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TMI Blog2013 (10) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has made freight payments of Rs. 2.14 crores without subjecting to tax deduction to various truck owners contracted/subcontracted to execute his freight contract with principals. On perusal of the payment details, it was noticed that in a number of cases, the sub-contracted amount agreed to be paid is more than Rs. 20,000/-. The total amount of such payment comes to Rs. 50,80,110/-. The assessee was asked to file the details of truck-wise freight payments without TDS on hired trucks to verify the violation u/s. 40(a)(ia) of the IT Act. The reply of the assessee is reproduced in the assessment order in which the assessee briefly explained that freights have been paid to the vehicle owners within the limit specified under the IT Act and where higher amount is paid, the tax has been deducted as per law and deposited with the Government account. The assessee filed complete list before the AO to show that the payments in question vary between the range of Rs. 20,000/- - 50,000/-, therefore, the above provision would not apply in the case of assessee. No payments have been made in contravention of any provision because the assessee has not made any payment more than Rs. 20,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of hired trucks are not sub-contractors and the assessee has hired the trucks for job work only, therefore, the provisions of section 194C would not apply. He has relied upon certain decisions of different benches of Tribunal and High court in respect of contention which we would take up later on, copies of which are filed in the paper book. On the other hand, the ld. DR relied upon the orders of the authorities below. 6. We have considered the rival submissions and the material on record. The provisions of sub-sec. (3) of section 194C of the IT Act provides as under : (3) No declaration shall be made under sub-section (1) or sub section (2) from--- [(i) the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor or sub-contractor, if such sum does not exceed twenty thousand rupees: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, sub-section (2) shall be liable to deduct income-tax [under this section:] Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of trucks for doing the job work. 7.1 The ld. counsel for the assessee relied upon the order of the ITAT, Agra Bench in the group cases of ACIT vs. Vipin Arora in ITA No. 306/Agra/2009 dated 17.06.2011, which is a case of individual who is the partner in the assessee firm in which on the same issue the Tribunal following the order of the Tribunal in the case of M/s. Avneesh Kumar Singh in ITA No. 592/Agra/2008, deleted the similar addition, holding that the assessee is not liable to deduct tax at source as per provisions of section 194C on the payments made to the lorry owners on lorry hired. 7.2 He has also relied upon the decision of ITAT, Vishakhapatnam Bench in the case of Mythri Transport Corporation vs. ACIT, 124 TTJ 970, in which it was held as under : "Assessee, a transport contractor, having itself executed the whole of the contract for transportation of bitumen by hiring lorries from other lorry owners who simply placed the vehicles at the disposal of the assessee without involving themselves in carrying out any part of the work undertaken by the assessee, it cannot be said that the payments made for hiring of vehicles fell in the category of payments towards sub-con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the case of assessee and as such, the assessee is not liable to deduct TDS. Therefore, the addition is wholly unjustified. We accordingly set aside the orders of the authorities below and delete the addition of Rs. 50,80,110/-. Grounds Nos. 1 to 4 of appeal of the assessee are allowed. 9. On ground No. 5, the assessee challenged the disallowance of Rs. 4,72,080/- out of truck freight expenses. The AO on examination of the record found that certain vouchers were not produced and some of the vouchers were not found and even certain payments are related to challans, Inams/traffic police expenses. Explanation of the assessee was called for as to why disallowance should not be made because payments have been made for violation of law. The assessee explained before the AO that generally challans are paid by the concerned persons for violation of traffic rules, but many a times, expenses are reimbursed. Inams are paid for smooth running of vehicles during the course of transportation, which generally happens in the line of transport business. The AO did not accept the contention of the assessee because the payment has been made for violation of law, which is specifically prohibite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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