TMI Blog2014 (1) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments of truck hire charges are not under a sub contract, but under a separate standalone contract, and, accordingly, the provisions of Section 194C, requiring the assessee to deduct tax at source from payments to sub-contractor, will not apply to these payments. This submission did not, however, satisfy the Assessing Officer. He was of the view that the assessee is a contractor, as he carries on the business of transport, and the assessee pays for hire of trucks which is nothing but a payment for subcontract work. On this basis, the Assessing Officer disallowed Rs 6,50,000, on account of truck hire, under section 40(a)(ia) r.w.s. 194C. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Thee asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on income comprised therein. Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the sub-contractor, shall be liable to deduct income-tax under this sub-section. Explanation I : For the purposes of sub-section (2), the expression "contractor" shall also include a contractor who is carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supply undertaken by the contractor. What follows from the above analysis is that so far as pre June 2008 position is concerned, tax withholding obligations under section 194 C in respect of an individual only in cases where the payments were made to a sub-contractor for carrying out a part of work, or the work itself, undertaken by the assessee. That would have been the case, for example, when assessee received the goods for transportation and the assessee had made payment for such transportation of goods, not truck hire simplictor. That is certainly not the case before us because the charges paid by the assessee are not for transportation of goods but simply for the payment of truck hire. Alternatively, when the assessee is engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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. 6. When the above position was set out before the learned representatives, they very graciously agreed to the matter being restored to the file of the Assessing Officer for adjudication de novo in the light of above legal position. In a case in which 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), and therefore, the provisions of Section 40( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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