M.R. Shah, J. - Present Tax Appeal has been preferred by the appellant-Revenue challenging the impugned judgment and order dated 12th April 2013 passed by the Income Tax Appellate Tribunal, Rajkot ("Tribunal" for short) in ITA No. 12/Rjt/2013 by which, Tribunal dismissed the said appeal preferred by the Revenue, confirming the order dated 25th October 2013 passed by the CIT (A)-II, Rajkot for A.Y 2007-08.
2. Opponent-assessee is a limited company engaged in the business of clearing and forwarding of cargo, shipping agency and other ancillary trading activities. A survey under section 133A (I) of the Income-tax Act, 1961 {"Act" for short} was carried out at the business premises of the assessee-company on 13th February 2007 for TDS verification. During the course of verification, the Assessing Officer found some discrepancies with regard to short deduction of tax at source under various provisions of the Act for the financial year 2006- 07, relevant to the assessment year under appeal. It was noticed that the assessee-company had made payments towards cargo handling charges to Messrs. Saurashtra Containers Private Limited of Rs. 3,47,720/=; Messrs. Balaji Heavy Lifters (P) Limited of Rs. 66,46,038/= and Messrs. Samarth Liftners (P) Limited of Rs. 21,29,370/= and the TDS was made under section 194C rather than under section 194-I of the Act.
3. According to the Assessing Officer, TDS was made under the provisions of Section 194C, instead of Section 194-I of the Act for the financial year under consideration on payment of Rs. 92,46,481/= in the above three cases and the total short deduction was worked out at Rs. 19,50,696/=. The Assessing Officer accordingly passed an order dated 24th March 2011 under section 201 (1) read with section 194-I and 201 (1A) of the Act raising the demand of Rs. 29,74,811/=.
4. Being aggrieved and dissatisfied by the order passed by the Assessing Officer, the assessee preferred appeal before the CIT [A]. The CIT [A] partly allowed the said appeal and set-aside the order passed by the Assessing Officer with respect to the contracts with Messrs. Balaji Heavy Lifters Private Limited and Messrs. Samarth Liftners Private Limited and confirmed the order of the Assessing Officer with respect to Messrs. Saurashtra Containers Private Limited.
5. Feeling aggrieved and dissatisfied by the order passed by the CIT [A], Revenue preferred appeal before the Tribunal. Considering the nature of work/contract and considering the decision of this Court dated 11th January 2011 in case of CIT v. Swayam Shipping Services (P.) Ltd. [2011] 199 Taxman 249 (Mag.)/11 taxmann.com 137, the Tribunal, by its impugned judgment and order, dismissed the said appeal.
6. Feeling aggrieved and dissatisfied by the impugned judgment dated 12th April 2013 passed by the Tribunal, the Revenue has preferred the present Tax Appeal, proposing the following substantial questions of law :—
'(A) Whether the Appellate Tribunal has substantially erred in deleting the addition made under section 201 (1) of the I.T Act of Rs. 18,80,471/= and interest charged under section 201 (1-A) of the I.T Act of Rs. 9,87,247/= in the case of Balaji Heavy Lifters Private Limited and Samarth Lifters Private Limited by treating the payment of rent under section 194C instead of under section 194-I by the Assessing Officer ?"
(B) "Whether the Appellate Tribunal has substantially erred in treating the cargo handling charges as work under section 194C in the case of (i) M/s. Balaji Heavy Lifter (P) Limited; and (ii) M/s. Samarth Lifters (P) Limited whereas, he himself has treated the cargo handling charges as rent under section 194-I in the case of Saurashtra Containers Private Limited ?"
(C) "Whether the Appellate Tribunal has substantially erred in law that after amendment in Section 194-I vide Taxation laws (Amendment) Act, 2006 w.e.f 13th July 2006, TDS on payments made on hiring of machinery are covered under section 194-I of the Act ?'
7. Having heard Mrs. Mauna Bhatt, learned advocate for the Revenue and considering the observations made by the CIT [A] with respect to the nature of work/contract with respect to Messrs. Balaji Heavy Lifters Private Limited and Messrs. Samarth Lifters Private Limited, the issue involved in the present Tax Appeal is directly covered by the decision of this Court in case of Swayam Shipping Services Private Limited (supra). Relevant observations made by the CIT [A] in para 6.1 reads, thus—
"6.1 In the second ground, the appellant has challenged the action of the Assessing Officer for applying provisions of Section 194-I in respect of payments made to M/s. Balaji Heavy Lifters Private Limited on work contract for cargo handling services. From the details, it is noticed that the Assessing Officer's contention is not correct as is evident from the terms decided in the contract agreement executed with the said party which is filed by the appellant in paper-book in page Nos. 16 to 18 wherein, the following terms are mentioned :—
1. Party of second part will provide service as and when required by the party of the part and remains in touch with the execution of the cargo handling work under this contract.
2. The party of the Second part will arrange, crane, trailers, man-power for loading, unloading, shifting, transportation, stuffing, etc. of the container or cargo on his own to perform all the required activities relating to cargo handling. The party of the 1st part is not at all concern with use of equipments, trailers, man-power, etc., they are only concerned with the cargo handling by whatever means deemed suitable by the party of the 2nd part.
3. Party of the second part will be responsible for the loss/damages of the container or cargo during the transit as well as various destinations involved in cargo handling stages.
4. Both the parties were agreed for the following consolidated rate for various cargo handling work :—
Nature of work Rate per M.T.
| (a) |
|
Handling of steel pipes from vessel hook point to port allotted yard at Kandla Rs. 75.00 |
(b) |
|
Handling of steel pipe & plat at vessel hook point Rs.40.00 |
(c) |
|
Steel coil handling :-Shifting, hooking and internal transportation at Kandla Port Rs.50.00 |
|
|
Reloading charges Rs. 15.00 |
(d) |
|
Timber logs shifting for export pipes vessel at Adani Mundra Port Rs. 60.00 |
(e) |
|
Transportation of concrete pipe from Nana Kapaya to Adani Port Rs.105.00 |
(f) |
|
Transportation of heavy packages container from vessel to Port yard at Mundra Port Rs.225.00 |
(g) |
|
Unloading of steel pipes from trailor at stacking yard reloading and transportation from stacking yard to vessel hook point. |
5. Since party of the 1st part is not concerned at all with the mode of cargo handling, they are not liable for any expenses incurred by the party of the 2nd part over and above the consolidated fixed rate related to various cargo handling activities.
6. Party of the 1st Part is not concerned with the equipment, trailer, etc. owned or hired by the party of the 2nd part in execution of this contract. No detention.
7. Party of the second part will raise their bills every 15 days and party of the 1st part undertakes to pay within a month from receipts of the bill."
8. From the above terms and conditions, it is evident that the work involved is mainly labour oriented work with the help of various machineries and equipments. This work involves providing of man power for loading and unloading, shifting and transportation of the cargo to the destination as well. It is also evident from these terms and conditions that the possession and control over equipments and man power do not vest with the appellant-company which is a determinant factor so as to decide the applicability of the provisions of Section 194-I. The rates for each kind of cargo have also been specified on the basis of the volume of the cargo being handled and not on the basis of time period involved in the execution of the said contract. In the decision rendered by the Hon'ble Jurisdictional High Court in the case of Messrs. Swayam Shipping Services Private Limited, as relied upon by the appellant, the authorities have discussed this issue which mainly hinges around transportation of goods from one place to another place wherein control over trailers/cranes were not with the concerned company. Respectfully, following the said decision of the Hon'ble Jurisdictional High Court, the action of the Assessing Officer is held to be unjustified. Thus, the appeal on this ground is allowed."
9. Identical question came to be considered by this Court in case of Swayam Shipping Services (P.) Ltd. (supra) wherein, it is held that the provision under section 194C would be applicable with respect to similar work contracts. CIT (A) as well as the Tribunal have heavily relied upon the aforesaid decision of this Court.
10. In view of the above, we see no reason to interfere with the impugned judgment and order of the Tribunal. Under the circumstances, no substantial question of law arises in the present Tax Appeal, which deserves to be dismissed. Accordingly, the present Tax Appeal is dismissed in limine.