Itta/127/2013 Of Commissioner Of Income Tax v. M/S Pullaiah Roadways

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI INCOME TAX TRIBUNAL APPEAL NO.127 OF 2013 DATED:27.6.2013 Between: Commissioner of Income TaxRajkamal ComplexLakshmipuram Main RoadGuntur-07 … AppellantAndM/s. Pullaiah RoadwaysMain RoadPeralaPrakasham District … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A. NO.127 OF 2013 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be admitted against the impugnedjudgment and order of the learned Tribunal, in relation to assessmentyear 2006-2007, on the following suggested questions of law: i.In the facts and circumstances of the case, whether theHon’ble Tribunal (ITAT) is correct in law in upholding theorders of the learned Commissioner of Income Tax (Appeals)in deleting the disallowance made by the Assessing Officerunder Section 40(a)(ia) of the Income Tax Act, when therespondent-assessee failed to comply the mandatoryrequirement under Section 194C(1) of the Act, in regard totransport charges paid by it to the truck owners? ii. In the facts and circumstances of the case, whether theHon’ble Tribunal is correct in law in holding that mere hiring oflorries by the respondent – assessee to transport of the goodswould not come under the category of “sub-contract orcarrying out any work” in terms of Section 194C of the Act,when the clause ‘c’ of Explanation III to Section 194C of theAct clearly say that for the purpose of the said provision theexpression ‘work’ shall also include carriage of goods andpassengers by any mode of transport other than byRailways? iii.Whether the Hon’ble Tribunal is correct in law in holding thatSection 194C(1) of the Act shall not apply, when therespondent – assessee merely hired lorries which do not fallin the category of ‘carrying out any work’ under the saidprovisions? In this case, the learned Tribunal factually found that theassessee had engaged certain lorry owners from open market forexecution of the contract undertaken by it for transportation of goods. The revenue wanted to term this transaction as sub-contract. Thelearned Tribunal, on fact, found that it is nothing but hiring of lorries forcarrying goods in relation to execution of contractual works. There isno element of sharing of risk or executing the work to term it as sub-contract. On fact, it was found that since it is not a sub-contract, thequestion of invocation of provisions of Section 194C(1) of the IncomeTax Act (for short, ‘the Act’), does not arise. The learned Tribunalnoted its decision in the case of Mythri Transport Corporation[[1]],wherein it was held that mere hiring of trucks cannot be treated as sub-contract unless the lorry owners involved themselves in carryout outany part of the work undertaken by the assessee by spending theirtime, energy and also by taking the risks associated with the maincontract. When the factual position is such as above, non-applicationof law would automatically follows. The learned Tribunal has correctlydid not apply the provisions of Section 194C of the Act. We do not find any merit in this appeal and the same isaccordingly dismissed. No order as to costs. ________________________ K.J. SENGUPTA, CJ ______________________ G. ROHINI, J 27.6.2013 bnr [1]124 ITD 40