By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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38 Assessee engaged in Transportation of
goods — No contract between assessee and the agents/suppliers who enabled the
assessee get the truck hired, but with the truck owners and drivers — Deduction
of tax u/s.194C — Held, Not applicable.
Facts :
The assessee company is engaged in the business of
transportation of goods for various clients all over India on a contract basis.
The AO, subsequent to survey action u/s.133A, concluded that the appellant had
not deducted taxes properly on payments made to truck owners or agents in
accordance with the provisions of S. 194C. The assessee had made total payments
of Rs.17,08,39,119 to various parties whose trucks were engaged. The AO
estimated an ad hoc 90% of the total payment as payment exceeding
Rs.20,000 and computed tax liability thereon @ 1% + 2% surcharge. Further, he
also levied interest u/s.201(1A). The CIT(A) deleted the demand raised by the
AO, stating that the provisions of S. 194C were not applicable.
On appeal to the Tribunal, it was held that :
1. From various correspondences and confirmations, it is
clear that the suppliers/agents were contacted for reference purposes only and
the negotiations for a particular destination were made with the truck
drivers/owners and not with the suppliers/agents.
2. Further, no contracts were entered into between the
assessee and agent/supplier, but were entered into with the truck
owners/drivers. In addition, no payments exceeding Rs.20,000 were made to
truck owners/drivers and where the payment so exceeded, tax has been
appropriately deducted at source and deposited into the treasury.
3. Further, Circular 715 issued by the CBDT was squarely
applicable to the facts and thus, it was clear that if the contracts are with
the truck owners/drivers and GR is separate, then the payment made for the
truck has to be a separate payment. Consequently, it cannot be said that there
was contract with the suppliers and not with the truck owners/drivers. Hence,
the CIT(A) was held right in stating that the provisions of S. 194C were not
applicable.
Case referred to :
City Transport Corporation v. ITO, [(2007) 13 SOT 479 (Mum.)]
