Section 40(a)(ia) applies only to sums payable at year-end, while higher depreciation and diesel expense relief were upheld.

Section 40(a)(ia) was held inapplicable to hire charges that had been paid during the year and were not outstanding at year-end, so the disallowance was deleted. For repair, maintenance, tyres and tubes expenses, the absence of complete bills and vouchers justified a restricted disallowance, and the appellate restriction was sustained. Higher depreciation on trucks, trailers, excavators and similar equipment was allowed on the view that, by functional use, they could qualify as plant and machinery. The deletion of disallowance for diesel expenses was also upheld because the expenditure was found to have been incurred for business purposes. The result was partial relief to the assessee.

---

---

Issues: (i) Whether disallowance under section 40(a)(ia) could be sustained in respect of hire charges paid during the year when no amount remained payable at year end. (ii) Whether disallowance for repair, maintenance, tyres and tubes and related expenses could be sustained for non-production of bills and vouchers. (iii) Whether higher depreciation was allowable on trucks, trailers, excavators and similar equipment. (iv) Whether deletion of disallowance relating to diesel expenses was justified.

Issue (i): Whether disallowance under section 40(a)(ia) could be sustained in respect of hire charges paid during the year when no amount remained payable at year end.

Analysis: The assessee's case was that the disputed amounts had been paid during the year and nothing remained outstanding at the close of the year. The Tribunal accepted the view that section 40(a)(ia) was attracted only where the relevant sum remained payable or outstanding at year end, and relied on the principle that where two views are possible, the one favourable to the assessee should be adopted.

Conclusion: Decided in favour of the assessee. The disallowance of hire charges under section 40(a)(ia) was deleted.

Issue (ii): Whether disallowance for repair, maintenance, tyres and tubes and related expenses could be sustained for non-production of bills and vouchers.

Analysis: The expenses were disallowed because supporting bills and vouchers were not fully produced. The Tribunal held that while absence of complete vouchers may justify some restriction, it did not warrant total disallowance of the expenditure claimed, particularly when the business had already disclosed reasonable profit and the appellate authority had already restricted the disallowance.

Conclusion: Decided against the assessee. The disallowance restricted by the first appellate authority was upheld.

Issue (iii): Whether higher depreciation was allowable on trucks, trailers, excavators and similar equipment.

Analysis: The Tribunal followed the view that such equipment, depending on their functional use, could be treated as plant and machinery rather than ordinary transport vehicles for depreciation purposes. On that basis, the appellate direction allowing higher depreciation was sustained.

Conclusion: Decided in favour of the assessee. The allowance of higher depreciation was upheld.

Issue (iv): Whether deletion of disallowance relating to diesel expenses was justified.

Analysis: The first appellate authority had accepted the claim on the basis of the remand materials and found the expenditure to be incurred for business purposes. The Tribunal found no reason to interfere with that factual finding.

Conclusion: Decided in favour of the assessee. The deletion of the disallowance relating to diesel expenses was upheld.

Final Conclusion: The assessee succeeded on the principal TDS issue and on the depreciation and diesel expense issues, while the disallowance for unsupported repair and maintenance expenses was sustained, resulting in a partial relief to the assessee and dismissal of the revenue's appeal.

Ratio Decidendi: Section 40(a)(ia) was held to apply only to amounts that remained payable at the close of the year, and not to sums already paid during the year.

---