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2009 (12) TMI 943 - ITAT HYDERABADTDS u/s 194C(1) or 194C(2) - Non deduction TDS - disallowance u/s 40(a)(ia) - assessee having his own trucks and is engaged in the business of transportation - assessee prays that his case be held as an independent 'contract' and not Annexure 'sub-contract' - AO held that the assessee is liable for deduction of tax under s. 194C(2) on the premise that the assessee was having agreement with the parties as a sub-contractor through whom truck were arranged for transportation of goods HELD THAT:- Neither the AO nor the CIT(A) recorded any findings of fact that there was any oral or written agreement between the assessee and transporters for carriage of goods or there has been tripartite agreement between the assessee, M/s Priyadarsini Cements and truck owners, nor it has been proved that any sum of money regarding freight charges was paid to them in pursuance of contract for specific period, quantity or price. In the absence of these facts, we are unable to give any findings to the applicability of the s. 1940(1). The assessee is pleading before us that s. 194C(1) is applicable without placing any documents to prove that he has entered into an agreement as a contractor with only truck owners and not as a sub-contractor and the assessee's arguments are only in air. In view of this fact, we are not in a position to uphold this argument of the assessee and the same is dismissed. Applicability of s. 40(a)(ia) - Whether sec 40(a)(ia) applies to cases in which the hire charges are 'payable' and not applicable to the amounts which have been already paid? - HELD THAT:- Respectfully following ratio laid down in the case of Tej Constructions [2009 (10) TMI 593 - ITAT HYDERABAD] as held once the AO has observed that books of account are not reliable, how the same books can be relied for other purpose for invoking other provisions of the Act - The AO rejected the claim on the ground that according to s. 194C stipulates that the person making payment to a contractor or at the time of credit to the account has to deduct tax at source - If amount is actually paid and tax is not deducted under the above section, s. 40(a)(ia) is not applicable we are inclined to allow the appeal of the assessee on issue relating to the applicability of s. 40(a)(ia ). Similar view has been taken in the case of Jaipur Vidyut Vitran Nigam Ltd. v. Dy.[2009 (4) TMI 489 - ITAT JAIPUR-A]. Further, the judgment relied by the Departmental Representative are relating to the upholding the constitutional validity of the provisions of s. 40(a)(ia ) and not relating to the applicability of s, 40(a)( ia). In the result the appeal of the assessee is partly allowed.
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