Truck owner Registration number not relevant to decide Section 194C applicability

Sri. Shivamurthy Vs Add.CIT (Karnataka High Court)

The action of the revenue in denying the deduction under Section 40 (a) (ia) of the Act on the premise that the aggregate of the truck amount paid by the assessee with the different truck drivers was exceeding Rs.50,000/-cannot be countenanced as the contract cannot be with the trucks, it is with the personnel/driver of the truck/truck operators. The whole attempt made by the revenue to bring the assessee under the ambit of Section 194 C of the Act to deny the deduction under Section 40(a) (ia) of the Act is not supported by the material evidence. The truck operators if not the truck owners, cannot be considered as the sub contractors for the purpose of Section 194 C (2) of the Act. In the circumstances, we deem it proper to set aside the order of the Tribunal as well as the authorities and to restore the matter to the file of the Assessing Officer to reconsider the matter afresh in the light of the observations made herein above. The Assessing Officer shall record a finding after examining the contract if any, entered by the assessee with the truck owners/ operators and an appropriate decision shall be taken in accordance with law.

In the facts and circumstances of the case, it is made clear that the registration number of trucks/truck owner would not be relevant for the purpose of deciding the applicability of Section 194 C of the Act but it is the personnel/truck operator from whom the trucks are hired.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 [‘Act’ for short] challenging the order of the Income Tax Appellate Tribunal “A” Bench, Bangalore [‘Tribunal’ for short] dated 26.08.2016 passed in ITA No.553/Bang/2014 relating to the Assessment Year 2008-­2009, whereby, the Tribunal has dismissed the appeal filed by the assessee confirming the order of the Assessing Officer.

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