In Brief
A transport contractor who received cement transportation contracts engaged truck owners to perform the actual transportation. The contractor received payments from its client with tax deducted at source (TDS) but paid the truck owners without deducting TDS on amounts exceeding Rs. 20,000. The Income Tax Officer disallowed the deduction of these payments under Section 40(a)(ia) for failing to deduct TDS. The Supreme Court held that the truck owners were sub-contractors, requiring TDS under Section 194C. The expression 'payable' in Section 40(a)(ia) covers all TDS-liable payments regardless of whether paid or outstanding. The provision applies to assessment year 2005-2006. The Court dismissed the appeal, confirming disallowance of Rs. 57.11 lakhs for non-compliance with TDS obligations."
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