TaxTMI 
TaxTMI 
2019 (5) TMI 17
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.... of expenses of Rs. 3,22,529/- made by the appellant to its associated enterprises was not an incomechargeable to tax and hence, the appellant was not required to deduct tax at sourcethereon under section 195 of the Act. Consequently, ought to have directed the AO todelete the disallowance ofRs. 3,22,529/- made under section 40(a)(i) of the Act. 2. Additions made to the income returned solely relying on the information containedin Form No.26AS - Rs. 84,33,029/-: 2.1 On the facts and circumstances of the case and in law, the Learned Commissioner ofIncome Tax (Appeals) ought to have heldthatthe amounts as per books and as appearingin Form 26AS stand duly explained and accordingly, ought to have directed the AO todelete the following additions made: Sr. No. Name of the Party Amount (Rs.) (i) Glaxo Smithkline Consumers Health Care Pvt. Ltd. 63,08,029/- (ii) Nova Medical Centre Pvt. Ltd. 21,25,000/- Total 84,33,029/- Without prejudice to the above and in the alternate 2.2 On the facts and circumstances of the case and in law, the Learned Commissioner ofIncome Tax (Appeals) ought to have heldthat additions ....
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....cts and circumstances of the case and in law, the Commissioner of Income Tax(Appeals) through inadvertence has stated that the car hire charges of Rs. 2,92,000/- wasinadmissible under section 40(a)(ia), notwithstanding the fact that tax thereon has beendeducted at source (under section 194-I) and the said amount was not subject matter ofdisallowance by the AO and further accordingly the AO should be directed to ignore thedirections of the Ld. C1T(A) as regards the disallowance of Rs. 2,92,000/- in respect ofthe same. 3. It is humbly prayed that the reliefs as prayed for hereinabove should be granted. 4. The Appellant craves leave to amend or alter any ground or add a new ground which maybe necessary." 4. The grounds raised by the assessee for Assessment Year 2014-15 in ITA No. 1493/Bang/2018 are as under. "1. Disallowance of Car Hire charges of Rs. 1,50,000/- U/s 40(a)(ia) of the Act: On the facts and circumstances of the case and in law, the Commissioner of Income Tax(Appeals) ought to have heldthat the provisions of Section 194-I apply to car hire chargesfor deduction of tax at source and not Section 194-C and consequently, ought to havedire....
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....voking the provisions of Section 40(a)(i) of the Act. During the appellate proceedings the appellant could not establish that the expenses are reimbursable by the Associated Enterprises and therefore the provisions of Sec. 40(a)(i) of the Act cannot be invoked. Therefore, the addition made u/s. 40(a)(i) is hereby upheld." 10. From the above Para reproduced from the order of CIT (A), it is seen that the order is very cryptic. On page no. 22 of the paper book for Assessment Year 2012-13, the invoice is available in respect of Hong Kong Dollars 31,123 equivalent to Rs. 2,08,350/-. Similarly on page no. 29 of the paper book is the copy of another invoice for Great Britain Pound (GBP) 1,360.95 equivalent to Rs. 1,14,180/-, total amount of these two invoices in Rupees terms comes to Rs. 3,22,530/-. We fail to understand what is the objection of CIT (A) and what is the basis of his decision as per para 5 reproduced above. 11. The issue regarding addition of Rs. 84,33,029/- was decided by CIT(A) as per Para 6 of his order for Assessment Year 2012-13. For the sake of ready reference, this para is reproduced hereinbelow. "6. Ground no.2 is on the additions made to the income r....
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.... the disallowance of car hire charges ofRs,4,45,600/- u/s.40(a)(ia)of the Act. During the appellate proceedings the appellant submitted that it had taken on lease cars without any driver or any services and it had entered into agreements for car lease. As per the terms of the agreements the respective parties are not required to provide any services but it is the appellant who shall be using the vehicle on its costs. The agreements do not require the owner of the vehicle to do any work at all. The appellant pays a fixed sum for obtaining the car on lease. Section 194C contemplates for work being done and work is defined as including carriage of goods or passengers by any other mode of transport other than by railways. However, since no work is carried out by the vehicle owners, the provisions of Section 194C do not get attracted. As against the same, Section 194 I specifically contemplates liability with any person paying rent to deduct tax for use of any machinery or plant or equipment. Hence provisions of Section 194I gets attracted where an assessee takes machineries on lease and pays rent for the same. The appellant submitted that the payment for use of car gets covered u/s. 19....