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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER: 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.
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.
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.
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.
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.
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, �दनांक/Dated, the 19th June, 2015.
Kri.
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-V, Chennai 4. आयकर आयु�त/CIT-X, Chennai-34 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.