Section 194C(6) limits TDS on goods carriage payments, while trust exemption alone does not justify non-deduction.

Section 194C(6) was applied to transport cooperative societies engaged in goods carriage work on the basis that the contractor was carrying on the business of plying, hiring or leasing goods carriages and had furnished PAN, so the ownership condition in section 44AE could not be imported into that provision; the linked demand under sections 201(1) and 201(1A) was deleted. For payments to HRTC, the Tribunal stated that exemption under sections 11 and 12, or registration under section 12A, does not by itself justify non-deduction of tax at source, but tax already paid by the recipient must be verified and given credit; the matter was remanded for fresh adjudication.

---

---

Issues: (i) Whether payments made to transport cooperative societies engaged in transporting goods attracted deduction of tax at source under section 194C, and whether the assessee could be treated as an assessee in default under section 201 for non-deduction. (ii) Whether non-deduction of tax on payments made to HRTC was justified on the footing that HRTC was a trust enjoying exemption, and what relief, if any, followed.

Issue (i): Whether payments made to transport cooperative societies engaged in transporting goods attracted deduction of tax at source under section 194C, and whether the assessee could be treated as an assessee in default under section 201 for non-deduction.

Analysis: The Tribunal followed its earlier view that the benefit of section 194C(6) depends on the contractor being engaged in the business of plying, hiring or leasing goods carriages, furnishing PAN, and the payer reporting the payment as required. The reference to section 44AE is only for the meaning of "goods carriage". The ownership condition in the deemed-ownership clause of section 44AE does not govern section 194C(6). The subsequent amendment introducing an ownership-based condition was treated as indicating that such a requirement was absent in the earlier provision.

Conclusion: The assessee was not liable to be treated as an assessee in default on this issue, and the demand raised under sections 201(1) and 201(1A) was deleted.

Issue (ii): Whether non-deduction of tax on payments made to HRTC was justified on the footing that HRTC was a trust enjoying exemption, and what relief, if any, followed.

Analysis: The Tribunal held that exemption claims under sections 11 and 12 do not authorise the deductor to assume that no tax is deductible at source. The absence of TDS cannot be justified merely because the recipient is registered as a trust under section 12A. At the same time, credit is to be given for tax already paid by the recipient, and the issue required verification of that factual aspect by the Assessing Officer. The matter was therefore sent back for a fresh decision after giving the assessee an opportunity of hearing.

Conclusion: The issue was remanded to the Assessing Officer for fresh adjudication, and the assessee obtained only limited relief subject to verification.

Final Conclusion: The additions were deleted on the transport-society issue, while the HRTC-related issue was sent back for reconsideration; the appeals thus succeeded in part and were otherwise disposed of for statistical purposes.

Ratio Decidendi: Section 194C(6) exempts tax deduction where the contractor is engaged in the business of plying, hiring or leasing goods carriages, and the ownership condition in section 44AE cannot be imported into that provision.

---