TaxTMI 
TaxTMI 
2021 (12) TMI 365
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....d on facts in deleting the disallowance of Rs. 5,48,921/- without appreciating the fact that the additional discount given is by way of godown ent and therefore, the assessee is under obligation to deduct TDS under section 1941 of the Act which the assessee failed to comply? [C] Whether the Appellate Tribunal has erred in law and on facts in deleting the depreciation on car and car expenses of Rs. 34,63,547/- without appreciating the fact that the car purchased in the name of director cannot be said to be assets of the company" 2. The Income Tax Appellate Tribunal ("the Tribunal" for short) passed an order dated 02.03.2021 in ITA No.1531/Ahd/2015 for the Assessment Year 2011- 12. There were cross appeals being ITA No.1397/Ahd./2015. Against the order of the Tribunal passed in ITA No.1091/Ahd./2015, Tax Appeal No.244 of 2021 has been preferred before this Court by the appellant original respondent. 3. The first question raised herein is identical, except for the amount of disallowance. This Court, while deciding the Tax Appeal No.244 of 2021, dealt with the same in following manner: "2.The respondent assessee filed return on 30.09.20130 declaring total income....
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....ran Sanghani, learned advocate for the appellant and Mr. B.S.Soparkar, learned advocate for the opponent. 8.The issue is covered by the decision of this Court rendered in the case of Commission of Income-tax-I vs. Valibhai Khanbhai Mankad, [2012] 28 taxman.com 119(Gujarat), where the issue was again with regard to payment to the contractor and requirement of deduction of TDS. Relevant paragraphs are reproduced as under: "3) We have heard the learned counsel for the Revenue as well as for the assessee. Section 194C of the Act, as is well known, pertains to payments to contractors. Sub-section (1) of section 194C, as it stood at the relevant time, required that any person responsible for paying any sum to any resident, contractor for carrying out any work in pursuance of a contract between the contractor and the specified entities, shall credit specified sum as income tax on income comprised therein. Likewise, sub-section (2) of section 194C required a person responsible for paying any sum to resident-sub-contractor to deduct tax at source under given circumstances. It is not in dispute that ordinarily the assessee was required to make such deduction on the payments made to ....
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.... in computing the income chargeable to tax under the head 'profits and gains of business or profession', namely, payments made towards interest, commission or brokerage etc., on which tax is deductible at source and such tax has not been deducted or, after deduction, the same has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act. Section 40(a)(ia) of the Act, insofar as it is relevant for our purpose, reads as under:- "Section 40(a)(ia):- Any interest, commission or brokerage, [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub-section (1) of section 139:]" 5) From the above statutory provisions, it can be seen that under section 40(a)(ia) of the Act, payments made towards interest, commission or brokerage etc. would be excluded for deduction in comp....
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....by the end of June of the next accounting year in question. 9) In our view, therefore, once the conditions of further proviso of section 194C(3) are satisfied, the liability of the payee to deduct tax at source would cease. The requirement of such payee to furnish details to the income tax authority in the prescribed form within prescribed time would arise later and any infraction in such a requirement would not make the requirement of deduction at source applicable under sub-section (2) of section 194C of the Act. In our view, therefore, the Tribunal was perfectly justified in taking the view in the impugned judgment. It may be that failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfillment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act. 10) When on the basis of the record it is not disputed that the requirements of further proviso were fulfilled, the assessee was not required to make any deduction at source on the payments made to the subcontra....
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....n the mind of the Revenue when the Tribunal has remanded the matter to the Assessing Officer to consider whether the assessee has filed form no. 26(Q) belatedly and to examine as to whether the fee has to be collected. We find that there is no ground to interfere with the order passed by the Tribunal. 9. Ms.V.Pushpa placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Valibhai Khanbhai Mankad reported in [(2014) 51 Taxmann.com 385 (SC)] where the Hon'ble Supreme Court has granted leave to file appeal by the revenue against the order passed by the Gujrat High Court in CIT Vs. Valibhai Khanbhai Mankad reported in [(2012) 28 Taxmann.com 119]. In the said decision the High Court of Gujarat held that once conditions of proviso to Section 194(C)(7) are satisfied, liability of payer to deduct taxes at source would cease and consequently, disallowance of payment of subcontractor under Section 40(a)(ia) could not be made on the ground that the assesee had not furnished form no.15J as required under Rule 29D. We find that the said decision is of no assistance to the case of the Revenue. 10. Mr.A.S.Sriraman, learned counsel for the assessee refe....
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....aid by the said parties. According to the assessee, the customers did not take the delivery of the goods in their own godown after the purchase and the goods would continue to be at the godown of the assessee till the customer sells the goods to the other parties. However, five persons to whom the deduction had been given by the assessee had taken the delivery of the goods to their own godown and, therefore, they were given the discount for the godown rent paid by them, on the ground that these parties were located in Mumbai and they also owned the godown. The Assessing Officer had chosen not to allow the payment made to them as according to him, the discounts were for rent, which required deduction of tax under section 194(1) of the Act, and, therefore, this discount had been added to the total income of the assessee. 7. The CIT(Appeals) deleted the addition. The CIT(Appeals) had directed to verify the contention of the Revenue and modify the above and subject to verification, disallowance of the amount was deleted. 8. When challenged before the Tribunal, it held that the discount offered by the assessee to its parties had been disallowed on two counts. Firstly, that they we....
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.... Assessing Officer also held and observed that the depreciation was denied in the year 2010-11, as the assessee failed to establish the same on producing the documentary evidence. He thus, disallowed the depreciation, RTO expenses and insurance charges of all the three cars. The same was challenged by the assessee before the CIT(Appeals). 15. The CIT(Appeals) held in favour of the assessee by holding thus: "20. Aggrieved assessee preferred an appeal before the learned CIT(A) who allowed the appeal of the assessee by observing as under: Having considered the facts of the case I am inclined to accept the contentions of the Ld.A.R. as admitted by the A.O himself the funds for purchase of the car were provided by the appellant. The Hon'ble Supreme Court in the case of Mysore Minerals Ltd. vs. C.I.T 239 ITR 775(S.C.) has held that the section of the I.T.Act, 1961, confers a benefit of the assessee. The provision should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee to secure the benefit intended to be given by the Legislature to the assessee. It was further held by the Hon'ble Supreme Court that the....