CIT Vs M/s Indian Oil Corporation Ltd. (Uttarakhand High Court)
Since common substantial questions of law have been raised in both the Appeals, we dispose of the Appeals by the following common judgment.
2. Substantially, the questions of law, which arise, relate to the provision, under which, the respondent assessee is obliged to deduct tax on the payment made by it to the Carrier under the contracts for transporting the petroleum products in the business in which the respondent assessee is engaged. On the one hand, it is the case of the appellant Department that the case of the respondent assessee falls under Section 194-I of the Income Tax Act, 1961 . On the other hand, the case of the respondent assessee is that its case falls under Section 1 94C of the Act.
3. The Assessing officer, on a conspectus of the terms of the contract as he understood it, came to the conclusion that the respondent assessee is obliged to deduct tax under Section 194-I of the Act. This view of the Assessing Officer did not find favour with the first Appellate Authority, who came to the conclusion, on his understanding of the contract, that the tax must be deductible under Section 1 94C and not under Section 194-I. The decision of the first Appellate Authority has found favour with the Appellate Tribunal and hence, the present Appeals.
4. We heard Mr. H.M. Bhatia, learned counsel for the Revenue and Mr. V.K. Kohli, learned Senior Counsel assisted by Mr. Kanti Ram, learned counsel appearing on behalf of the respondent.
5. H.M. Bhatia, learned counsel for the Revenue, who took us through the order of the Assessing Officer, would submit that the Assessing Authority has correctly appreciated the provisions in the contract and has rightly come to the conclusion that the provisions of Section 194-I would apply. He would emphasize that in this case, the contract involved exclusive use of vehicles by the respondent assessee in carrying on its business. Various provisions of the contract would, according to him, lead unerringly to the said conclusion. Since we intend to elaborately advert to the clauses in the contract, we need not say anything more.
6. On the other hand, Mr. V.K. Kohli, learned Senior Counsel for the assessee would submit that it is clear case, where what is involved in terms of the contract is only transporting of goods. It is not as if the amounts are paid for the use of the vehicles as such, and what is involved is only the transportation as per the contract.
