TaxTMI 
TaxTMI 
2016 (6) TMI 842
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....case, a survey u/s 133A was conducted on 10.3.2010 and consequently order' u/s 201& 201(1A) for the asst. year 2010-11 were passed on 10.5.2010. Later, these orders had become subject matter before the Commissioner of Income-tax (TDS) in the proceedings u/s 263 of the IT Act. The Commissioner of Income Tax(TDS), Hyderabad had set aside the orders of the AO vide order u/s 263 dated 28/03/2013 directing the AO to complete the 201(1) and 201(1A) afresh. Thus the re-assessment proceedings were completed on 11.3.2014 for the said asst. year by raising a demand of Rs. 1,09,238/-. 3. Consequent to survey, the default on the part of the assessee to comply with provisions of TDS on financial charges paid to certain companies was pointed out. ....
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....e Act, the AO held that that this is a fit case for imposition of Penalty u/s.271C of IT. Act. As per the provisions of section 271C as the assessee failed to adhere to the provisions of TDS under Chapter XVIIB in respect of payments made of Rs. 1,30,25,758/- at the rate of 10% which works out to Rs. 13,02,576 u/s 194A of the I.T. Act in respect of M/s. TML, M/s. SREI and M/s. GE capital as above. According to the AO, the explanation furnished by the assessee in this regard is not acceptable. As such, the assessee was treated as "assessee in default" and held that the penalty provisions are clearly attracted in the case of the assessee. Accordingly, the AO imposed a penalty of Rs. 13,02,576/- u/s 271C being the non-deduction of tax at sourc....
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....ore, the financial charges on hire purchase are not in the nature of interest. The issue in dispute is squarely covered by the decision of the ITAT, Hyderabad in case of M/s R. Balarami Reddy & Co. (supra) wherein the Bench has held as under: "5. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. We find that the issue in dispute whether it is interest or not on hire purchase contract has been decided by the Hon'ble AP High Court in the case of CIT Vs. M/s M.G. Brothers Finance Ltd., vide ITTA Nos. 43,44,45, 50 of 2007 and 761 of 2006, judgment dated 05/12/2013, wherein the Hon'ble Court held as follows: "The owner of the goods, which are usable mo....
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.... hire purchase agreement there is no agreement to buy goods; the hirer being under no legal obligation to buy, has an option either to return the goods or to become its owner by payment in full of the stipulated hire and the price for exercising the option. This class of hire purchase agreement must be distinguished from transaction in which the customer is the owner of the goods and with a view to finance his purchase he enters into an arrangement which is in the form of a hire purchase agreement. In this case, the learned Tribunal had admittedly held that there is a hire purchase agreement factually. Therefore, we affirm the judgment and order of the learned Tribunal. The appeals fail and they re accordingly dismissed." ....