THE ITO, WARD-2(2)(1),, AHMEDABAD vs. SHRI CHANDRAKANTBHAI SHANTILAL SHAH, AHMEDABAD

This appeal filed by the Revenue is directed against the order of the Ld. CIT(A)-10, Ahmedabad dated 28.09.2016 pertaining to A.Y. 2008-09 and following grounds have been taken:

This is the second round before the ITAT and Co-ordinate Bench in & 2175/Ahd/2012 dated 25.07.2013 remitted the case to the file of the Assessing Officer with the following direction: "... We have heard the rival submission and carefully perused the materials on record and the orders of the revenue authorities. From either order of the revenue, if is not established that there was a contract existing between the assessee and other parties for transportation of goods. The revenue has gone on the presumption that there was an implied contract between the assessee and the transporter The learned CIT(A) came to such presumption by looking at the receipts, customer ID grade, mode of payment etc. Further, the learned CIT(A) has relied on the running ledger accounts in the books of the assessee with respect to the transporter. The nature of transactions with respect to the assessee's case has not been understood in its true sense. The assessee was deriving income by retaining commission from the total amount received from the customers which includes freight charges collected on behalf of the transporters which were duly paid to the transporters. There are three parties in the transactions namely (i) the transport owner (ii) the party from whom the goods are to be received and (iii) the party to whom the goods are to be delivered. The claim of the assessee was that he was bridging all these three parties for transportation of goods and received commission for the same. In fact, the truck owners determine the transport cost to be collected from the persons who received the goods on transportation. The assessee raises his own bill being the transport cost plus his commission in the name of the persons who received the goods. The recipients of the goods will make the payment for the entire bill amount to the assessee by way of account payee cheque after deducting TDS and by issuance of TDS certificate.

The AO while passing the order u/s. 143(3) rws 254 of the Act has held that the assessee has not submitted any further details which he submitted at the time of original assessment. Moreover, the assessee has received entire amount from the party for whom he has carried out the work. The party concerned has also deducted TDS u/s. 194C on such payments. Books of accounts are duly audited and assessee has accounted entire freight receipts. If the assessee has received only the commission income, which comes to Rs. 4,41,2097-, there is no question of auditing the books of account u/s. 44AB of the Act. The assessee has incurred expenditure towards freight charges and the assessee has made payment of freight of Rs. 1,47,92,209/-. Had the assessee been only a commission agent, then the assessee would have received only commission amount from the party concerned. When the assessee has received the entire freight charges. It is his duty of deduct TDS at applicable rate and accordingly the assessee was liable for deducting TDS u/s. 194c of the Act. Accordingly, the A.O. has disallowed an amount of Rs. 1,47,92,209/- as per the provisions of Section 40(a)(ia) of the Act.

Thereafter, assessee preferred first statutory appeal before the ld. CIT(A). And in the meanwhile, Co-ordinate Bench has also given specific direction to verify “Whether the appellant was the owner of the trucks or carried the goods through his trucks to the destination”.

In support of its contention, assessee contended that he is neither the owner of the trucks nor carrying the goods through his trucks to the destination. The P& L account has shown income from freight receipt of Rs. 1,47,92,209/- and the direct expenses on account of freight paid of Rs. 1,47,92,209/-. Therefore, there are no expenses debited on account of any of these item in P&L account. Thereafter, with detailed discussion, ld CIT(A) allowed the appeal of the assessee.

Now Revenue has come before us.

We have gone through the impugned order and heard both the parties and gone through the relevant record. Assessee is a proprietor of Navkar Freight Carriers which is engaged in the activity of running Transportation Business. Assessee is a commission agent to arrange trucks in its customer for lifting of goods. In this kind of business supplier or the purchaser of the goods make a contact with the business men in transport carriers. Thereafter transport carrier lift goods and deliver at the destination. In this case, assessee job is only a middle-man who charges his commission for making available the transport vehicles. And in order to arrange, assessee charges 1% to 3% commission from the person who heir trucks/transportation through assessee and after deducting 1% to 3% of the commission, entire amount is given to truck drivers of the 5 . A.Y. 2012-13 said vehicle because making pre payment to the diver is condition in such business. During the process of loading, transportation and unloading of goods from one person to another, the entire expenses in relation to vehicle maintenance, operation and running cost is born by the vehicle owners only. The middle-man is not required to incur any such expenses on transport vehicle.

As we can see, assessee is not owner of the truck and necessary expenditure such as drivers’ salary, fuel, loading and unloading charges, maintenance of vehicles, Insurance has not been debited to the Profit and Loss account of the assessee. In our considered opinion, ld. CIT(A) has passed reasoned order and same does not require any kind of interference at our end.

In the result, appeal filed by the Revenue is dismissed.