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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assesseeby: Shri S. L. Jain Revenue by: Shri M. C. Omi Ningson सुनवाईकीतारीख / Date of Hearing: 22.11.2016 घोषणाकीतारीख /Date of Pronouncement: 23.12.2016 आदेश / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 28.01.2016passed by the Commissioner of Income Tax (Appeals) - 20, Mumbai [hereinafter referred to as the “CIT(A)”]relevant to the assessment year 2012-13.
2. The assessee has raised the following grounds:-
ITA No.2743/Mum/16 A.Y.2012-13 “1. The learned Commissioner of Income Tax (Appeals) erred in confirming disallowance as made by Ld. Assessing Officer of Rs.1,68,000/- under the provisions of Sec.40(a)(i) on the plea that Car rent of Rs.1,68,000/- paid to M/s. Shree Balaji Enterprises is not the rent falling u/s.194I, but it is a contractual payment falling u/s.194C, on which no TDS is deducted without properly appreciating the facts of the case and law applicable thereto.
The Learned Commissioner of Income Tax (Appeals) failed to appreciate that the assessee paid only rent for the car and car was provided without any driver and all the costs of running of the car are incurred by the assessee company. Hence, annual rent paid is not contractual payment u/s.194C, but is rent paid falling u/s.194 I of the Act.
The appellant pray the disallowance of Rs.1,68,000/- be deleted.
3. The brief facts of the case are that the assessee filed the return of income on 21.09.2012 declaring total income to the tune of Rs.6,97,510/-. The return was processed u/s.143(1) of the Income Tax Act, 1961( in short “the Act”). Subsequently, notice u/s.143(2) of the Act dated 06.09.2013 was issued and served upon assessee. Thereafter, the notice u/s.142(1) of the Act along with annexure calling for information and documents were issued and served upon the assessee. The assessee company deals in providing industrial labour on contract basis. During the year under consideration, the assessee disclosed the contract income of Rs.1,10,54,108/- received from Samrudh Packaging Pvt. Ltd. and Samrudh Pharmaceuticals. The assessee has claimed the car rent expenses to the tune of Rs.1,68,000/- which was disallowed by the Assessing Officer on the A.Y.2012-13 ground of that the assessee was under obligation to deduct the TDS @ 2% as per the provision of section 194 C of the Act. The assessee filed an appeal before the CIT(A) who confirmed the said addition, therefore, the assessee has filed the present appeal before us. ISSUE NO.1 TO 3:- 4. All the issues are in connection with the disallowance of car expenses to the tune of Rs.1,68,000/-. The learned representative of the assessee has argued that the assessee paid the rent u/s.194 I of the Act and the assessee did not pay any contract payment u/s.194 C of the Act but the Assessing Officer has applied the provision u/s.194 C of the Act wrongly and illegally, therefore, the car expenses to the tune of Rs.1,68,000/- is liable to be allowed in view of the provision u/s.194I of the Act and also placed reliance on the law settled in DCIT Vs. Satish Agrawal & Co. 124 TTJ 542 (Agr) and ACIT Vs. Accenture Services (P) Ltd. 44 SOT 290 (Mum) and ITO (TDS) Vs. Indian Oil Corpn 13 ITR (T) 79 Delhi and Hindustan Coca Cola Bevarges (P) Ltd. Vs. CIT 293 ITR 226 (SC). On the other hand, learned departmental representative has placed reliance on the order passed by the CIT(A) in question. Keeping in view of the argument advanced by the learned representative of the parties and perused the record, it came into the notice that the appellant has taken the motor car on monthly rental basis from M/s. Shree Balaji Enterprises and credited an amount of Rs.1,68,000/- in the account of the party. It is A.Y.2012-13 the contention of the assessee that the amount was not exceeding to the tune of Rs.1,80,000/- no TDS was required to be deducted u/s.194I of the Act, therefore, the case of the assessee falls in view of the provision u/s.194I of the Act. The contention of the assessee is also that the assessee hired the car without any service and driver and paid an amount of Rs.1,68,000/- as rent, therefore, the provision u/s.194C of the Act is not applicable. As per the contention raised by the assessee, it is to be seen whether the assessee has taken the car on rent or the car on rent with driver and other services etc. for the application of the proper provision.
The assessee has placed reliance upon the audited accounts which lies at page 1 to 8 of the paper book in which the assessee has shown the rent paid in connection with the car. M/s. Shree Balaji Enterprises in his balance sheet and profit and loss account shown the rent received to the tune of Rs.1,68,000/-. The return filed by the owner of the car Shri Lalji Bhagwan Singh for the A.Y.2012-13 has shown the income from car from M/s. Shree Balaji Enterprises to the tune of Rs.23,355/-. Nothing came into the notice that the M/s. Shree Balaji Enterprises and Shri Lalji Bhagwan Singh provided any other services to the assessee. It also came into the notice that the assessee insured the vehicle by paying the insurance charges lies at page 9 of the paper book. There is no material on record to which it can be assumed that there is work contract in between the assessee and M/s. A.Y.2012-13 Shri Balaji Enterprises. The assessee took the vehicle on rent and paid the rent, no services of any kind was taken from M/s. Shri Balaji Enterprises. The vehicle was taken by the assessee for its own use and paid the rent for that. Payment of rent without providing any manpower cannot be termed as carrying out any work by M/s. Shree Balaji Enterprises / owner. There is no contract on record to carry out any work. In view of the said circumstances and in view of the above mentioned law, it is quite clear that the case of the assessee does not fall within the provision of section 194C of the Act. Therefore, in the said circumstances, the case of the assessee falls within the purview of section 194I of the Act. Accordingly, the assessee was not liable to deduct the TDS upon the rent paid to M/s. Shree Balaji Enterprises, therefore the addition of rent to the tune of Rs.1,68,000/- is not liable to be disallowed and added to the income of the assessee. Reliance placed upon the law mentioned above i.e. DCIT Vs. Satish Agrawal & Co. 124 TTJ 542 (Agr) and ACIT Vs. Accenture Services (P) Ltd. 44 SOT 290 (Mum) and ITO (TDS) Vs. Indian Oil Corpn 13 ITR (T) 79 Delhi and Hindustan Coca Cola Bevarges (P) Ltd. Vs. CIT 293 ITR 226 (SC). Accordingly, the finding of the CIT(A) is not correct, therefore, the same is hereby ordered to be set aside and the appeal of the assessee is hereby allowed.
ITA No.2743/Mum/16 A.Y.2012-13
In the result, the appeal filed by the assessee is hereby Allowed.