IN THE HIGH COURT OF DELHI AT NEW DELHI 
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   ITA 463/2013  
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 THE COMMISSIONER OF INCOME TAX-XII  ..... Appellant 
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 Through:  Mr.Puneet Gupta, Junior Standing 
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 Counsel 
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 versus 
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 MR GURPREET SINGH     ..... Respondent 
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 Through: 
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 CORAM: 
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 HON'BLE MR. JUSTICE SANJIV KHANNA 
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 HON'BLE MR. JUSTICE SANJEEV SACHDEVA 
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 O R D E R 
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    09.10.2013 
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 1.  The respondent is a sole proprietor, Harmony Travels and is a 
 contractor who provides vehicles with drivers to third parties. The 
 respondent assessee had filed return of assessment year 2008-09 declaring 
 income of Rs.5,93,390/-.  No substantial addition to the income was made 
 except an ad hoc addition of Rs.5,042/- on account of  disallowance 
 towards personal telephone expenses. 
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 2.   However, Section 40(a)(ia) was invoked by the assessing officer to 
 make an  addition of Rs.1,42,95,000.51/-.    The entire expenditure of 
 Rs.1,42,95,000/- which was paid to car/taxi owners   was disallowed by 
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 the assessing officer for failure to deduct tax at source at 1% (i.e. Rs.1,42,950/-)   under Section 194 C (2) of the Income Tax Act, 1961. The 
 assessing officer rejected the contention of the assessee that  he had 
 only hired the vehicles; but the drivers, fuel etc. were paid by the 
 assessee and thus Section 194C(2) was not applicable.  Assessing officer 
 held that substance and not form was relevant and determinative. 
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 3.   The aforesaid observation of the assessing officer is contrary to 
 Section 194 C(2)  as the said section applies only when payment is made 
 for carrying out or for supply of labour for carrying out whole or any 
 part undertaken by the Contractor with labour.  Labour is the essential 
 component of a work/ contract under Section 194C(2) of the Act.  The 
 expression ?Work? defined in Explanation 3 refers to carriage of goods 
 and passengers by any mode of transport other than railways. Taking a 
 vehicle/taxi, without driver and fuel is not covered.  The stand of the 
 assessee which has been accepted by the Tribunal is that the respondent 
 assessee had only hired the vehicles and thereafter the vehicles were run 
 by drivers and the fuel expenses were paid directly by the respondent 
 assessee.  The vehicle owners had not provided for fuel and drivers. 
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 4.   Section 194C(2) is applicable when conditions/stipulations 
 mentioned in the section are satisfied and not otherwise.  It is not in 
 dispute that the expenditure of Rs.1,42,95,000.51/- was incurred/paid and 
 is a genuine expenditure. 
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 5.   Learned counsel for the appellant submits that Commissioner of 
 Income Tax (Appeals) in his order has referred to car rentals paid to 
 four parties between Rs.15,000 to Rs.24,000/- per month.  Commissioner 
 (Appeals) had referred to the agreement between the respondent and a 
 third party and the amount payable under the said agreement in support of 
 the findings that the drivers and fuel etc. were paid or provided by the 
 taxi owners and not by the respondent assessee. 
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 6.   The contention has  to be rejected as the agreement between the 
 respondent assessee and third parties as quoted by the Commissioner 
 (Appeals) refers to various additional charges which have to be paid to 
 the respondent assessee towards air conditioning charges,  extra 
 kilometres charges as well as payment on account of (A.A) charges. 
 Neither the assessing officer nor Commissioner (Appeals) had orally 
 examined or asked for written replies/computation from the car 
 owners/taxi owners to verify and ascertain whether they had provided 
 drivers and paid for fuel.  The assessing officer had proceeded and 
 accepted that drivers/fuel was directly provided/paid for by the 
 respondent.  The Tribunal, on the other hand, has specifically referred 
 to the contention of the assessee and voluminous documents to establish 
 that the respondent-assessee had paid for fuel and salary of the drivers. 
 These documents referred to in the order of the Tribunal have not been 
 placed before us in appeal paper book. 
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 The appeal has no merit and is, accordingly, dismissed in limine. 
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 SANJIV KHANNA, J 
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 SANJEEV SACHDEVA, J 
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 OCTOBER 09, 2013/sv 
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 $ 2 
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