Case Law Details
Chandrakant Thackar Vs. Asst. CIT (ITAT Cuttack)
After having analyzed the totality of the facts and circumstances of the case and law in this respect, we are of the opinion that liability for deduction of tax at source of a contractor arises if he has allowed any other person to carry on whole or in part of a contract work taken by the contractor for doing himself and has also fastened liability which may arise as a result of non-performance of such contract meaning thereby that it is only when the contractor, having undertaken to execute the work in the capacity of a contractor, allocates whole or part of the work to somebody else and along with the fastening of liability also, that such other person can be said to be working in the capacity of sub-contractor otherwise not.
So far as the system of working in the line of transporters is concerned, it is quite common that the transporters enters into a contract with the parties for transporting their goods during a specific period and to specified destination but if the transporter is not able to transport the goods in his own truck/vehicle he hires trucks from other transporters or truck owners directly. In case he hires trucks from any other transporter on day-to-day requirement basis then such an arrangement cannot be said to be as a result of written or oral contract. Similarly, if he hires directly from the truck owners the same also cannot be said to be as a result of contract; meaning thereby that a transporter, who has entered into a contract of transport of goods of some parties, is unable to transport the goods in his own vehicle either because he has no sufficient number of vehicles or his vehicles are not available, he has to hire vehicles/trucks either through some other transporter or from truck owners directly, as the case may be. But in this case, the hiring is not a result of written or oral contract. The payments made in consequence of such hiring to the transporter or to the truck owners directly are also not a result of any written or oral contract and it is so because the liability fastened on the transporter (contractor) having entered into contract with the parties for transporting their goods is never fastened either on to the transporter or the truck owners from whom the trucks are hired.
We have no hesitation to accept the stand of the assessee that 106 parties were the truck owners and not transporters. Consequently hiring of their trucks as well as the payments made to them by the assessee, were not in consequence of any written or oral contract.
Having held as above, we are further of the opinion that when hiring of trucks and payment thereof was not in consequence upon any written or oral agreement, the natural outcome is that the provisions of section 194C, as has been held in the decisions referred to herein before, were also not applicable to the assessee’s case and it was so then as held in the aforesaid decisions itself, the assessee’s case was not hit by the provisions of section 40(a)(ia) of the Act.
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Sir my question is that we have hied a truck from a union of transporter having its own PAN but no vehicle in its own name.One vehicle is provided to us by the union. as we have no oral or written contract with the vehicle owner the Section 194C should not be applicable