2011 (4) TMI 1368 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A) for assessment year 2007-08 regarding deletion of addition on account of fuel and petrol, repair and maintenance expenses, and disallowance of vehicle hiring expenses and parking charges u/s 40(a)(ia) of the Act.

Issue 1 - Deletion of addition on account of fuel and petrol, repair and maintenance expenses:
The Assessing Officer disallowed 20% of the claimed expenditure for personal use without log book maintenance. CIT(A) deleted the disallowance stating no adhoc disallowance for genuine expenses. ITAT restricted the disallowance to 10% considering lack of log book maintenance.

Issue 2 - Disallowance of vehicle hiring expenses and parking charges u/s 40(a)(ia) of the Act:
Assessing Officer disallowed expenses for failure to deduct TDS u/s 194C, contending it was applicable to individuals. CIT(A) deleted the disallowance based on absence of sub-contract evidence and incorrect application of law. ITAT upheld CIT(A)'s decision citing the case of Mythri Transport Corporation and concluded that payments did not fall under sub-contract, hence no TDS was required.

In conclusion, the ITAT partly allowed the revenue's appeal by restricting the disallowance on fuel and petrol expenses and dismissing the disallowance on vehicle hiring expenses and parking charges.