2011 (4) TMI 781

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..... the appeal is dismissed. - Decided in favor of assessee.
MR.JUSTICE ADARSH KUMAR GOEL, MR.JUSTICE AJAY KUMAR MITTAL, JJ. Present: Mr. Rajesh Katoch, Senior Standing Counsel for the appellant. Adarsh Kumar Goel, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 29.1.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh in ITA No.883/CHD/2009, for the assessment year 2006-07, claiming following substantial questions of law:- "i) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in holding that the provisions of Section 194C are not applicable on the payments of Rs.54,66,94 .....

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..... etween the firm and the partners. This view has been upheld by the Tribunal as under:- "The provisions of section 194C of the Act are attracted when there is a contract, whether in writing or oral, between two entities and any payment is made in lieu thereof. We find support from the ratio laid down by the Hon'ble Himachal Pradesh High Court in Sirmour Truck Operators Union Vs. CIT (supra) wherein it was held that freight paid by the association of persons to truck owners, who were of the members of the association of persons, was not liable for deduction of tax at source under section 194C of the Act.14. Further, in CIT Vs. Ambuja Darla Kashlog Mangu Transport Coop Society 2009) 31 DTR (HP) 49, it was held that the payment by Society/AOP .....

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..... arate entities for income tax and it may be permissible for a firm to give a contract to its partners and deduct tax from the payment made as per Section 194C, it has to be determined in the facts and circumstances of each case whether there was any separate sub contract or the firm merely acted as agent as pleaded in the present case. Case of the assessee is that it was the partners who were executing transportation contract by using their trucks and payment from the companies was routed through the firm as agent. The CIT(A) and the Tribunal accepted this plea on facts. Once this plea was upheld, it cannot be held that there was a separate contract between the firm and the partners in which case the firm was required to deduct tax from the .....

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