TaxTMI 
TaxTMI 
2016 (8) TMI 1046
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....help of Dumpers and Pay Loaders. The assessee owns 14 pay loaders and 14 Dumpers but has to hire dumpers as and when urgency so warrants to keep delivery dates and avoid penalty etc. for late delivery. Out of total hire charges incurred amounting to Rs. 16,17,19,641/-, assessee paid Rs. 11,18,33,541/- to specific parties from whom dumper etc. hired on regular basis and with whom assessee has contracts. Balance Rs. 498,86,642/- was paid to dumper owners/drivers picked from market through brokers and not direct with whom only hire charges to be paid to Dumper Driver is settled with no other condition to be fulfilled. There being no contract as such with such brokers, dumper owners/drivers, no tax at source was deducted as no part of burden of contract the firm has with factory owners whose goods are to be delivered was to be shared by such dumper owners picked from local market. However, as per ld AO, this payment of Rs. 498,86,642/- is covered by section 194C and no tax being deducted, he disallowed the same u/s. 40(a)(ia) of the Act. The assessee submitted that it had also to engage the temporary services of small truck owners/drivers casually in case of urgent requirements and tot....
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....ideration as under. Accordingly, the ld AO proceeded to make disallowance u/s 40(a)(ia) of the Act in the sum of Rs. 4,98,86,342/- for violation of section 194C of the Act . 2.2. The ld CITA appreciated the contentions of the assessee that there was no verbal or written contract entered into with the owners / drivers of these dumpers used on hire by the assessee and hence the provisions of section 194C of the Act could not be applied and accordingly deleted the disallowance u/s 40(a)(ia) of the Act by placing reliance on several tribunal and high court decisions. Aggrieved, the revenue is in appeal before us on the following ground:- "1. Vehicle Hire Charges The Ld. CIT(A) has deleted the disallowance made by the AO u/s. 40(a)(ia). The Ld. CIT(A) held in this regard that no actual contract either written or oral actually existed. But Ld. CIT(A) failed to appreciate the fact that in the business of hiring an implied contract always exist. The moment a vehicle is hired a verbal contract for carriage of goods automatically entered into. Further appeal is therefore suggested on this issue." 2.3. The ld DR vehemently relied on the order of the ld AO and argued that the ld AO....
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.... 2.5. We find that the issue before us is covered by the direct decision of the Hon'ble Jurisdictional High Court in the case of CIT vs Stumm India Supra wherein it was held that :- "It is urged before us that the learned Tribunal ought not to have accepted the judgment and order of the CIT(Appeal) who has quashed the disallowance of deduction of Rs. 41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source. Before us no other point has been urged not it is said that the aforesaid fact finding is truthful without any basis whatsoever." Respectfully following the ratio laid down in the aforesaid judgement , we dismiss the ground no. 1 raised by the revenue. 3. The last issue to be decided in this ....
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....ought to the notice of the assessee also. The Ld. CIT(A) failed to appreciate the facts brought on record by the AO. Further appeal is therefore suggested on this issue." 3.2. The ld. DR vehemently relied on the order of the ld AO and the ld AR vehemently relied on the order of the ld CITA. 3.3. We have heard the rival submissions and perused the materials available on record. We find that the ld CITA had deleted the addition by observing as under:- "6. Ground No.4 :- In this ground the appellant is disputing the A.O. 's action in adding balances due to three sundry creditors. The A.O. 's case is that neither of these 3 creditors had submitted documents to prove their creditworthiness to enter into transactions of the magnitude that they have done with the appellant. Consequently, he has added back the credit balances due to them. The appellant's case is that the A.O. has treated these balances as cash credits and while doing so he has allowed the amounts paid to these parties during the year and has added back only the outstanding balances. The appellant has also mentioned that TDS was made on the payments given to these parties during the year and this fact w....