K.Kodiarasan, Chennai vs Department Of Income Tax

This appeal of the Revenue is directed against the order of

the Commissioner of Income Tax (Appeals)-V, Chennai, dated

25.02.2014 and pertains to assessment year 2006-07. The only 2 I.T.A. No.1847/Mds/14

issue arises for consideration is with regard to disallowance of hire

charges of `51,19,851/- for non-deduction of tax at source.

2. Dr. B. Nischal, the Ld. Departmental Representative,

submitted that the assessee paid hire charges of `51,19,851/- to

various parties for hiring the car. However, TDS was not deducted

at source. According to the Ld. D.R., the assessee is expected to

deduct tax under Section 194C of the Income-tax Act, 1961 (in short

'the Act'). Therefore, the Assessing Officer, applying the provisions

of Section 40(a)(ia) of the Act, disallowed the payment of hire

charges. On an enquiry from the Bench whether it is simply hiring

of the vehicles or the payment was made for carrying out any work?

The Ld. D.R. clarified that the payment was made only for hiring of

the car. However, the Ld. D.R. referred to the grounds of appeal

filed before this Tribunal and submitted that when any payment was

made to a resident contractor, i.e. an owner of the vehicle, tax has

to be deducted at the time of crediting of sum to the account of the

vehicle owner. Since the tax was not deducted, according to the Ld.

D.R., the CIT(Appeals) ought not have allowed the claim of the

assessee.

3. We heard Sh. T. Banusekar, the Ld.counsel for the assessee

also. Admittedly, the assessee hired a car/motor vehicle and paid 3 I.T.A. No.1847/Mds/14

hire charges. It is not the case of the Revenue that any work was

assigned by the assessee other than simply hiring a vehicle. This

Tribunal is of the considered opinion that a mere hiring of vehicle

would not fall within the meaning of "carrying on any work". Unless

and until some work was assigned to an owner of vehicle other than

hiring the vehicles, this Tribunal is of the considered opinion that the

provisions of Section 194C are not applicable at all. In this case,

admittedly, the assessee hired vehicle from various vehicle owners

and used the same in his business to carry out his work. Therefore,

no part of the work was assigned to the vehicle owner. This

Tribunal is of the considered opinion that it is a case of hiring of

vehicles, therefore, at the best, the provisions of Section 194-I of the

Act would be applicable.

4. We have also carefully gone through the provisions of

Section 194-I of the Act. Section 194-I was amended with effect

from 13.07.2006 by the Taxation Laws (Amendment) Act, 2006.

Therefore, the hire charges/rent would be subjected to deduction of

tax only from the assessment year 2008-09 and not for the

assessment year 2006-07. In the case before us, the assessment

year under consideration is 2006-07. Therefore, the assessee is 4 I.T.A. No.1847/Mds/14

not expected to deduct tax for the payment of hire charges/rent

during the year under consideration.

5. In view of the above, we do not find any reason to interfere

with the order of the CIT(Appeals). Accordingly, the same is

confirmed.

6. In the result, the appeal of the Revenue is dismissed.

Order pronounced on 19th June, 2015 at Chennai.

sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 5दनांक/Dated, the 19 June, 2015.

Kri.

आदे श क/ - त6ल7प अ8े7षत/Copy to: 1. अपीलाथ,/Appellant 2. -.यथ,/Respondent 3. आयकर आय9 ु त (अपील)/CIT(A)-V, Chennai 4. आयकर आय9 ु त/CIT-X, Chennai-34 5. 7वभागीय - त न ध/DR 6. गाड( फाईल/GF.