S.194C is not applicable in absence of any contract and consequently, disallowance u/s 40(a)(ia) is unwarranted:

AO made disallowance u/s 40(a)(ia) in respect of freight charges paid to truck owners without deducting tax u/s 194C. The said disallowance was deleted by CIT(A). On revenue’s appeal, Hon’ble ITAT observed that the assessee was engaged in the business of transportation of goods by trucks. The said work was carried out by trucks owned by the assessee as well as trucks hired from other truck owners. Assessee merely hired the trucks of other truck owners and duties of such truck owners were restricted to the extent of transporting goods from one place to another. Neither such truck owners were ever confronted with the main contractor of the company nor did they step into the shoes of the assessee before them. They were not at all sub-contractors acting on behalf of the assessee in respect of main contract undertaken by the assessee from the main contractor. Also there didn’t any exist any written or oral agreement between the assessee and such truck owners. Further, the arrangement between the assessee and the companies was such that the assessee was alone responsible for executing such contracts without any right of sub-contract. During the transit of goods through such trucks not owned by the assessee, entire risks and rewards lie with the assessee. Such truck owners have not contributed to any work over and above rendering trucks on hire along with drivers. Hence, it was held that provisions of S.194C shall not come into play and consequently, no disallowance u/s 40(a)(ia) is called for.

[ACIT vs. Chartered Logistics Ltd. – IT(SS)A Nos.115 to 118/Ahd/2013 &

 ACIT vs. Gyanchand Gandhi HUF - IT(SS)A Nos.111 to 114/Ahd/2013]