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TMI Blog2014 (4) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 194C can not apply to a situation not amounting to a contract for carrying out any work as contemplated in section194C, and entering into a contract for hiring of trucks was not equivalent to entering into a contract for carrying out any work. Therefore, Explanation III to section 194C was not attracted Provisions of section 194C will not be applicable in the present assessee s case before us and therefore, provisions of Section 40(a)(ia) cannot be invoked for both the assessment years. Accordingly, this issue is decided in favour of the assessee. - I.T.A.Nos.2228 & 2229/Mds/2013 (Assessment Years: 2007-08 & 2009-10) & C.O.Nos.05 & 06/Mds/2014 - - - Dated:- 25-4-2014 - SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER Appellant by : Shri T.N.Betgeri,JCIT D.R Respondent by : Shri S.Sridhar,Advocate O R D E R PER A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER:- These appeals are filed by the Revenue against the common order of the Commissioner of Income Tax (Appeals), Madurai dated 25.07.2013 and Cross Objections by the Assessee in support of the common order of the Ld.CIT (A), in ITA No.85/11-12 passed under sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Ariyalur. Besides the transport business, the assessee is also partner in four partnership firms. For the assessment year 2007-08, the case was taken up for scrutiny wherein the assessee was given an opportunity for filing the details in order to explain as why the provisions of Section194C and Section 40(a) (ia) would not be attracted. Since the assessee had not produced any details, the assessment was completed by invoking Section 40(a)(ia) of the Act by disallowing the payments made by the assessee towards the lorry hire charges for ₹ 4,89,75,838/- sic ₹ 4,73,05,515/-. 6. The same issue was before the Ld. AO for the assessment year 2009-10. From the details available on record, Ld. Assessing Officer observed that the assessee was engaged in transporting salt pans and gypsum from fields at Tuticorin to M/s.Chettinad Cements factory at Karaikal and Arriyur for an agreed rate per ton. M/s. Chettiand Cement Corporation Ltd, while paying for the transportation charges to the assessee, had deducted TDS U/s. 194C of the Act by treating the transactions as payment to contractor. The assessee had explained before the Ld. Assessing Officer that she had engaged Lorries on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted and consequently provisions 40(a)(ia) cannot be invoked; The whole of transportation contract was executed by me by hiring trucks from various truck operators and therefore it cannot be said that such payments fell in the category of payments to sub contractors and hence the provisions 194(c) are not attracted and consequently there cannot be any disallowance under Section 40(a)(ia) of the Income Tax Act,1961. 8. While considering the issue, the Ld. CIT (A) observed that there was no contract either written or oral between the appellant and the lorry owners/drivers in order to attract the provisions of section 194C of the Act. The Ld. CIT (A) further observed that the assessee had paid advances to the lorry drivers towards diesel, toll, and batta expenditures occasionally and the same was adjusted on the final payment. It was also observed by the Ld. CIT (A) that the work being transportation of goods was not the responsibility of the owner of the truck or the driver of the truck, but it was that of the appellant considering the contractual obligation between the appellant and M/s.Chettinad cement. Further, keeping in view of the decisions cited by the appellant, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the facts of the case that the assessee had undertaken a contract from M/s.Chettinad Cement for transporting their goods from various locations to their factory premises. Since the assessee did not own any vehicles, she had hired the vehicles from the open market for meeting out her contractual obligations. Thus, the work of transporting the goods was carried out by the assessee. There is nothing on record to suggest that there was a sub contract existing between the assessee and the lorry owners/drivers. The contention of the assessee was that, she had hired the vehicles in order to carry out her work and the vehicles haired out were under her command, directions and risks. For hiring the vehicles the assessee had paid hired charges. This fact has not been disproved by the Revenue by bringing out any materials on record. Sec.194C of the Act requires the existence of the contract for carrying out any work. The Act prescribes the work to include carriage of goods or passengers by any mode of transport other than by railways. In the present case, the existence of contract of transportation of goods is established between the assessee and M/s.Chettinad cements. However the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of hire charges to the shipping companies. The AO treated the assessee as in default and directed the assessee to pay the tax U/s. 201(1) of the Income tax At and also levied interest U/s. 201(1A). The Commissioner (Appeals) and the Tribunal held that section 194C was not applicable. On appeal the High Court: Held, dismissing the appeal, that the payment of hire charges for taking temporary possession of the ships by the assessee company would not fall within the provisions of section 194C and hence no tax was required to be deducted. 10.2 In the case of Saiyad Saukatali Saiydamiya Vs. ITO [2013] 156 TTJ (Ahd.)(UO) 19, following the decisions of - (i) CIT Vs. Poompuhar Shipping Corporation Ltd. in [2006] 282 ITR 3(Mad.), (ii) CIT Vs. United Rice Land Ltd. 217 CTR (P H) 332 (wherein it was held that: There being neither any oral or written agreement between the assessee and the transporters for carriage of goods nor it is proved that any freight charges were paid to them in pursuance of a contract for a specific period, quantity or price, the assessee was not liable to deduct tax U/s. 194C from the payments made to the transporters. ) and (iii) K.Srinivas N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for carrying out any work. There was no contract between the assessee and the owners of the trucks to carry out any work. The assessee hired the trucks belonging to the truck owners for a fixed period, on payment of hire charges. The hired trucks were utilized by the assessee in its business of civil construction. There was no agreement for carrying out any work or to transport any goods or passengers from one place to another. The assessee simply hired the trucks on payment of hire charges. Thus, the hiring of trucks for the purpose of using them in the assessee s business would not amount to a contract for carrying out any work, as contemplated in sec 194C of the Act. It was not the case of the Department that the trucks taken on hire by the assessee from the truck owners were supplied by the truck owners to the assessee along with man power, i. drivers and/or conductors. The trucks were undeniably put to use by the personnel of the assessee. Thus nothing had been brought on record by the Department to the effect that man power was provided along with the trucks to the assessee by the truck owners. Mere provision of the trucks without any man power could not be termed as carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X
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