AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 1007
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....he Act') was issued. In response to notice, the authorized representative of the assessee appeared from time to tome and furnished books of accounts and other details. The Assessing Officer after considering the details furnished by the assessee completed the assessment u/s 143(3) of the Act and determined the total income of Rs. 74,48,453/- by disallowing amount of Rs. 66,84,347/- u/s 40(a)(ia) of the Act, for failure to deduct TDS u/s 194C of the Act. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). The CIT(A) has confirmed the additions made by the Assessing Officer. On further appeal before the ITAT, Visakhapatnam bench vide ITA No.364/Vizag/2008 dated 12.6.2009, the ITAT, set aside the assessment order to the file of the Assessing Officer with a direction to verify the nature of transactions between the assessee and the owners of the hired vehicles and decide the issue afresh, in accordance with principles laid down by the bench in the case of Sri M. Seetaramaiah Vs. ACIT in ITA No.335/Vizag/2008 dated 18.5.2009, which in turn followed the decision in the case of M/s. Mythri Transport Corporation in ITA No.183/Vizag/2008. 4. The a....
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....tal basis and the risk associated with the transport of goods is vested with the contractor. Therefore, the Assessing Officer was not correct in coming to the conclusion that there exist a contract between the vehicle owners and the assessee and consequential payment attracts TDS u/s 194C(2) of the Act. The assessee further submitted that in this case, he had entered into agreement with his clients for carriage of goods. In the process, he has hired the vehicles from the owners on fixed price. The Goods Consignment Notes (GCNs) were issued by himself and not by the vehicle owners. The Goods Consignment Note is a document that acknowledges the receipt of goods by the customers and mentions the vehicle registration number through which the goods mentioned in the Goods Consignment Note are to be transported besides the place of origination and destination. Therefore, GCN is clear evidence which established the contract between me and my customers and not with vehicle owners. The assessee further submitted that his case is squarely covered by the decision of Hon'ble ITAT, Visakhapatnam bench in the case of M/s. Mythri Transport Corporation Vs. ACIT (supra) and also in the case of M. Se....
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....f whole or part of the main contract by spending time, money and energy. The Ld. D.R. further submitted that the CIT(A) was erred in applying the ratios laid down by the ITAT, in the case of Shri M. Seetaramaiah (supra) and M/s. Mythri Transport Corporation (supra), as the same were rendered under different set of facts. In the present case on hand, the assessee has sub contracted the transport work to two different transport operators and the transport operators have undertaken the work with positive involvement in the work by spending their money, energy and resources. The vehicle owners have paid the salary of the drivers on their own and incurred necessary expenditure towards diesel and maintenance of the vehicles. Therefore, the arrangement between the assessee and the transport operators is nothing but a contract in the nature of any work as defined u/s 194C(2) of the Act. 8. The D.R. further submitted that the CIT(A) ought not to have held that the provisions of section 40(a)(ia) of the Act are applicable only in respect of amounts payable and not in respect of amounts paid, as the department has not accepted the decision of the Hon'ble ITAT, Visakhapatnam in the case of M/....
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....ract between assessee and vehicle owners is in the nature of sub contract as defined u/s 194C(2) of the Act. The assessee hired the vehicles along with drivers and other maintenance expenses to be borne by the vehicle owners, therefore, the arrangement between the assessee and the vehicle owners is nothing but a contract. Consequently, the payments are covered u/s 194C(2) of the Act. It was the contention of the assessee that it is a mere hiring of vehicles not a sub contract. The assessee further contended that he is involved in the business of transport contract and entered into a contract for carriage of goods with its clients. In the process, he has hired the vehicles in the open market on fixed hire charges and the vehicle owners has provided vehicles without any risk associated with carriage of goods. The assessee further submitted that the entire risk associated with the carriage of goods vest with him, whether vehicles are used or not, the agreed fixed amount has to be paid to the vehicle owners. 11. The assessee contention is that it is mere hiring of vehicles not a contract. To invoke the provisions of section 194C(2), there should be a contract for carrying out any work....
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....he acts and defaults committed by the assessee and/or its employees. It is not established by the Revenue that other lorry owners, from whom the vehicles were hired, have also been fastened with any of the above said liabilities. In a sub-contract, s prudent contractor would include all the liability clauses in the agreement entered into by him with the sub-contractor. The assessee has also claimed before the tax authorities that the responsibility in the whole process lies with it only. Though the passing of liability is not the only criteria to decide about the existence of sub-contract, yet this contention of the assessee read with the liability clauses of the work order supports its submission that the individual vehicle owners are simple hirers of the vehicles. As per the provisions of s. 194C (2), the sub-contractor should carry out the whole or any part of the work undertaken by the assessee. The dictionary meaning of the words "carry out" is to "carry into practice"; "to execute "; "to accomplish". It signifies a positive involvement in the execution of the whole or any part of the main work by spending his time, money, energy, etc, and further taking the risks in carrying ....
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....ovisions of sec. 194C(2) shall not apply to the assessee." 14. Considering the facts and circumstances of the case and also respectfully following the coordinate bench decision of this Tribunal, we are of the opinion that mere hiring of vehicle without any risk associated with the carriage of goods does not amount to carrying out any work or sub contract as defined u/s 194C(2) of the Act. Consequently, hire charges paid for hiring the vehicles are not liable for TDS u/s 194C(2) of the Act. The CIT(A) rightly deleted the additions made by the A.O., by following coordinate bench decision of this Tribunal, in the cases mentioned (supra). We do not find any error or infirmity in the order passed by the CIT(A). Therefore, we are inclined to uphold the order of the CIT(A) and dismiss the appeal filed by the assessee. 15. The cross objection filed by the assessee is supporting the order of the CIT(A). However, the assessee has challenged the action of the A.O., in passing consequential order giving effect to ITAT Order in ITA No.364/Vizag/2008 dated 12.6.2009 and second order dated 21-12- 2010. The A.R. submitted that the A.O. has passed consequential order dated 12.6.2009 to give effe....