- (1.) In this appeal following substantial questions of law have been raised: "(i) Whether on the facts and in the circumstances of the Case the Learned Tribunal is justified in deleting the entire addition of Rs. 96,78,419/- on account of 'Vehicle Hire Charges' by holding that there was no Contract? (ii) Whether on the facts and in the circumstances of the Case the Learned Tribunal is justified in deleting the entire addition of Rs. 12,76,000/- on account of 'Loading and Unloading Charges' by holding that there was no Contract? (iii) Whether on the facts and in the circumstances of the Case the Learned Tribunal is justified in ignoring the categorical finding of the CIT(A) that there was a contract between the parties and Assessee was liable to deduct TDS? (iv) Whether on the facts and in the circumstances of the Case the Learned Tribunal is justified in relying upon the decision delivered in the case of Bhagwati Steel reported in (2011) 198 TAXMAN 275 (P&H) which was not at all applicable in the instant Case? (v) Whether on the facts and in the circumstances of the Case the impugned Order is perverse?"
(2.) This matter has been taken up for its final hearing by the consent of the learned counsel for both the sides and have argued out the case at length.
(3.) Counsel for the appellant on behalf of the Commissioner Income Tax, Jamshedpur has submitted that the respondent has claimed deduction of Rs. 98,76,419/-, which is paid to the sub contractor for transportation. Similarly, the respondent-assessee has also claimed deduction of Rs. 17,60,600/- under the heading of "loading and unloading charges". These deductions not having been allowed, appeal was preferred by the respondent before the Commissioner, Income Tax (Appeals) Jamshedpur bearing Appeal No. 525/JSR/2011-12. Which was dismissed by the Commissioner of Income Tax vide order dated 31st December, 2012 mainly on the ground that the assessee has not deducted TDS, as required u/s. 194C of the Income Tax Act, 1961 and, therefore, deductions are not permissible u/s. 40(a)(ia) of the Income Tax Act, 1961. Against this order, the respondent had approached Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi. The appeal preferred by the assessee bearing I.T.A. No. 16/Ran/2013 for the assessment year 2009-10 having been allowed by Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi vide order dated 3rd May, 2013, the Income Tax Department has preferred the present Tax Appeal raising the aforesaid substantial questions of law. It is submitted by the counsel appearing for the appellant that learned Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi has stated that there is no written or oral contract for specific period, quantity or price and hence, the provision of Section 194C of the Income Tax Act, 1961 is not applicable and once this Section is not applicable, disallowance made u/s. 40(a)(ia) cannot be made. Thus, both the deductions from the income of the respondent-assessee was allowed without appreciating the fact that:-- "(a) Section 194C of the Income Tax Act, 1961 is also applicable to the oral contract. (b) Assessee will never prove the contract even if it is in writing available nor they will produce. This is a fact within the specific knowledge of the assessee. Oral contract may be deduced from several facts available with the assessing officer. (c) The learned ITAT has failed to appreciate the fact that the respondent-assessee is not a broker, who is claiming only brokerage per truck as argued vehemently here at the rate of Rs. 150-200 per truck. The respondent-assessee has made cash payments to various parties on different dates under the different heads which are as under:-- I. Vehicle hire charges II. Labour charges. III. Repair and Maintenance - mainly for the expenses for replacement of spare parts, tyres and tubes, batteries, engine, motors auto body, leaf spring and other general repairs. IV. Loading & Unloading charges. (d) On the basis of the aforesaid cash payments made for huge amounts under one of the headings, namely, vehicle hire charges Rs. 98,76,419/- have been paid in cash during the assessment year 2009-10 and financial year 2008-09. Looking to the repairs and maintenance charges, the amount has also been paid by this assessee over and above vehicle hire charges. There is also huge payments for loading and unloading charges. There is also payments for labour charges. There is an oral contract between this assessee and transporters, who are transporting goods of M/s. Rungta Mines Ltd. It is submitted by the counsel for the appellant that looking to the payments made on different dates to the same party of more than Rs. 20,000/- in cash as stated in para 3.4 of the Assessment Order passed by the Assessing Officer dated 20th December, 2011 (Annexure 1 to the memo of the Tax Appeal). It appears that gross error has been committed by the ITAT that Section 194C of the Income Tax Act, 1961 is not applicable and consequently the deductions disallowed under Section 40(a)(ia) should have been allowed by the Income Tax Department. This is an error on the face of the record committed by the ITAT, which is not permissible. (e) Similarly, learned counsel for the appellant submitted that for loading and unloading charges, deductions claimed by the respondent-assessee is of Rs. 17,60,600/-. Such a huge amount has also been paid in cash to various parties as stated in para 3.5 of the Assessment Order passed by the Assessing Officer. For this amount also tax had not been deducted at source as required under Section 194C of the Income Tax Act, 1961 and hence, this deduction is also not permissible under Section 40 (a)(ia). Learned Income Tax Appellate Tribunal, Ranchi Circuit Bench, Ranchi has failed to appreciate that oral contract can be deduced from the nature of the payments made by this assessee repeatedly, in cash for vehicle hire charges, labour charges, repairs and maintenance charges and loading and unloading charges etc. It should have been kept in mind by the ITAT that whenever these provisions are brought into operation, especially Section 194C of the Income Tax Act, 1961 to be read with Section 40(a)(ia), in not a single case there will be a written contract, looking to the tendency of the tax payers to avoid the payment of the taxes. Oral contract may be deduced, if the facts of the case permit. If any truck is hired and if the payment is made only a once, it may not be covered under the aforesaid two Sections. But, in the case on hand series of payments are made to one party e.g. in the facts of the present case Rs. 15,70,000/- have been paid by this respondent-assessee to one party repeatedly- Sri Sudhir Kumar Singh on 07th April 2008, 30th April 2008, 28th May 2008, 01st July 2008, 16th August 2008, 29th August 2008, 01st September 2008, 16th September 2008, 30th October 2008, 16th December 2008, 02nd January 2009, 05th January 2009, 28th January 2009, 12th February 2009, 27th February 2009, 14th March 2009 and 25th March 2009. All these payments have been made repeatedly to only one party and that to in cash and every time the amount is exceeding Rs. 20,000/-. These facts have been stated in para 3.4 of the Assessment Order passed by the Assessing Officer dated 20th December, 2012. There are other examples which have been given in the said order. Similarly, this respondent-assessee has also claimed vehicle hire charges, labour charges, repairs and maintenance charges and loading and unloading charges etc. which are undisputed facts, looking to the books of accounts and if these are the transactions carried out by the respondent-assessee during the assessment year then it can not be said that he is only a broker and earning Rs. 150-200 per truck. In fact, he is a transporter and he is giving sub contract for transportation of goods of M/s. Rungta Mines Ltd. and, therefore, as per Section 194C of the Income Tax Act, 1961, TDS ought to have been deducted by the respondent-assessee before making huge payment to the sub contractors and hence, this tax deduction at source has not been carried out. The deductions claimed from the total income by the assessee of Rs. 98,76,419/- for vehicle hire charges is not permissible under Section 40(a)(ia) of the Income Tax Act, 1961. Similar is the position with respect to the loading and unloading charges for Rs. 17,60,600/-. Learned counsel for the appellant has relied upon the decision rendered in the case of Raja and Company v. Commissioner of Income Tax, 2011 335 ITR 381. In view of the aforesaid decision, it is submitted by the counsel for the appellant that the conclusion arrived at by the Income Tax Appellate Tribunal, Ranchi Circuit bench, Ranchi deserves to be quashed and set aside and the order passed by the Commissioner of Income Tax (Appeals), Jamshedpur in Appeal No. 525/JSR/2011-12 dated 31st December, 2012 may be upheld by this Court.";