2014 (5) TMI 1000 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decisions on TDS and Depreciation for 2009-10

The Tribunal upheld the CIT(A)'s decisions regarding the disallowance of TDS deductions and the claim for excess depreciation on vehicles by the assessee ... Amendments made to Section 40(a)(ia) by Finance Act, 2010 - Retrospective effect or Prospective effect - Deletion made u/s 40(a)(ia) of the Act – Existence of contract/sub-contract between assessee and the payee – Obligation to deduct TDS – Held that:- The TDS deducted for the period April 2008 to February 2009 was deposited before the due date of filing of return u/s 139 (1) of the Act – there was no infirmity in the order – Following CIT vs. Naresh Kumar [2013 (9) TMI 275 - DELHI HIGH COURT] - the amendment made to Section 40(a)(ia) by the Finance Act 2010 should be given retrospective effect. Excess depreciation on vehicles – Held that:- CIT(A) rightly was of the view that the Principle laid down in the circular and judicial precedents clearly reiterates intention of legislature to allow benefit of higher depreciation to the persons involved in the business of running motor cars, motor lorries etc. on hire as well as using these vehicle for transporting goods on hire - The word ‘hired’ used by statute was only to indicate that some income should be rendered to taxation by utilization of those assets in fact tippers/trucks were used in appellant’s business of transportation and income from such activity was duly included in business income as appellant had entered into a composite contract - The Tax Auditor has duly certified depreciation claim - the facts are not in dispute in as much as that the assessee entered into a transportation contract with M/s East India Minerals Ltd. for transportation of Iron ore etc. from crusher stockpile to railway sidings which has not been assailed by the revenue by way of any argument on fact or any evidence led to show that a fact has been wrongly taken into consideration, in the absence of the same, the commercial heavy goods vehicles belonging to the assessee have been used for hire for transporting the goods from one place to the other - Considering the Circular No. 652 dated 14/6/1993, the order of the CIT(A) is upheld - Decided against Revenue. Issues:1. Disallowance of TDS under Section 40(a)(ia) of IT Act.2. Addition on account of excess depreciation on vehicles claimed by the assessee.Issue 1: Disallowance of TDS under Section 40(a)(ia) of IT Act:The Revenue filed an appeal against the order of CIT XXVIII, New Delhi for the 2009-10 assessment year, contesting the deletion of the addition made under Section 40(a)(ia) of the IT Act. The Assessing Officer disallowed TDS deductions made by the assessee but deposited in the next financial year. The CIT(A) held that since the TDS was deposited before the due date of filing the return, disallowance under Section 40(a)(ia) was unwarranted. The Tribunal upheld the CIT(A)'s decision, citing the retrospective effect of the amendment to Section 40(a)(ia) based on a judgment by the Jurisdictional High Court. The Tribunal rejected the Revenue's grounds of appeal related to this issue.Issue 2: Addition on account of excess depreciation on vehicles claimed by the assessee:The Assessing Officer disallowed the claim for high depreciation on trucks by the assessee, as no income was declared from letting out the trucks on hire. The CIT(A) overturned this decision, emphasizing that the assessee had used the trucks for its transportation business, saving revenue that would have been incurred by hiring vehicles externally. The CIT(A) relied on circulars and judicial precedents supporting higher depreciation for vehicles used in the business of transporting goods on hire. The Tribunal, after considering the explanations and evidence presented, upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this issue.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions regarding the disallowance of TDS deductions and the claim for excess depreciation on vehicles by the assessee for the 2009-10 assessment year.