TaxTMI 
TaxTMI 
2011 (6) TMI 454
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....dicate whether any interest under section 201(1A) was included in the payment on account of delayed deposit of TDS. The assessee vide letter dated 14/11/2007 gave a reply on the above aspect as "not applicable". The assessment was completed by the AO by order dated 26/12/2007. 3. The CIT in exercise of his powers under section 263 of the Act noticed that the assessee had made a payment on account of Motor Fleet Hire Charges amounting to Rs. 3,14,41,098/- and claimed the same as expenditure in P&L account. In this regard it has to be mentioned that the assessee is in the business of transportation of Cargo from ports, yards, godowns, factories and vice-versa. In the course of its business it uses its own containers. On some occasions the assessee also uses the services of other owners of containers. A sum of Rs.3,14,41,098/- is nothing but the amount paid as charges to the owners of containers whose containers were used by the assessee for the purpose of transportation of cargo. 4. As per the provisions of section 40(a)(ia) of the Act amount payable to a contractor or sub-contractor being resident for carrying out any work on which tax is deductible at source and whe....
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....ehicles and their business was merely to supply vehicles to the principal transporters i.e. transport contractors. Every trip of work was completed by the other truck owner as a separate and single contract having no continuity of contract for any specific period or quantity. The assessee drew attention to question No.9 of Board's Circular No.715 dated 08.08.1995 on applicability of sec. 194C and contended that TDS deduction was rightly note made as per provisions of sec. 194C(2). The assessee argued that the consideration of single engagement of other truck owner did not exceed the amount of Rs.20,000/- qua each other truck owner. 7. Further, the assessee submitted that the AO passed an order of assessment after proper application of mind and, therefore, it cannot be terms as prejudicial to the interest of revenue. The assessee also submitted that for assessment year 2005-06 section 194C(1) did not apply to individuals. 8. After considering the above submissions, the CIT held that the AO had issued a questionnaire dated 18/11/2006 asking the assessee to furnish month-wise and party-wise details of all major expenses exceeding Rs. 10,000/- debited under each head of....
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....tract for several parties. The assessee has also disclosed payment of fleet hire charges and has not denied engaging other truck owners for transportation of containers to parties. As per the proviso to sec. 194C(2), where the gross receipts of the assessee in the immediately preceding financial year exceeded the monetary limits specified under clause (a) or clause (b) of sec. 44AB of the Act, provisions of sub-sec.2 of section 194C were applicable to the assessee who is an individual. The CIT held that in the case of the assessee this proviso was fully applicable. The CIT also found that Clause (i) of subsection (3) of sec. 194 C had been cited by the assessee to explain that individual payment for each engagement of other truck owners were each less than Rs. 20,000/- and aggregate amount of such payments paid was less than Rs.50,000/- so that major portion of the fleet hire charges payment were outside the ambit of 194C(2) of the Act. On the above submission, the CIT held as follows: "3.3 The assessee has initially contended that he had engaged outside contractors to carry out the transportation of containers as a single contract, value of which was less than 20,000/- and....
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.... or period of time, is not acceptable without verification of the work done in respect of transportation of goods undertaken by the assessee either for importer or exporters at a particular point of time. The assessment record shows no evidence of any examination made in this regard before accepting the claim of the assessee regarding allowability of fleet hire charges expenditure." 8. With regard to the issue of disallowance of 10% of diesel and load, repair and spare parts expenses etc. the assessee took a stand that only 1% of the expenses should be disallowed and that the reference to 10% of those expenses in the order of assessment is typographical error. The CIT held as follows: "5. In view of the above discussion, it is held that the assessment order dtd. 26.12.2007 passed in the case of the assessee for A.Y 2005-06 was erroneous and prejudicial to the interest of revenue. The assessment order is set aside for redoing afresh. While redoing the assessment so the AO has (i) to examine whether the assessee had given sub-contract of fleet hire as a single and separate contract in respect of each vehicle or separate sub-contract to carry out any work of transporta....
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....ook to transport bitumen to various points as per their directions. Since the Assessee did not have required number of lorries, it had to hire lorries from others who simply placed the vehicles at the disposal of the assessee. As per the provisions of section 194C(2), the sub-contractor should carry out the whole or any part of the work undertaken by the assessee. In that case, various clauses in the work order suggested that the assessee was solely responsible for all the acts and defaults committed by the assessee and/or its employees. On the above facts, the Tribunal held that it was not established by the Revenue that other lorry owners from whom the vehicles were hired have also been fastened with any such liability. Further, it was held that there was 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 and energy and by undertaking the risks associated with the main contract work. Hence, it was held that it cannot be said that the payments made for hiring of vehicles fell in the category of payments towards sub-contracts. Therefore, assessee was not liable to deduct tax a....