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TMI Blog2015 (3) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance made by AO for the reason that the assessee failed to deduct TDS from transport payments to the tune of Rs. 3,34,8,822/- u/s. 194C of the Act by invoking the provisions of section 40(a)(ia) of the Act. The CIT(A) decided the issue that no contract exists between the assessee and transporters. For this, revenue has raised following three grounds: "1. The Ld. CIT(A) erred in accepting that payment to 6 different transports, to the tune of Rs. 3,34,08,822/- does not fall in the purview of "works contract". 2. The Ld. CIT(A) failed to appreciate the fact that the assessee failed to deduct TDS u/s. 194C from the contractual expenses paid to the transporter thereby attracting the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- 5. Indian Corporation -do- 1,01,40,000/- 6. Brijesh Shyam Sunder -do- 14,68,822/- Total: 3,34,08,822/- As the assessee failed to deduct TDS, he disallowed the entire payment. Aggrieved, assessee preferred appeal before CIT(A), who deleted the disallowance by holding that there exists no contract between the parties and for this he recorded as under: "3. The submission of the Appellant as above and the facts of the case have been considered. It is seen that the expenses, in question, are in respect of payment made under the head Carriage Inwards to six parties the details of payments are reproduced as under:- Sl. No. Name of the party Nature of Expenses Bill Amount (Rs.) 1. Metal Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracts as envisaged u/s 194C between the Appellant and the persons from whom the dumpers and lorries had been taken on hire. The Hon'ble Tribunal in the case of DCIT Vs. Satish Aggarwal & Co. supra has held that explanation III to section 194C cannot apply to a situation not amounting to a contract for carrying out any work as contemplated in section 194C, and entering into sub-contract for hiring of trucks was not equivalent to entering into a contract for carrying out any work. It is also held in the above case that there was no contract between the assessee and owners of the truck to carry out any work and that the assessee had hired the trucks belonging to the truck owners for a fix period on payment of hire charges and that the truck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract for hiring of carriers of goods from the transport company, who are having goods carriage. Admittedly, the assessee has debited carriage inward expenses paid to six transport contractors, who are transport companies having in the carriage business for the purpose of hiring towards carriage of goods. Definitely, once the hiring is made, the contract exists, as to whether verbal or written. Once there is a verbal contract the provision of section 194C will apply and once provisions of section 194C apply the provisions of 40(a)(ia) of the Act will apply. For this proposition, we are relying on the case law of the coordinate bench in the case of ITO Vs. MGB Transport in ITA No.2280/Kol/2010 for AY 2007-08 dated 15th March, 2013, wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is labour may be treated as employed by the assessee for all practical purposes, the provisions of section 194C are clearly attracted. In such a situation, i .e. when labour hired by the assessee through CDLB is considered to be in assessee's employment , the payments made to CDLB cannot be treated as payments for any work, but nevertheless these payments could still be covered by the provisions of sect ion 194C because these are payments made for supply of labour which are specifically covered by section 194C(1). CDLB is an agent of the stevedores like the assessee in the sense that the labour is recruited by the assessee through CDLB, but when this fact does not affect the nature of payment by the assessee to the CDLB which is admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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