LEASE PLAN INDIA P.LTD.,NEW DELHI vs. ITO, WARD-4(3), NEW DELHI

The grounds raised by the assessee are as under :

That the Commissioner of Income-tax (Appeals) erred on facts and in law in confirming the disallowance of guarantee commission of Rs. 1,33,54,268/-, on account of non- deduction of tax at source therefrom, invoking provisions of section 40(a)(i) of the Income-tax Act, 1961 (‘the Act’).

As could be seen from the grounds raised, the dispute between the parties is in relation to disallowance of deduction claimed on account of payment of guarantee Commission of Rs.1,33,54,268/- to Lease Plan Corporation NV, by invoking the provisions of section 40(a)(i) of the Income-tax Act, 1961 for alleged failure on the part of the assessee to withhold tax at source.

Briefly, the facts are, the assessee is a resident corporate entity engaged in the business of leasing of motor vehicles, financial services and fleet management. For the assessment year under dispute, the assessee filed its return of income on 30.11.2013 declaring loss of Rs.44,85,65,300/- under the normal provisions and book loss of Rs.5,65,95,552/- under section 115JB of the Act. In course of assessment proceedings, the Assessing Officer while verifying Form 3CEB report, noticed that the assessee has paid an amount of Rs.1,33,54,268/- to its Associated Enterprise (AE) for provision of guarantee services. Noticing the above, the Assessing Officer called upon the assessee to explain, whether, the assessee has deducted tax at source while making such payment. Having noticed that the assessee has not deducted tax at source, the Assessing Officer observed that the payment made is in the nature of fee for technical services u/s. 9(1)(vii) of the Act, hence, liable to tax in India. Since the assessee had failed to deduct tax at source, the Assessing Officer disallowed the deduction claimed of Rs.1,33,54,268/-. The assessee contested the aforesaid disallowance before learned first appellate authority. However, learned Commissioner (Appeals) upheld the disallowance.

Before us, it is a common point between the parties that the issue is squarely covered by the decision of the Tribunal in assessee’s own case in assessment years 2011-12 and 2012-13.

Having considered rival submissions and perused the materials on record, we find that identical nature of dispute arose in assessee’s case for the assessment years 2011-12, 2012-13 and 2013-14. In fact, learned first appellate authority has disposed of the appeals for aforesaid assessment years in a consolidated order impugned in the present appeal. While deciding assessee’s appeals for the assessment years 2011-12 and 2012-13, arising out of the very same order of the learned Commissioner (Appeals), the Tribunal, in the order referred to above, has deleted the disallowance made u/s. 40(a)(i) of the Act. There being no difference in the factual position in the impugned assessment year, respectfully following the decision of the coordinate Bench in assessee’s own case, as discussed above, we delete the disallowance made u/s. 40(a)(i) of the Act. Grounds are allowed.

In the result, appeal is allowed.