4. The CIT (Appeals)-VI, Hyderabad, by order dated 13-012011 allowed the appeal in respect of interest debited to the Profit and Loss Account of Rs.8,633/- and also disallowance of the lorry freight charges of Rs.43,29,444/- relying on the decision of the ITAT, Visakhapatnam in the case of Mythri Transport Corporation reported in 124 ITD 40. In the said case the Tribunal had held that as per the provisions of Section 194-C (2) of the Act, the sub contractor should carry out the whole or any part of the work undertaken by the assessee, that the lorry owners engaged by the assessee in the said case did not involve themselves in carrying of any part of the work undertaken by the assessee by spending their time, energy or by taking risks associated with the main contract work and therefore the payments made to the lorry owners is similar to simple payments made towards salaries, rent etc. It held that payments made for hired vehicles would not fall in the category of payment towards a sub contract with lorry owners and therefore the assessee was not liable to deduct tax at source as per the provisions of Section 194-C (2) of the Act on the payments made to the lorry owners for lorry hire. Consequently, the provisions of Section 40 (a) (ia) of the Act will not apply to such payments.
