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TMI Blog2012 (6) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. Hence, assessee was not liable to deduct TDS u/s 194C(2) in relation to payment made to the outside parties and accordingly there is no violation of Section 40(a)(ia) - Decided in favor of assessee. - IT Appeal No. 2941 (Mum.) of 2011 - - - Dated:- 11-5-2012 - P. M. Jagtap And Amit Shukla, JJ. Namrata Dedhia for the Appellant G. K . Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order. The Assessing Officer observed that the assessee had not deducted TDS as per the provision of 194C(2) on these payments and therefore, same is not allowable as expenditure. The assessee contended that he had offered his income u/s 44AE and therefore, such a disallowance cannot be made and secondly, provision of Section 40a(ia) will not be applicable to assessee in this year as he is individual not liable to deduct TDS u/s 194C. The Assessing Officer rejected the explanation and held that the assessee was engaged in the business activities of forklift and hiring and had made transactions with various persons and therefore, non-deduction of TDS clearly violates the provision of Section 40(a)(ia) even in this year. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 194C (2), as there was no oral and written agreement and secondly, hiring of forklift vehicles is a machinery which falls within the scope of Section 194(1) and not 194C.Even the Explanation to Section 194(1) provides for TDS liability on hiring of machinery which has come w.e.f. 13-7-2006, hence, does not fall in the impugned assessment year. She also filed copy of decision of ITAT Mumbai Bench in ACIT v. Janardhan V. Sawant , in ITA No.6505/Mum/2010, vide order dated 28-3-2012, wherein on similar facts in the case of assessee's brother, the Tribunal has dismissed the case of the department. 7. On the other hand, learned Senior DR submitted that there was a clear violation of Section 194C as the assessee has not dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om basis to fulfil his own commitment towards his principals. There is no material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. The judgments as have been relied upon by the assessee before the CIT(A) clearly clinches the issue in favour of the assessee. The relevant proposition laid down in these cases are given here under :- United Rice Land Ltd. ( supra ) The assessee-company was engaged in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of fact had not been controverted by the Department. Mythri Transport Corporation ( supra ) In the instant case, there is no material to suggest that the other lorry owners involved themselves in carrying out any part of the work undertaken by the assessee by spending their time, energy and by taking the risks associated with the main contract work. In the absence of the above said characteristics attached to a sub-contract in the instant case, the payment made to the lorry owners stands at par with the payments made towards salaries, rent etc Hence, in our considered opinion, it cannot be said that payments made for hired vehicles would fall in the category of payment towards a sub-contract with lorry owners. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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