2018 (8) TMI 1357

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the grounds of appeal are related to the disallowance made by the Assessing Officer (AO) u/s 40(a)(ia) of the Income Tax Act (hereinafter called as 'Act'). 3. Briefly stated the facts are that, for the assessment year 2006-07, the assessee filed the return of income declaring total income of Rs. 1,00,000/- and agricultural income of Rs. 25,640/- on 31.10.2006. The assessment was completed on total income of Rs. 3,84,194/- and the assessing officer (AO) made the addition of Rs. 2,25,454/- representing the payment made to the contractors without deduction of tax at source. The assessee had incurred the transport expenses of Rs. 2,74,818/- out of which the payment of Rs. 1,89,055/- was made to M/s South India Roadlines and Rs. 36,999/- mad....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....there is no either express or implied contract with the transporter, hence no application of TDS provisions u/s 194C as well as the disallowance u/s 40(a)(ia) of the Act. For application of provisions u/s 194C, there must be contract between the assessee and the transporter for rendering the services in written or oral contract. Unless the revenue establishes that there exists contract between the assessee and the transporter, there is no case for application of deduction of tax at source u/s 194C of the Act. In this case, the assessee has stated that the assessee has placed an order for supply of the goods which was transported by the supplier and as per the instructions of the supplier, the payment was made. The assessee has neither engag....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ry owners only. We shall elaborate further this point. If a supplier engages lorries to transport goods on his own volition, then it may be said that the contract exists between the supplier and the transport contractor. On the other hand, if he engages the lorries on the instructions of the buyers, then he is acting as the agent of the buyers only and in that case, the contract actually exists between the buyers and the transport contractors. If the buyers themselves engages the lorries for transportation of goods, then there may not be any confusion as to the fact that the contract exists between the buyers and the transport contractors. 8. In the instant case, we notice that the assessees herein have reiterated the fact that the....