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of <h1>Tribunal overturns tax disallowance on vehicle hire charges, assessee's appeal successful.</h1> <h3>Shri Govind Singh, S/o. Shri Jaswant Singh, Versus Income Tax Officer 3 (2), Mathura.</h3> Shri Govind Singh, S/o. Shri Jaswant Singh, Versus Income Tax Officer 3 (2), Mathura. - TMI Issues involved:The appeal filed by the assessee against the order passed by the Ld. CIT(A)-I, Agra for the Assessment Year 2007-08. The main issue raised by the assessee is the disallowance of `24,96,000/- u/s 40(a)(ia) of the Income Tax Act, 1961.Details of the Judgment:Applicability of Section 194-C and 194-I:The assessee derived income from plying passenger vehicles and had taken contracts for providing and operating passenger vehicles on hire basis. The Assessing Officer disallowed the claim of `24,96,000/- under section 40(a)(ia) of the Act, stating that the assessee was liable to deduct tax u/s 194C but failed to do so. Additionally, the Assessing Officer viewed that section 194-I is applicable due to the amended provision from 13.07.2006. The CIT(A) confirmed the disallowance under section 40(a)(ia) based on section 194-I. However, the Tribunal found that section 194-I was wrongly applied as it does not cover vehicle hire charges. The order of the I.T.A.T. in a similar case supported the assessee's position, leading to the deletion of the demand and interest. The Tribunal held that section 194-I was not applicable to vehicle hire charges, and thus, the addition made by the Assessing Officer was deleted, resulting in no disallowance under section 40(a)(ia).Conclusion:The Tribunal allowed the appeal of the assessee based on the findings that section 194-I was wrongly applied to vehicle hire charges, leading to the deletion of the addition made by the Assessing Officer. Therefore, no disallowance was warranted under section 40(a)(ia) of the Act.
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