TaxTMI 
TaxTMI 
2022 (11) TMI 178
X X X X Extracts X X X X
X X X X Extracts X X X X
....213 & 222/2018-19/CIT(A)-15; dated 29.03.2019. Assessments for these three Assessment Years are made by the Income Tax Officer, Corporate Ward - 6(2), Chennai u/s.143(3) r.w.s.147 of the Act vide orders of different dates, i.e. 31.12.2018 and 26.12.2018. 2. The first common issue in these five appeals is as regards to the order of the Commissioner of Income Tax (Appeals) in confirming the action of the Assessing Officer in disallowing the expenses claimed by the Assessee without deduction of Tax Deducted at Source [TDS] and thereby the Assessing Officer invoked the provision of Section 40(a)(ia) of the Act and made a disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc. The Assessing Officer made the following disallowance by invoking the provisions of Section 40(a)(ia) of the Act for non-deduction of TDS and in the following Assessment Years. Assessment Years 2012 - 2013: Sl. No. Particulars Amount [1] Office rent paid to Directors 12,00,000.00 [2] Payment made to Hypercube Architect 2,28,970.00 [3] Director r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and to Mr. Rathinavel amounting to Rs.6,00,000/- and for the rest of the disallowance, i.e. office rent paid to the Directors amounting to Rs.12,00,000/- and the payment made to the Hypercube Architect amounting to Rs.2,28,970/- and interest paid to Shri Ganesh (Director) amounting to Rs.14,27,080/-, he has instructions from the assessee not to press these disallowances. Accordingly, the Assessee is not interested to prosecute these disallowances for the reason that these are debatable issues and hence he is ready to pay the taxes on the same. The learned Counsel for the Assessee before us stated that the payments of remunerations to the Directors are not subject to TDS and consequentially the same are not subject to rigors of Section 201 of the Act for the reason that the Assessee had disclosed the income with respect to these two amounts received and included the same in the return of income filed by these two recipients and paid the taxes due thereon. The learned Counsel for the Assessee further stated that these two Directors, Mr. Ganesh and Mr. Rathinavel had disclosed the remuneration received from the Assessee in their individual income tax returns and discharged the taxes ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r is restored back to the file of the Assessing Officer for limited purpose of verification of facts, as to whether the recipients have disclosed the remunerations received on the salaries received from the Assessee in their individual tax returns and discharged the taxes payable there under in terms of the second proviso to Section 40(a)(ia) of the Act or not? The Assessing Officer will accordingly allow the claim after verifying the same. Thus, this common issue in all these years is allowed partly as indicated above. 7. The next common issue in all these five appeals of the Assessee is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in disallowing the claim of depreciation and expenses on motor vehicles, i.e insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Directors of the Assessee Company. 8. The brief facts are that the Assessing Officer had disallowed the following motor vehicle expenses in the following Assessment Year's-: Particulars A.Y 2012-13 A.Y 2013-14 A.Y 2014-15 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Trib.) 236 (ITAT [Mum]), wherein it is held as under: "32. We have heard the parties on this issue and perused the record. We noticed that the Hon'ble Gujarat High Court has considered identical issue in the case of the Commissioner of Income Tax Vs. Aravali Finlease Limited [2012] 341 ITR 282 (Guj) and has taken the decision that the depreciation is allowable in the hands of the company, even if it is registered in the name of its Director provided that the vehicle is used for the purpose of business of the company and income derived there from was shown as income of the company. In the instant case there is no dispute with regard to the fact that the vehicles are used for the purpose of business of the Assessee Company. In the case of the Commissioner of Income Tax Vs. Basti Sugar Mills Company Limited [2002] 257 ITR 88 (Delhi), the Hon'ble Delhi High Court approved the decision of the Tribunal in holding that since the vehicle is a movable asset, the registration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. In the instant case, the funds for purchase of vehicles have been provided by the Assessee Company and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition, no disallowance can be made on this count. Hence, this ground of the Assessee is decided in favour of the Assessee in both the Assessment Years. Thus, this issue in the Assessee's appeal is allowed. 13. The next issue for the Assessment Year 2016 - 2017 is as regards to the disallowance u/s.37(1) of the Act, confirmed by the Commissioner of Income Tax (Appeals) that is made by the Assessing Officer amounting to Rs.60.00 lakhs in respect of the payment titled "Pannallur Minister Expenses". 14. The brief facts are that the Assessing Officer on verification of the impounded books of accounts noticed that on 03.11.2015, the Assessee has made a payment of Rs.60.00 lakhs which is entered as cash paid towards the "Pannallur Minister Expenses". The Assessing Officer had brought out this in his assessment order as under: Date Particulars Vch. Type Vch. No. Debit 03.11.2015 Cr. Ganesh Imprest: Cash paid towards Panallur Minister Expenses details overleaf through Ganesh unoffi total 1,74,00,000/- already 4,00,000/- add Rs.60,00,000/- balance Rs.1,10,00,000/- (50.00 Lakhs singing of Minister and Rs.60.00 Lakh go singing tharanum) Journal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces of the case, we noted that the addition that was made of Rs.64.00 lakhs should be restricted to Rs.60.00 lakhs only for the reason that the payment of Rs.60.00 lakhs made to the Minister on 03.11.2015, i.e. "Pannallur Minister Expenses" is clearly hit by the Explanation 1 of Section 37(1) of the Act. We affirm the findings of the lower authorities and this issue in the Assessee's appeal is dismissed. As regards to the addition of Rs.4.00 lakhs, the Assessing Officer will verify as to whether this Rs.4.00 lakhs is already considered in the payments disallowed of Rs.18,04,800/- and accordingly he will decide the claim of the Assessee after verification. Thus, this issue in the Assessee's appeal is partly allowed. 18. The next issue in these appeals for the Assessment Years 2015 - 2016 and 2016 - 2017 is as regards to the disallowance in respect of the interest payment u/s.40A(3) of the Act. 19. The brief facts are that the Assessing Officer during the course of the assessment proceedings has made the following disallowance by invoking the provisions of Section 40A(3) of the Act being payment exceeding Rs.20,000/- as mandated under the said Section, as under: A.Y. 201....