The Jammu Cooperative Supply & ... vs Department Of Income Tax

The Assistant Commissioner of Vs. M/s The Jammu Cooperative Income Tax, Circle-2, Jammu Supply and Marketing Federation Ltd., B.C. Road, Jammu.

(Appellant) (Respondent)

Appellant by: Smt. Ratinder Kaur, DR Respondent by: None Date of hearing: 10.03.2015 Date of pronouncement: 11.03.2015

ORDER

PER A.D. JAIN, J.M.

1. This is department's appeal for the assessment year 2007-08, against the

order dated 18.11.2013, passed by the learned CIT(A), Jammu.

2. The department has taken the following grounds of appeal.

"1. On the facts and circumstances whether the learned CIT(A) was right in allowing the relief on account of non 2 ITA No.66 (Asr)/2014

Asst. Year 2007-08

deduction of TDS on freight charged as per the provisions of section 40(a)(ia) of the I.T.Act,1961.

2.On the facts and circumstances whether the learned CIT(A) was right in allowing the relief on account of non deduction of TDS on freight charged as per the provisions of section 40(a)(ia) of the I.T.Act,1961 as the aggregated amount paid to the contractors as freight during the year under consideration exceeds Rs.50,000/- and tax was required to be deducted as per the proviso of section 194C of the I.T. Act,1961.

3. On the facts and in the circumstances whether the learned CIT(A) was right in not considering that such sum on which tax was required to be deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid."

3. The facts as per the record are that the assessee society has

paid freight on account of transportation of fertilizer on behalf of

the Govt. of India to different locations in Jammu & Kashmir.

The racks of fertilizers unloaded at Railway station is to be

transported to different locations within the stipulated period of

time. For transportation of the same, the assessee society 3 ITA No.66 (Asr)/2014

Asst. Year 2007-08

arranges individual trucks as per its requirement, keeping in

view the load to be transported to different destinations. Since

the society, engaged in the transportation business of fertilizer,

does not own any truck, it has to hire the trucks from the local

market every time, as and when there is requirement for the

same. The freight paid to the truck drivers/owners varies from

time to time, which fluctuates due to demand and supply, as the

society has not entered into in any specific contract, for any

specific period, with any of the truck owners/drivers. No

contract, either oral or written, has been executed by the society

with any transport company or transport contractor, for any

specified period, or for any specified quantity, or at any pre-

agreed specified rate.

4. The AO made a disallowance of Rs.70,98,738/-, by observing

as follows:

"After considering the submissions made on behalf of the assessee society with reference to the facts of the case I hold that the assessee was required to deduct the Income Tax at source where the payments in excess of Rs.50,000/- made to each Truck owners and deposit the same in the Central Government account within the prescribed period.

4 ITA No.66 (Asr)/2014 Asst. Year 2007-08

Out of these payments of freight in respect of fertilizer an amount of Rs.70,98,738/- has been worked as per details given in Annexure-'A' forming part of the assessment order, on which tax was required to be deducted under section 194C of the Income Tax Act, 1961 but assessee has neither deducted the tax nor deposited the same in the Central Government account within the prescribed period of time. The cases on which the representative of the assessee tried to rely are quite different than the facts of the assessee society and as such, same are distinguishable. Therefore, the payment of Rs.70,98,738/- made by the assessee society in contravention of the provisions of section 194C of the Income tax Act, 1961 does not quality for deduction and as such, same is disallowed keeping in view the provisions of section 40(a)(ia) of the Income Tax Act, 1961. This would result disallowance of Rs.70,98,738/- under this head."

5. Therefore, the AO held that the assessee was required to

make TDS qua payments in excess of Rs.50,000/- made to

each truck owner.

6. By virtue of the impugned order, the learned CIT(A) deleted

the disallowance made by the AO.

7. The notice issued to the assessee on 19.01.2015 has not been

received back unserved. As such, none has put in appearance 5 ITA No.66 (Asr)/2014

Asst. Year 2007-08

before us on behalf of the assessee. However, finding that

the matter can be proceeded with even in the absence of the

assessee, we are doing so.

8. Challenging the impugned order, the learned DR has

contended that the learned CIT(A) has erred in deleting the

disallowance correctly made by the AO. It has been

contended that while doing so, the learned CIT(A) has failed

to appreciate that the aggregate amount paid to the

contractor by the assessee as freight exceeded Rs.50,000/-,

due to which, tax was required to be tax deducted, which was

not done. It has further been submitted that the learned

CIT(A) failed to consider that the amount on which tax was

required to be deducted in any subsequent years or on which

tax has been deducted during the year, but paid after the due

date specified in section 139(1) of the I.T. Act, shall be

allowed as a deduction in computing the income of the

previous year in which such tax has been paid.

9. We have heard the learned DR and have perused the material

on record. It remains undisputed that the payment of freight

was made by the assessee society to the hired individual 6 ITA No.66 (Asr)/2014

Asst. Year 2007-08

truck drivers, with whom, no specific contract was entered

into by the assessee for any specified period. The payment

varied from time to time. This fluctuation was due to demand

and supply. There was no pre-agreed specified rate of

payment of freight. Each trip was, hence, a separate contract.

For every single trip, a freight rate would be negotiated,

depending on the prevailing market conditions. Each job

undertaken by each truck owner was, thus, a separate job for

the same person, i.e., the assessee, at different rates and

terms. Therefore, the different jobs could not be termed as

being covered under one single contract. This position stands

accepted in "ITO vs. Indian Road Lines", ITA

No.80/Asr/2010, reported in 45 DTR (Asr) (Trib) 49. The

contractors were arranged by the assessee society as per its

requirement, considering the load of fertilizers to be

transported. For all the different trips, even the destinations

also varied. CBDT Circular No.715 dated 08.08.1995(under

Q. No.9) is also in favour of the assessee in this regard. The

learned CIT(A), it is seen, duly took into consideration all

the above facts while holding that no TDS was deductible, as 7 ITA No.66 (Asr)/2014

Asst. Year 2007-08

each contract was below Rs.20,000/- and therefore, there was

no application of Section 40(a)(ia) r.w.s 194(C) of the I.T.

Act.

10. The grievance sought to be raised by the department is, in

view of the above, found to be shorn of merit. It is,

therefore, rejected. The order under appeal is hereby

confirmed.

11. In the result, the appeal filed by the department is dismissed.

Order pronounced in the open court on 11th March, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11.03.2015 /PK/ Copy of the order forwarded to:

1. The Assessee: M/s The Jammu Cooperative Supply and Marketing Federation Ltd. B. C. Road, Jammu.

2 The Assistant Commissioner of Income Tax, Circle-2, Jammu. 3 The CIT(A), 4 The CIT, 5 The SR DR, I.T.A.T., True copy

By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.