TMI Blog2019 (10) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... r income and paid due taxes to the Credit of Central Government. CIT(A) is directed to verify these evidences/certificates and accordingly adjudicate the issue on merits in accordance with law , keeping in view ratio of decision of Hon ble Delhi High Court in the case of Ansal Land Mark Township [ 2015 (9) TMI 79 - DELHI HIGH COURT] and Hindustan Coca Cola [ 2007 (8) TMI 12 - SUPREME COURT] - ITA Nos.1790 & 1791/Chny/2018 - - - Dated:- 22-10-2019 - Shri N.R.S. Ganesan, Judicial Member And Shri Ramit Kochar, Accountant Member For the Appellant : Mr. M.Karunakaran, Adv. For the Respondent : Ms.R.Anitha, JCIT ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: These two appeals, filed by the assessee, being ITA Nos.1790 1791/Chny/2018, are directed against common appellate order dated 15th March, 2018 passed by the learned Commissioner of Income Tax (Appeals)-8, Chennai (hereinafter called the CIT(A) ) in ITA No. 90 265/16-17, for assessment years(ay s) 2013-14 2014-15 respectively, the appellate proceedings before learned CIT(A) had arisen from separate assessment order(s) da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fees and the disallowance is liable to be deleted. 7. The authorities below erred in invoking the provisions of section 40(a)(ia) on vehicle maintenance expenses of ₹ 57,84,247/-. 8. The appellant submits that the vehicle maintenance expenses are normal repairs and maintenance expenses and there are no contract as such entered into by the appellant with the persons carrying the repairs and therefore the provisions of section 194C has no application and the appellant is not required to deduct any TDS on such vehicle maintenance expenses. The disallowance made by the assessing officer is therefore liable to be deleted. 9. The appellant therefore prays that the disallowance made u/s.40(a)(ia) on interest paid to NBFCs (₹ 53,18,606), payments to other travels (₹ 1,06,20,450), auditors (₹ 2,01,677) and on vehicle maintenance expenses (₹ 57,84,247) may be deleted and render justice. In ITA No.1791/Chny/2018 for the AY 2014-15: The appellant submit the following grounds of appeal in addition to various others which will be put forth at the time of hearing:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deleted. 9. The appellant therefore prays that the disallowance made u/s.40(a)(ia) on interest paid to NBFCs (₹ 57,64,891), payments to other travels (₹ 1,45,68,958), auditors (₹ 1,80,000) and on vehicle maintenance expenses (₹ 94,83,080) may be deleted and render justice. 3. First we will take up assessee s appeal for ay:2013-14 . The brief facts of the case are that the assessee is engaged in business of travel agency running and plying buses to various routes for picking and dropping of their employees for various organizations and companies on contract basis. The assessee had made payments towards interest to the tune of ₹ 76,15,294/- during previous year relevant to ay: 2013-14 to various financial institutions and banks on vehicle hire purchase loans availed by it for carrying out its business. The total amount borrowed towards vehicle hire purchase loans was to the tune of ₹ 6,09,97,869/-, and the assessee had paid interest to the tune of ₹ 53,18,606/- to various financial institutions during previous year relevant to ay: 2013- 14, as detailed below: Name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,34,677/- 194J Professional fee 67,000/- 194J Vehicle Maintenance Expenses 57,84,247/- 194C Total 2,19,24,980/- 3.3 The AO show-caused assessee as to why the additions be not made for non compliance of provisions of Section 40(a)(ia) read with Chapter XVII-B of the 1961 Act . As per AO, the assessee did not filed proper reply, which led the AO to invoke provisions of Sec.40(a)(ia) of the 1961 Act and made additions to the tune of ₹ 2,19,24,980/- by disallowing expenses for non-deduction of income-tax at source under relevant provisions of Chapter-XVIIB of the 1961 Act, vide assessment order dated 09.03.2016 passed by the AO u/s. 143(3) of the 1961 Act. 4. Aggrieved by an assessment framed by the AO vide assessment order dated 09.03.2016 passed u/s 143(3) of the 1961 Act, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel for the assessee stated that no disallowance u/s 40(a)(ia) of the 1961 Act is warranted keeping in view ratio of decision of Hon ble Delhi High Court in the case of CIT v. Ansal Land Mark Township Private Limited reported in (2015) 377 ITR 635(Delhi). It was submitted that second proviso to Section 40(a)(ia) of the 1961 Act which was inserted by Finance Act, 2012 w.e.f. 01.04.2013 shall come into play for rescue of the assessee, which was held to be retrospective by Hon ble Delhi High Court w.e.f. 01.04.2005. It was submitted that in light of decision in the case of Hindustan Coca Cola Beverage Private Limited v. CIT reported in (2007) 293 ITR 226(SC) , the revenue can at best recover interest as per ratio of decision in the case of Hindustan Coca Cola(supra) and it was prayed that issue may accordingly be restored back for readjudication. 5.2 The Ld.DR objected to the grant of one more opportunity to the assessee and submitted that the assessee has not filed evidences/certificates as are required to evidence that these payees have included aforesaid payments made by the assessee to them under various heads in their return of income filed with R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The provisions of Section 40(a)(ia) of the 1961 Act were clearly hit on aforesaid payments made for ay: 2013-14 and the AO has rightly invoked provisions of Section 40(a)(ia) for making disallowance of expenses to the tune of ₹ 2,19,24,980/- , which stood later confirmed by learned CIT(A). So far as ay: 2014-15 is concerned, the learned CIT(A) has rightly excluded interest payments made by assessee to banks keeping in view exemption provided u/s 194A(3)(iii)(a) read with section 40(a)(ia) of the 1961 Act. The contention of the assessee that payments made for vehicle maintenance are not hit by Section 194C of the 1961 as the payments are made under oral contact cannot be accepted as provisions of Section 194C of the 1961 Act stipulates that payments to contractors/sub-contractors are covered by Section 194C of the 1961 Act . It did not distinguish between oral and written contracts. The Indian Contract Act, 1872 also recognized oral as well written contract as an agreements which are enforceable at law. There is no distinction made by Indian Contract Act, 1872 between oral and written contract so far as enforceab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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