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2017 (10) TMI 1491 - AT - Income TaxTDS u/s 40(a)(ia) - TDS u/s 194C - Transportation changes - HELD THAT:- It is not in dispute that the assessee is a transporter executing various contracts by engaging transporter’s vehicles. AO disallowed payments because they were made to transporter as sub-contract. There is nothing on record to suggest that any contract existed between the assessee and the alleged transporter as sub-contractor. There is neither written nor oral agreement in this connection. There is no quarrel about the settled legal proposition that written agreement is not compulsory. Even oral agreement can be inferred from the facts and circumstances of the case. AO has not made out the case that on the basis of the contract of the business of the assessee, there existed contractor and sub-contractor relationship between the assessee and the alleged subcontractor. AO has not made out a case that the alleged sub-contractor has been engaged on some definite terms and conditions for executing the work of the assessee. The assessee has engaged different transporters for executing its different work. There is nothing on record to suggest that the assessee has assigned any particular portion of work to a particular transporter. Therefore, the Assessing Officer was not justified in making disallowance by invoking the provisions of section 40(a)(ia) of the Act. Disallowance u/s.40A(3) - HELD THAT:- We find that the genuineness of payment has not been doubted by the Assessing Officer. Therefore, the case of the assessee is fully covered by the decision of the above quoted decision of the Amritsar Bench of the Tribunal and also the decision of P&H High Court in the case of Gurdas Garg vs CIT, [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT] . For the above reasons also, no disallowance under section 40A(3) of the Act can be made out of transport charges paid by the assessee. Hence, we set aside the orders of lower authorities and allow this part of the ground of appeal also.
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