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2014 (1) TMI 302 - AT - Income TaxDisallowance of expenditure on hiring trucks u/s 40(a)(ia) r.w section 194C of the Act – Failed to discharge tax – Held that:- The assessee is mainly engaged in the business of transporting of goods, and, in a situation in which the assessee is doing the business of transport of goods - in the course of carrying out such business, he takes the trucks on hire for transportation of goods, the truck hire is an independent and standalone contract which, though essentially an integral part of the business of transportation, cannot be said to be a sub contract - the assessee may not have any tax withholding obligation in respect of truck hire payments in the pre-amendment period - everything hinges on the findings as to whether the trucks were hired for the purpose of hiring out simplictor of trucks, or for the purpose of use of these trucks in the course of transportation of goods by the assessee. The assessee has used the hired truck in the course of carrying out his business of transportation of goods, and not that of hiring out trucks, the payments for truck hire cannot be treated as payments to sub-contractor, and, accordingly, the provisions of Section 194C(2), thus, the provisions of Section 40(a)(ia) cannot come into play - The disallowance will have to be deleted – if it is found that trucks were hired by the assessee for back to back hiring out of trucks by the assessee, it will indeed be a case of sub-contracting the work, and, to that extent, provisions of Section 194 C(2) will indeed come into play – Matter remitted back – Decided in favour of Assessee.
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