Case Law Details
Adhunik Khanan VA Parivahan Theka Sahakari Samiti Limited Vs ITO (ITAT Jodhpur)
Introduction: In a landmark decision by the ITAT Jodhpur in the case of Adhunik Khanan VA Parivahan Theka Sahakari Samiti Limited Vs ITO, a significant clarification was made regarding the applicability of TDS under Section 194C of the Income Tax Act. The ruling emphasized that for the purpose of TDS exemption under this section, the possession of transport vehicles is deemed sufficient, rather than their legal ownership.
Detailed Analysis
The Case Background: The appeals were filed by Adhunik Khanan VA Parivahan Theka Sahakari Samiti Limited against the order of the National Faceless Appeal Centre (NFAC), Delhi. The dispute revolved around the deduction of TDS on transportation payments made to various persons who were not the legal owners of the vehicles. The core issue was whether the term “owns” under Section 194C(6) of the Income Tax Act, 1961, refers to legal ownership or beneficial ownership (possession).
Legal Framework and Tribunal’s Reasoning: The tribunal examined the provisions of Section 194C(6), which exempts from TDS deduction, payments made to contractors engaged in the business of plying, hiring, or leasing goods carriages who own ten or fewer goods carriages. The tribunal referenced Section 44AE of the Act, which presumes income for businesses engaged in hiring, leasing, or plying goods carriages based on the number of vehicles possessed, not necessarily owned.
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