2008 (11) TMI 703 - AT - Income Tax

Tribunal Upholds CIT(A) Decision: Disallowance, TDS Discrepancy, Interest Charges

The Tribunal upheld the CIT(A)'s decision on all counts, including the disallowance u/s 40(a)(ia) for vehicle hire charges, the addition for the ... - Issues Involved:1. Disallowance u/s 40(a)(ia) for vehicle hire charges.2. Discrepancy in total receipts as per TDS Certificate.3. Charging of interest u/s 234B.Summary:1. Disallowance u/s 40(a)(ia) for vehicle hire charges:The assessee contested the disallowance of Rs. 79,45,225 u/s 40(a)(ia) for vehicle hire charges, arguing that the hire of vehicles did not constitute a transportation contract u/s 194C. The assessee claimed that vehicles should be classified as 'machinery' per section 32 and the depreciation schedule. The CIT(A) and Assessing Officer (AO) considered the vehicle hire as a transportation contract, thus requiring TDS deduction. The Tribunal upheld the CIT(A)'s view, stating that hiring vehicles for business purposes falls under a transport contract, making the disallowance u/s 40(a)(ia) valid.2. Discrepancy in total receipts as per TDS Certificate:The assessee disputed the addition of Rs. 6,82,968 due to a discrepancy between the total receipts in the TDS Certificate and the amount reported in the profit and loss account. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's books were maintained on a mercantile basis, and the receipts as per the TDS Certificates should have been included in the income. The Tribunal found no merit in the assessee's argument for reconciliation and confirmed the addition.3. Charging of interest u/s 234B:The assessee challenged the charging of interest u/s 234B, arguing that the additions were debatable and not anticipated. The Tribunal upheld the CIT(A)'s decision, stating that the levy of interest u/s 234B is mandatory and must be applied as per the Income Tax Act.Conclusion:The Tribunal dismissed the appeal, affirming the CIT(A)'s order on all counts. The disallowance u/s 40(a)(ia) for vehicle hire charges, the addition for the discrepancy in TDS receipts, and the charging of interest u/s 234B were all upheld.