TMI Blog2016 (11) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that since the amount paid as ‘hire charges’ are not covered by the provisions of Section 194C, question of disallowance u/s. 40(a)(ia) does not arise. In view of that, assessee’s grounds are allowed - I.T.A. No. 1113/HYD/2012 - - - Dated:- 2-9-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri P. Bala Krishna, AR For The Revenue : Smt U. Minichandran, DR ORDER PER B. RAMAKOTAIAH, A.M. : This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad dated 23-04-2012, on the issue of disallowance u/s. 40(a)(ia) of the Income Tax Act [Act]. The appeal was filed with a delay of thirteen days and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable. Ld.AO however, has not accepted the contentions by stating as under: The contention of the assessee is not acceptable. A subcontractor would mean any person who enters into a contract with the contractor for carrying out the whole or part of work undertaken by the contractor. In the present case the assessee is a transport contractor who undertakes work of transportation of goods from various parties and it entrusts the work to lorry owners/drivers. Therefore, it is to be treated as work given on sub-contract and provisions of Section 194C applies. Accordingly, the payments made towards hire charges without deduction of tax at source under chapter XVIIB are required to be disallowed. u/s. 40(a)(ia) of the I.T. Act, the case l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent who will get a meeting arranged with the customers and the lorry driver and take commission. Rather, the appellant gives his own bill and undertakes the full responsibility of the transportation. Further, whether the appellant purchases its own lorries or sub-contracts a portion of the work is an internal arrangement of how it wants to conduct business. This does not change the nature of the business or the nature of the contract. The assessee is not taking commissions but undertaking full contracts for transportation. Given the above facts and circumstances, I hold that the TDS was to be deducted and the addition made by the Assessing Officer is correct . 4. After considering the rival contentions and perusing the orders of the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case, the assessee was a transport contractor and had entered into an agreement with parties whereby it undertook to transport bitumen to various points as per their directions. According to the assessee, the lorries used for the said purpose were specially designed with proper heating arrangements. The claim of the assessee was that since it did not have required number of lorries, it had to hire lorries from others who simply placed the vehicles at the disposal of the assessee. The assessee alone, under its control and supervision, had executed whole of the contract. According to the assessee, the individual lorry owners had not carried out any part of the work undertaken by the assessee. [Para 8.2J] The stringent clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he work undertaken by the assessee by spending their time, energy and by eking the risks associated with the main contract work. In the absence of the abovesaid characteristics attached to a sub- contract in the instant case, the payment made to the lorry owners stood at par with the payments made towards salaries, rent, etc. Hence, the reasoning of the tax authorities, to hold that the payment made for hired vehicles was a sub-contract payment, was not correct and was not based on relevant considerations. Hence, it could not be said that the payments made for hired vehicles would fall in the category of payment towards a sub-contract with the lorry owners. In that case the assessee was not liable to deduct tax at source, as per the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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