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2016 (8) TMI 1046 - AT - Income TaxTDS u/s 194C - non tds on Vehicle Hire Charges - disallowance u/s. 40(a)(ia) - Held that:- We find from the facts and circumstances of the case that the provision of section 194C(2) could not be made applicable as there was no contract between the assessee and the individual dumper owners and hence, the invocation of provision of section 40(a)(ia) cannot be made applicable. We find that the invocation of provisions of section 40(a)(ia) is to be decided on the scope and ambit of such enactment. It is not in dispute that the assessee had indeed deducted tax at source wherever it had duly entered into contracts for transportation of goods to the tune of ₹ 11,18,33,299/- out of the total hire charges of ₹ 16,17,19,641/-. In respect of remaining hire charges of ₹ 4,98,86,342/- , depending on the exigencies of circumstances, the assessee had made payments towards hire charges on temporary basis on various occasions which was done from the market mostly through brokers. We find that there was no material to suggest that the other dumper owners / drivers who were arranged through brokers by the assessee were involved in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risk associated with the main contract work. No contract, either verbal or written, is entered into with the owners / drivers in these cases of purely temporary transporting arrangements. - Decided in favour of assessee Tax on trade credits in respect of balance outstanding in three creditors - Held that:- A.O.'s action implies that a part of the transaction, in fact the major part judging by the amount paid, has been held to be genuine whereas the outstanding balances are not. No logic behind allowing payments made during the year as genuine while simultaneously holding outstanding credit balances due to the same parties as ingenuine. Furthermore, the A.O. is not seen to doubt the identity of these parties or the genuineness of the transactions. Details of the parties were available with him. On that there is no dispute. If the A.O.has any doubt regarding the creditworthiness of these parties he could have made requisite enquiries. No such enquiry appears to have been done. In view thereof , without conducting such enquiries, to hold that the concerned parties have no creditworthiness, as the A.O. has done, cannot be justified.- Decided in favour of assessee
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