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TMI Blog2010 (1) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation Ltd. and therefore, disallowance u/s 40(a)(ia) could not have been made beyond Rs.5,14,725/-. 2.1. The Assessing Officer noticed that the assessee has shown income from transport business separately at a fixed percentage of the gross receipts and working sheet for the same was enclosed to the return. The Assessing Officer further noticed that the assessee was showing receivable from Indian Oil Corporation Ltd. in the balance sheet and was also showing the amount payable to the transport contractor. The assessee obtained a contract from Indian Oil Corporation Ltd. for the transportation of LPG cylinders and in turn, such transportation was being done through another contractor. The assessee has claimed TDS with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of sec.40(a)(ia) as per which the payments made to sub contractor without making TDS where TDS is applicable is disallowed as an expenditure from the income from business as per the amended section w.e.f. 1.4.2005. The assessee during the year 2005-06 has received Rs.11,52,685/- as payment towards transport business from IOC and has paid Rs.11,26,500/- to the various truck owners after keeping Rs.26,185/- (being TDS amount) as his income from transport business. The assessee has stated that upto 2004-05 the amount held was 3% plus TDS made by IOC but from the year 2005-06 it is only TDS which is taken as income as per the oral agreements with truck owners for which there is no documentary evidence. The provisions of sec.40(a)(ia) are app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be considered for the purpose of tax deduction at source u/s 194C. The assessee was receiving the payment from the IOC and therefore, the payments made to truck owners was part of the expenditure incurred for the purpose of income from transport business. The IOC was not making any direct payment to the truck owners. Hence, it cannot be said that the assessee was receiving commission in respect of payments being made by IOC through him to the truck owners. The learned CIT(A) further held that tax was required to be deducted at source because the payments made to the truck owner exceeded Rs.50,000/-. Section 44AE cannot be invoked because the assessee is not owning more than 10 goods carriage. Form No.15I has been received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Understanding with Shri Athaulla Khan. In order to comply with the clauses of the agreement with Indian Oil Corporation Ltd., it is mentioned in the MoU with Shri Athaulla Khan that the vehicle will be resold back to Shri Athaulla Khan by the transporter i.e. the assessee. As per the MoU, it is clear that Shri Athaulla Khan, who was owning the truck, agreed to act as Manager of the transporter i.e. the assessee. A MoU made between the appellant and Shri Athaulla Khan made it clear that the appellant made such MoU in view of clause mentioned in the contract awarded to him by the IOC. It is true that the assessee mentioned in the agreement that he will retain only 3% of the commission but actually in the income shown in the return, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a)(ia) will not be applicable. Hence, we hold that income of the assessee in respect of transport business is to be determined as per section 44AE(2) as against the income shown by the assessee. 2.6. We are not satisfied with the contentions of the learned AR that no tax was required to be deducted at source in view of Form No.15I submitted. Form No.15I has been submitted subsequently and has not been given to the assessee during the financial year relevant to the asst. year under consideration for not deducting the tax at source. The decision of Hon'ble jurisdictional High Court in the case of CIT vs Ace Multiplex Systems Pvt. Ltd. 317 ITR 207 is not applicable, as the issue was different. Moreover, the outer limit of getting Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom IOCL, the assessee received net payment to the extent of Rs.5,14,725/-. The deductions were in respect of diesel, TDS and others. A sum was deducted by IOCL in respect of diesel made available for plying of truck and therefore, the same was deducted and paid to IOCL and not to the so-called sub-contractor. Hence, we also hold the alternative submission of the learned AR that disallowance u/s 40(a)(ia) should have been restricted to Rs.5,14,725/-. We had already upheld that section 40(a)(ia) is not applicable because the income of the assessee is to be determined u/s 44AE(2). 3. The second grievance of appellant is that the learned Assessing Officer has erred in making disallowance of Rs.2,25,300/- u/s 40A(3). 3.1. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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