The appellant is a partnership firm, had entered into contract with
 Aditya Cement Limited  for transporting cement to various places in India. As the appellant was not having the transport vehicles of its own, it had engaged the services of other transportersfor the purpose.  On verifying the  record  the AO observed that while making payment to the truck operators/owners, the appellant had not deducted tax at source even if the net payment exceeded Rs. 20,000/-. The  appellant contended, inter alia, that the trucks hired were belonging to different operators/owners who were not the sub-contractors or contractors; that they came from different parts of India and mostly required cash payment for diesel and other running expenses; that the appellant had no liability to deduct tax at source because it had not made payments exceeding Rs. 20,000/- in a single transaction; and that the provisions of Section 40(a)(ia) were not applicable to the appellant. the AO held  that the payments to different truck operators/owners were made directly by the appellant firm and not the consignor company; that the appellant firm was responsible for transportation of goods of the company asper the contract for which, the appellant received payment from the company after tax being deducted at source therefrom. The AO also held  that the appellant firm paid freight charges to the truck operators/owners from the income so earned; and the remaining amount was shown as commission. AO held that looking to the nature of dealings of the parties where the single payment exceeded the sum of  Rs 20, 000  the amount was disallowed by applying the provision of S. 40(a) (ia) of the Act . Order of the AO is affirmed by the CIT (A) ,Tribunal  and also High Court . On appeal affirming the decision of High Court , the Court held that ,  disallowance u/s 40(a)(ia), 40A(3) etc are intended to enforce due compliance of the requirement of other provisions of the Act and to ensure proper collection of tax as also transparency in dealings. The interest of a bonafide assessee who had made the deduction as required and had paid the same to the revenue is safeguarded. No question about prejudice or hardship arises (ii) Payment made for hiring vehicles for the business of transportation of goods attracts TDS u/s 194C, (iii) Disallowance u/s 40(a)(ia) is not limited to the amount outstanding (“payable”) but also to expenses that had already been incurred and “paid” by the assessee, (iv) Disallowance u/s 40(a)(ia) as introduced by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 is applicable to AY 2005-2006, (v) Benefit of amendment made in the year 2014 to s. 40(a)(ia) is not available to the facts of the appellant  as the appellant has neither deducted the tax at source nor  deposited the tax before filing of the return .  (CA No. 7865 of 2009 dt 29 -07 -2020) ( AY.2005 -06)