|Mr. X pays freight charges of Rs. 3,00,000 in a year to ABC Pvt. Ltd, whose business is only to arrange truck owned by different persons. The said companies does not own any truck but acts only as a commission agent. The buyer of goods pays freight charges to the said company and obtain its PAN.
Now, whether payer is liable to deduct tax u/s. 194C of the Act while mak-ing payment to the said company, not knowing who is the owner of the truck and whether such person owns more than 10 trucks? If not wheth-er any declaration from the Transport Agent needs to be obtained in terms of amended Sec. 194C w.e.f. June 01, 2015.
|From the query, it is clear that a payer, is seeking help from the company, for arrangement of trucks from others. The company does not own any truck therefore it is only entitle for commission. Hence, the payer is paying to the company not for carrying out any work.
Explanation to section 194C(iv) clarifies that “work” would include
“(c) carriage of goods or passengers by any mode of transport other than rail-ways”
Thus, from the query, it is manifest tht the company does not carry any goods or passengers, it only arranges trucks for carriage of goods. So, no tax is required to be deducted by the payer.
A similar question arose in the case of payee before the Delhi High Court in CIT v. Hardarshan Singh [350 ITR 427]. In that case, the facts were, the assessee had lorry booking business. In that business there was no privity of contract for carriage of goods. On these facts, the Court held that the assessee had collected the freight charges from the clients who intended to transport their goods through separate transporters. The entire amount collected from the clients was paid to transporters after deducting commission from the amount. Thus the Tribunal was justified in holding that the contract was between the assessee’s clients and the transporters and that the assessee had mainly acted as a facilitator as an intermediary. Therefore, no tax is required to be deducted while making payments to the assessee, on the basis of CIT v. Cargo Linkers [179 Taxman 151 (Del)].
Similarly, in the present query, Mr. X is not liable to deduct the tax while making payments to ABC Pvt. Ltd.. Accordingly, it is not necessary that facilitator should obtain any declaration from transporter.
Similarly, Mr. X is not liable to deduct the tax while making payments to ABC Pvt. Ltd.
|CA. H. N. Motiwalla
|Contractor, freight charges, tax deducted at source
Opinion Of Eminent Legal Luminaries On Controversial Issues
Whether TDS Is Required To Be Made To A Person Who Arranges Trucks For The Assessee?
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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