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M/s. Decent Lorry Services Versus Income Tax Officer, Ward-5 (2) ,

TDS u/s 194C - non deduction of tds on lorry hire charges - Held that:- Assessee does not even have a contract to supply with his parties on a regular basis. It undertakes transportation of goods as and when a particular person requires them to be transported. When there is no regular contract, as in the case of Mythri Transport Corporation Vs. ACIT [2009 (1) TMI 337 - ITAT VISAKHAPATNAM ] the question of sub-contract does not arise on the facts of the case. On the facts of the case, we are of t .....

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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 reason furnished was that the partner has fallen sick and therefore, due to ill-health, the memo could not be signed and appeal could not be subm .....

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not deducted tax on the above amounts and the provisions of Section 40(a)(ia) are applicable, Assessing Officer (AO) issued show cause notices to assessee asking for compliance with the provisions. It was submitted that the payments of lorry hire debited to P&L A/c covers payments at various points of offices and branches and amount paid to each party will not exceed ₹ 20,000/- and so the provisions of Section 40(a)(ia) are not applicable. It was further submitted that assessee undert .....

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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 .....

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2.1. Thus, out of ₹ 71,92,213/- debited to P&L A/c, AO disallowed an amount of ₹ 4,38,790/- stated to be paid towards hire charges at ₹ 50,000/- or more to each lorry owner/driver. 3. Before the Ld. CIT(A), the same contentions were reiterated but Ld. CIT(A) also agreed with assessee by stating as under: 5.2 I have seen carefully the facts and evidence. In the current case, the arguments of the appellant are not correct that there was no contract with anyone. The appellant .....

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lant who undertakes the transport the goods of various customers. The appellant is not an agent 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 .....

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fact, there may be an oral contract when assessee undertakes to transport the goods. What assessee receives as transportation charges are entirely different from what assessee pays to lorry owner or driver which is not a transportation charge but a lorry hire charge . there cannot be contract, even orally, as considered by the Ld. CIT(A) for this sort of work. The same issue was considered by the Co-ordinate Bench at Visakhapatnam in the case of Mythri Transport Corporation Vs. ACIT [124 ITD 40] .....

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ub-contractor for carrying out the whole or any part of the work undertaken by the can tractor. (c) The sub-contractor should carry out the whole or any part of the work undertaken by the contractor. (d) Payment should be made for carrying out the whole or any part of the work. In the instant 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, t .....

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8.2J] The stringent clauses of the work order suggested that the assessee would be solely responsible for all the acts and defaults committed by it and/or its employees. [Para 8.4] It was not established by the revenue that other lorry owners, from whom the vehicles were hired, had also been fastened with any of the abovesaid 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 had .....

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part of the work undertaken by the assessee. The dictionary meaning of the words 'Carry out' .: 'to carry into practice; 'to execute:' 'to accomplish'. It signifies a positive involvement in the execution of the whole or any part of the main work by spending one's time, money, energy, etc., and further, taking the risks in carrying on the said activity. In the instant case, there was no material to suggest that the other lorry owners involved themselves in carryi .....

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