TMI Blog2014 (1) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is neither the owner of the vehicle nor the owner of the goods carried – Thus, the contention of the assessee that the lorry drivers are acting as the agent of the assessee is not correct – the assessee failed to show that the payments made by it in violation of the provisions of sec. 40A(3) of the Act is covered by any of the exceptions provided under Rule 6DD of the Income Tax Rules – order of the CIT(A) in confirming the disallowance made by the Assessing Officer u/s. 40A(3) of the Act upheld – Decided against Assessee. - I.T.A. No. 74/Coch/2013 - - - Dated:- 18-7-2013 - Shri N. R. S. Ganesan, JM And B. R. Baskaran, AM,JJ. For the Petitioner : Shri D. S. Sreekumaran, Adv. For the Respondent : Smt. S. Vijayaprabha, Jr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, Kerala Civil Supplies Corporation etc. Since the assessee-firm does not own any fleet of lorries, it usually hires lorries from the market for carrying out transportation work though the help of brokers on a day to day basis. The lorry freight amount is determined through negotiations with the concerned lorry drivers and hence the assessee does not have any direct contract with the lorry owners. Further, it is not known to the assessee whether the concerned lorry owners are having bank accounts or not. Since the said lorry drivers are required to make payments to the concerned lorry owners in cash, they insist on payment of lorry freight charges in cash only. Hence, the assessee was constrained to make payments in cash out of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lorry owners as well as assessee herein. Accordingly, the Ld A.R submitted that the exemption given under Rule 6DD(k) also applies to the assessee. 8. The Ld A.R submitted that the assessee is squarely covered by the exemption given under the proviso to sec. 40A(3) of the Act. By placing reliance on the decision of the Hon'ble Supreme Court in the case of Directorate of Income Tax vs. Pooranmall and Sons (96 ITR 390), the Ld. Counsel submitted that the Income Tax Rules cannot override the provision of the Act. 9. The Ld. DR, however, contended that lorry drivers cannot be considered as agent of the assessee and hence, the exemption provided under Rule 6DD(k) of the Income tax Rules is not applicable to the facts of the case. The Ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to the payment made only "in such cases and under such circumstances as may be prescribed" and for prescribing such cases or such circumstances, the Government shall take into account the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. 12. The Government has prescribed Rule 6DD in the Income tax Rules by considering the nature and extent of banking facilities, considerations of business expediency and other relevant factors. Hence, in our view, the assessee is required to show that its case falls under any of the circumstances/cases prescribed under Rule 6DD of the Income Tax Rules in order to escape from the rigours of sec. 40A(3) of the Act. 13. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee does not have any contact with the concerned lorry owners and the lorry freight rates are finalised with the lorry drivers. In this factual scenario, we are inclined with the view taken by the assessing officer that the lorry drivers are collecting payments on behalf of the lorry owners and they cannot be considered as the agents of the assessee. The Ld A.R further submitted that, under Kerala Sales Tax Act, the lorry drivers are treated as agents. He has also furnished copies of sec. 46, 47 and 67 of the Sales tax Act. The said rules are concerned with the inspection of goods in transit at the Check post and for limited purpose certain responsibilities/liabilities fixed on owner of the vehicle or owner of goods are also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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