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ACIT, Circle-2 (1) , Vijayawada Versus Sri K.V. Subba Rao

2016 (10) TMI 322 - ITAT VISAKHAPATNAM

TDS u/s 194C - non deduction of tds on transportation charges - disallowance u/s 40(a)(ia) - Held that:- The issue is squarely covered by the decision of coordinate bench of this Tribunal, in the case of Mythri Transport Corporation vs. ACI [2009 (1) TMI 337 - ITAT VISAKHAPATNAM] wherein under similar circumstances, held that hiring of trucks and lorries cannot be called to be the work as per the definition given in explanation 3 to section 194C of the Act and consequently the assessee is not li .....

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4 for the assessment year 2007-08. 2. The brief facts of the case are that the assessee is a partnership firm engaged in the business of transport of iron ore and coal to various mining companies and metal trading companies. The assessee has filed its return of income for the assessment year 2007-08 on 31.10.2007 admitting total income of ₹ 18,32,535/-, which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') on 26.9.2008. Subsequently, the asses .....

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charges of ₹ 2,59,52,945/- under the provisions of section 40(a)(ia) of the Act for non-deduction of tax at source u/s 194C of the Act. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee submitted that it is engaged in the business of bulk transportation of iron ore and coal to various mining companies and metal trading companies. During the previous year relevant to assessment year 2007-08, it has executed transport w .....

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goods and the risk associated with transportation of goods is rest with the assessee and the lorry owners deployed the vehicles at the disposal of the assessee, therefore, the transportation charges paid is not coming within the meaning of works as defined u/s 194C of the Act. To support his arguments, relied upon the decision of ITAT, Visakhapatnam in the case of Mythri Transport Corporation Vs. ACIT in ITA No.183/Vizag/2008, P. Ramachandra Rao Vs. ACIT in ITA No.387/Vizag/2008 and Kranti Road .....

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section 40(a)(ia) of the Act. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 4. The Ld. D.R. submitted that the Ld. CIT(A) is not justified in holding that the payments made in excess of ₹ 20,000/- are not liable for TDS as per the provisions of section 194C of the Act, when on the same set of facts and circumstances, the revisionary authority held that the assessee is liable to deduct TDS. The Ld. D.R. further argued that the CIT(A) is not justified in holding that the .....

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o agreement with the companies for transportation of goods and also providing minimum number of trucks. The assessee has used his own trucks for the purpose of transportation of goods and also hired trucks from outsiders on fixed charges basis. The facts of the case laws relied upon by the assessee are different from the facts of the present case, accordingly the CIT(A) erred in relied upon those case laws to delete the addition made by the A.O. Therefore, requested to upheld assessment order. 5 .....

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the decision of ITAT, Visakhapatnam in the case of Mythri Transport Corporation Vs. ACIT in ITA No.183/Vizag/2008, P. Ramachandra Rao Vs. ACIT in ITA No.387/Vizag/2008 and Kranti Road Transport Pvt. Ltd. Vs. ACIT in ITA No.358/Vizag/2008. The A.R. further submitted that on similar facts, the Hon ble ITAT, held that mere hiring of trucks does not amount to contract or sub contract as defined under the provisions of section 194C(2) of the Act. 6. We have heard both the parties, perused the materi .....

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deducted TDS. The A.O. further was of the opinion that the assessee has failed to deduct TDS, accordingly, the amount incurred under the head transportation charges is not allowable as deduction under the provisions of section 40(a)(ia) of the Act. It is the contention of the assessee that amount incurred under the head transportation charges does not come within the definition of contract or sub contract as defined under the provisions of section 194C of the Act. The assessee further submitted .....

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f trip. The assessee further argued that the arrangement between assessee and the truck owners is a mere hiring of trucks, but not a contract or sub contract as defined under the provisions of section 194C of the Act, so as to invoke the provisions of section 40(a)(ia) of the Act. 7. The only issue that came up for our consideration is whether on facts and circumstances of the case the impugned payments are coming within the meaning of works contract as defined u/s 194C of the Act. The Ld. A.R. .....

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on payment to lorry/truck owners as per the provisions of section 194C of the Act. The relevant portion of the order is reproduced hereunder: Sec. 1940(2) is attracted if all the following conditions are satisfied (a) the assessee should be a contractor, (b) the assessee, in his capacity as a contractor, should enter into a contract with sub-contractor for carrying out the whole or any part of the work undertaken by the contractor; (c) the sub-contractor should carry out the whole or any part o .....

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all the liability clauses In the agreement entered into by him with the subcontractor. 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 order supports Its submission that the individual vehicle owners are simple hirers of the vehicles As per th .....

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