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TMI Blog2011 (8) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... been that in this business, he is not carrying on the work of transportation of goods and, therefore, the provision contained in section 194 C is not applicable to him. However, the finding of the AO is that the assessee has been carrying on this business also in respect of which he is liable to deduct tax at source from the payments made to other transporters. He has not deducted the tax at source on payment made to such transporters. Therefore, the expenditure incurred in this behalf is liable to be disallowed under the provision contained in section 40(ia). In order to illustrate his point, he directed the assessee to file a revised profit and loss account including the receipts and expenditure from this business in the profit and loss account. Such an account was furnished, which shows that the income from lorry booking amounting to Rs.8,51,43,744/- and booking commission of Rs.26,02,032/-. The expenditure on lorry booking was the same as the income, i.e., Rs.8,51,43,744/-. This amount of Rs.8,51,43,744/- was included in the total income of the assessee. 20% of the expenditure incurred in cash, computed at Rs.2,82,913/-, was also disallowed by invoking the provision contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o loss to the revenue even in the absence of deduction of tax by the appellant. However, on being asked to furnish necessary evidence so as to substantiate his claim, the ld. counsel again expressed his inability to do so. Therefore, this plea of the appellant is also not tenable in the absence of supporting evidence and is being rejected. In view of the aforesaid, I do not find any infirmity in the action of the ld. AO and the addition of Rs. 8,51,43,744/- made in terms of section 40(ia) read with section 194C of the IT Act, 1961 is being sustained." 3.1 He also confirmed the addition of Rs. 2,82,913/- by recording the following findings:- "5. As regards ground no. 2 relating to disallowance of Rs. 2,82,913/- made in terms of section 40A(3) of the Act, no argument/submission has been made on behalf of the appellant. The ld. AO has recorded a categorical finding that the payment of Rs.14,14,564/- was made in violation of section 40A(3) and no explanation in regard to compelling circumstances leading to payment in cash in excess of Rs.20,000/- has been furnished. In view of the aforesaid, the disallowance of Rs.2,82,913/- is also being accordingly sustained." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same date, i.e., 26.03.2007, the amount of Rs.50,000/- was handed over to the driver Ram Kishan of truck No. HR 47E 7121 of Delhi Assam Roadways Corporation Ltd. Again, on the same day, a final bill was drawn in which lorry freight was shown at Rs.70,000/-. Two amounts, i.e., Rs.50,000/- and Rs.2,100/- representing money paid to the driver and the commission of the assessee, aggregating to Rs.52,100/-, were deducted showing the balance amount payable at Rs.17,900/-. According to the ld. counsel, the balance amount would be paid by the customer to Delhi Assam Roadways Corporation Ltd. on unloading of goods at Kurukshetra. It is also submitted that the only activity carried on by the assessee was to act as an intermediary between the customer and Delhi Assam Roadways Corporation Ltd., for which he received commission of Rs.2,100/-. No other work has been done by the assessee except bringing the two parties together. He did not make any payment to the aforesaid roadways corporation for transportation of goods. Such payment was made by the customer. Thus, there was no liability on assessee for deduction of tax at source. 5.1 To support the aforesaid contention, reliance has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable and, therefore, the provision contained in section 40(ia) was also not applicable. The Hon'ble Court mentioned that the firm and partners may be separate entities for income-tax and it may be permissible for a firm to give contract to its partners and deduct tax from the payments made as per provision contained in section 194C, but it was to be determined whether there was any separate sub-contract or the firm merely acted as an agent. The case of the assessee was that it was the partners who were executing transportation contract by using their trucks and payment from the company was routed through the firm as agent. The ld. CIT(A) and the Tribunal accepted this plea. Once this plea is upheld it could not be held that there was a separate contract between the firm and the partners. 5.3 We have considered the facts of the case and submissions made before us. We may explain the contents of the bill as mentioned above. The assessee raised a bill no. 3916 dated 26.03.2007 on the aforesaid Delhi Assam Roadways and asked it to arrange the trucks of the capacity of 25 tons on his behalf. The bill amount was Rs.70,000/- and Rs.50,000/- were paid to Ram Kishan, driver. Second ..... X X X X Extracts X X X X X X X X Extracts X X X X
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