dissatisfied with theorder passed by the CIT(A), the revenue filed appeal before the Tribunal.Vide order dated 24.2.2010, Annexure A.IlI, the Tribunal dismissed theappeal and confirmed the order passed by the CIT(A). Hence the instantappeal by the revenue. 3We have heard learned counsel for the appellant-revenue. Noone has appeared on behalf of the respondent. 4It is not disputed by learned counsel for the appellant-revenuethat the issue has already been decided against the revenue by this Court inITA No.120 of 2012 (Commissioner ofIncome Tax I, Ludhiana vs. M/sTruck Operator Union, Adda Jodhan Mandi, Ludhiana)vide order dated782012 wherein it was recorded thus:- *’3.Learned counsel for the revenue has very fairly acceptethat similar issue involved in respect of the same assessee forthe earlier assessment year has been decided against therevenue by this Court inCommissioner of Income Tax vyTruck Operators’ Union, (2011) 339 ITR 532, wherein itwas held as under:- “5. Learned counsel for the Revenue fairly states and weare also of the same view that section 194C(2) of the Acthad no application in the circumstances of the case whenthe union was merely acting in representative capacityand there was no separate contract between the union andits members for performance of the work as required forapplicability of section 194C(2) of the Act. In suchcircumstances, section 40(a)(1a) of the Act was not applicable, as rightly held by the CII(A) and theTribunal. Learned counsel for the Revenue also pointsout that same view has been taken by the High Court ofHimachal Pradesh in its order dated ?0[th]October 2009 1nIT Appeal No.30 of 2005 CIT v. Ambuja Darla KashlogMangu Transport Co. Op. Society and others, (2009) 31DTR (HP) 49 against which SLP was dismissed by theHon'ble Supreme Court on 17[th]January 2011 being SLP(Civil.../2011 CC 259 of 2011 CIT v. Ambuja D.ManguTransport Cooperative Society.” applicable, as rightly held by the CII(A) and theTribunal. Learned counsel for the Revenue also pointsout that same view has been taken by the High Court ofHimachal Pradesh in its order dated ?0[th]October 2009 1nIT Appeal No.30 of 2005 CIT v. Ambuja Darla KashlogMangu Transport Co. Op. Society and others, (2009) 31DTR (HP) 49 against which SLP was dismissed by theHon'ble Supreme Court on 17[th]January 2011 being SLP(Civil.../2011 CC 259 of 2011 CIT v. Ambuja D.ManguTransport Cooperative Society.” 4In view of the above, no substantial question of lawarises. 4 The appeal is dismissed.” 4 In view of the above, the substantial questions of law areanswered against the revenue and the appeal stands dismissed. (Ajay Kumar Mittal)Judge January 25, 2016 (Raj Rahul Garg)Judge|