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2014 (2) TMI 738 - AT - Income TaxDisallowance u/s 40(a)(ia) of the Act – TDS not deducted u/s 194C of the Act – Held that:- Section 40(a)(ia) provides that in case of any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor for carrying out any work on which tax is deductible at source and such tax has not been deducted or after deduction has not been paid before the due date, such amounts shall not be deducted in computing the income chargeable under the head "Profits and Gains of Business or Profession" irrespective of the provisions contained in Sections 30 to 38 of the Act - the disallowance under section 40(a)(ia) is attracted in respect of amounts out of which tax is deductible at source and such tax is either not deducted or after deduction is not paid before the specified date - the disallowance u/s 40(a)(ia) can be made irrespective of the provisions contained in sections 30-38 of the Income-tax Act - The scope of disallowance contemplated by section 40 covers all those expenses which are specifically enumerated - The expenses claimed by the assessee as deduction are specified in section 40(a)(ia) and therefore they are well within the scope of disallowance contemplated by section 40(a)(ia) irrespective of their eligibility for deduction under sections 30 to 38. The case of the assessee is fully covered by the provisions of section 194C(2) - The goods received by the assessee from consignors for their carriage were sent through truck owners hired by the assessee - There was no privity of direct contract between the truck owners hired by the assessee and the consignors - It was the assessee's responsibility to transport the goods received from them for which purpose the assessee hired the services of the truck owners, obviously as sub-contractors - The assessee was required to deduct tax at source out of payments made by him to such truck owners/drivers in terms of section 194C(2) but he did not do so and hence the provisions of section 40(a)(ia) were rightly invoked by the AO for making the impugned disallowance – relying upon Shree Choudhary Transport Co. v. ITO [2009 (5) TMI 865 - RAJASTHAN HIGH COURT] – thus, the order passed by the CIT(A) is not sustainable in law – Decided in favour of Revenue.
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