TMI Blog2010 (11) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... unds raised by the revenue in this appeal read as under:- 1. On the facts and in the circumstances of the case, the order the CIT(A) is erroneous both in law and on facts of the case. 2. The learned CIT (A) erred in ignoring the information about the applicability of provisions of section 194C (3) of the Act, 1961 brought in the assessment order. 3. The learned CIT (A) ought to have upheld the decision of the AO in the disallowance of unaccounted outstanding liability towards payments to truck/lorry owners. 3. Brief facts of the case are that the assessee filed its return of income for the assessment year under consideration on 30-10-2005 declaring a total income of ₹ 88,45,230. The assessing officer has completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the above said liabilities. In a sub contract, a prudent contractor would include all the liability clauses in the agreement entered into by him with the sub contractor. The assessee has also claimed before the tax authorities that the responsibility in the whole process lies with it only. Though the passing of liability is not the only criteria to decide about the existence of sub contract, yet this contention of the assessee read with the liability clauses of the work supports its submission that the individual vehicle owners are simple hirers of the vehicles. The CIT(A) further held that in the instant case, there is no material to suggest that the other lorry owners involved themselves in carrying out any part of the work undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (2), shall be liable to deduct income tax under the section 194C of the Act. She further submitted that this provision makes it sufficiently clear that in such cases, where the total payment made to the truck owners during the financial year 2004-05 was more than ₹ 50,000 the assessee was required to deduct tax in respect of such payments. The total amount of such payments made during the year under consideration is found to be ₹ 10,42,038 and hence taking into consideration, the provisions of section 194C, the assessee is required to deduct tax at source in such cases. Hence she argued that the assessing officer is correct in disallowing this amount under section 40(a)(ia) of the Act. Alternatively,she further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands at par with the payments made towards salaries, rent, etc. We find that the reasoning of the assessing officer to hold that the payment made for hired vehicles is a sub contract payment is not correct and not based on relevant consideration and hence it cannot be said that the payments made for hired vehicles would fall in the category of payment towards sub contract with the lorry owners. In that case the assessee is not liable to deduct tax at source as per the provisions of section 194C (2) of the Act and consequently the provisions of section 40(a)(ia) shall not apply to such payments. After considering the facts and the circumstances of the case, we are of the opinion that the first appellate authority is perfectly justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the nature of the liabilities and the usual business practices followed in this line of business and also the amount of outstanding liabilities in the preceding years, an estimated amount of ₹ 10 lakhs being approximately 15% of the outstanding liability, shall be treated as unexplained liability, in the absence of confirmations or any other credible evidence and he added the same as unexplained credit. Against the order of the assessing officer, the assessee went in appeal before the CIT (A). On appeal, the CIT (A) held that the assessee has not engaged any sub contractor to carry the transportation contract given to it by the Bsallarpur Industries Limited. In such a situation, it is not expected that the assessee will have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g into account the nature of the liabilities and the usual business practices followed in this line of business and also the amount of outstanding liabilities in the preceding years, estimated aforesaid of ₹ 10 lakhs being approximately 15% of the outstanding liability, shall be treated as unexplained liability, in the absence of confirmations or any other credible evidence and he added the same as unexplained credit and she contended that the assessing officer is right in doing so. 9. On the other hand, the learned counsel for the assessee while supporting the order of the first appellate authority contended that the assessee furnished the ledger extract showing the details of payment along with the truck number for each day of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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