TMI Blog2021 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... bed authority has not been nominated under the provisions of law. Thus in the absence of such prescribed authority no fault can be attributed to the assessee for not filing the necessary details as discussed above. In our considered view in the absence of prescribed authority, the details filed by the assessee along with form 26Q should be considered as sufficient compliance on the part of the assessee. Accordingly, we hold that the claim of the assessee cannot be denied in the absence of non-filing of necessary details to the prescribed authority as alleged by the AO. Provisions as provided under sub-section 6 and 7 to section 194C of the Act are independent to each other and therefore they cannot be read in conjunction. In other words non-compliance of the provisions of sub-section 7 to section 194C of the Act the claim of the assessee cannot be denied as there was the compliance on the part of the assessee for the provisions as provided under subsection 6 to section 194C .As decided in M/S ARIHANT TRADING CO. PAHARI [ 2019 (3) TMI 1251 - ITAT JAIPUR] The provisions of section 40(a)(ia) which are deeming fiction relating to non-deduction of TDS have to be read in the limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets in personnel capacity - HELD THAT:- Admittedly, it is necessary for the assessee to own the assets for claiming the depreciation on the assets. But the word own has not been defined under the provisions of the Act whether the ownership refers to the legal ownership or the beneficial ownership. Undoubtedly, the assessee in the present case is not the legal owner of the vehicles but it has made the payment for the acquisition of the cars. Thus it can be inferred that the assessee owns the cars in the capacity of beneficial owner. Thus, in our considered view the assessee is entitled for the depreciation on the car - See ELECTRO FERRO ALLOYS LTD. [ 2011 (10) TMI 495 - ITAT, AHMEDABAD] . Regarding the other expenses of fuel and maintenance on such cars, we find that the AO has made the disallowance in adhoc manner which are not permitted under the provisions of law. As such, the AO was under the obligation to pinpoint the personal expenses incurred by the assessee but he has not done so - the dominion ownership of the car rest with the company. The company being a body corporate is different from the individuals. In a body corporate there cannot be any element of persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appreciating the fact that the basic condition required for claim of depreciation are not fulfilled in this case. 3. The first issue raised by the Revenue is that the learned CIT (A) erred in deleting the disallowances of ₹ 2,59,03,812/- made by the AO under section 40(a)(ia) of the Act. 4. The fact in brief is that, during the assessment proceeding, the AO found that the assessee has not deducted tax under section 194C of the Act on certain payment made to the transporter, freight inward charges and clearing forwarding charges amounting to ₹ 2,22,48,327/-, ₹ 36,55,545/- and ₹ 138,350/- respectively. 4.1 The assessee with regard to the payment to transporter and freight inward charges claimed that in the TDS return in form 26Q for Quarter 3 and 4 it has reported PAN of all the parties to whom transportation charges and freight inward charges were paid. Thus, in view of the provision to sub-section (6) to section 194C it was not required to deduct the TDS. The assessee also claimed that by reporting the PAN detail of the transporter in form 26Q it has complied with the provision of sub-section 7 to section 194C of the Act. 4.2 However the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. As contended by the AR this amount was only reimbursement of the transportation charges and therefore not liable for deduction of tax. Hence I am of the view that the disallowance is not sustainable. It is deleted. (3) Payment to M/s Trishul Trasnport Co. (₹ 1,38,350/-) The written submission filed by the appellant is silent on the disallowance. A.O.'s observations remain uncontroverted. Disallowance of the said sum is upheld. 6. Being aggrieved by the order of the ld. CIT-A, both the Revenue and the Assessee are in appeal before us. The Revenue is in appeal for the deletion of ₹ 2,59,03,812/- and assessee is in appeal against the confirmation of the addition of ₹ 1,38,350/- only. The Assessee in its appeal in ITA No. 1397/Ahd/2015 has raised the ground which reads as under: 1. The Ld.CIT Appeals 6 has erred in law and on facts in confirming the disallowance of ₹ 138350/- on account of freight payment made. The disallowance was made by AO by invoking sec. 40(a)(ia). 7. The learned DR before us submitted that the assessee has not deducted the TDS on the expenses and therefore the same cannot be allowed as deduction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity or the person authorised by it, such particulars, in such form and within such time as may be prescribed. 10.3 At the threshold, we find that though there is provisions under the Act to file the necessary details to the prescribed authority but such prescribed authority has not been nominated under the provisions of law. Thus in the absence of such prescribed authority no fault can be attributed to the assessee for not filing the necessary details as discussed above. In our considered view in the absence of prescribed authority, the details filed by the assessee along with form 26Q should be considered as sufficient compliance on the part of the assessee. Accordingly, we hold that the claim of the assessee cannot be denied in the absence of non-filing of necessary details to the prescribed authority as alleged by the AO. 10.4 It is also significant to note that the provisions as provided under sub-section 6 and 7 to section 194C of the Act are independent to each other and therefore they cannot be read in conjunction. In other words non-compliance of the provisions of sub-section 7 to section 194C of the Act the claim of the assessee cannot be denied as there was the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties on account of go-down rent paid by such parties. The details of the parties and the rent stand as under: SN Name of the concern Godown Rent paid (Rs.) 1 Shah Steel Tubes, Mumbai 2,00,774 2 Puja Tube Corporation, Mumbai 53,617 3 Digar tubes Ltd., Mumbai 30,956 4 Bombay Hardware Pvt. Ltd., Mumbai ₹ 2,51,680 5 Vora Bros. Co., Mumbai 5,48,921 12.1 The assessee s contention was that usually its customer don t take the delivery of the goods in their own go-down after the purchase but leave the good at the assessee s go-down until and unless the customer further sold the good to other parties. Thereafter the customers instruct the assessee to deliver the goods directly to the premises of such other parties. However the above mentioned parties have taken the delivery of goods to their own g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to its parties has been disallowed on account of 2 reasons. Firstly, these parties own their own go-down in Mumbai and therefore there was no occasion/reason for the assessee to offer any discount for lifting the goods from the go-down of the assessee. Secondly, the assessee is paying the rent to those parties in the form of discounts extended to them and therefore such discount is subject to the provisions of section 194I of the Act being rent in the garb of discount. 17.1 For the 1st reasons, we note that it was the decision of the assessee to extend the discount or not to the parties. Similarly, there was no doubt on the correctness of the claim made by the assessee. The AO has no power to seat on the armchair of the assessee and direct to carry out its business affairs in a particular manner. Therefore we are of the view that such discount extended by the assessee cannot be denied. 17.2 For the 2nd reason, we note that the provisions of section 194I of the Act cannot be attracted on the discount extended by the assessee to its customers/buyers. Similarly the assessee has claimed discount as deduction which cannot be equated with the rent. Furthermore, we also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... running expenses of 202441/- on proportionate basis. 20. Aggrieved assessee preferred an appeal before the learned CIT (A) who allowed the appeal of the assessee by observing as under: Having considered the facts of the case I am inclined to accept the contentions of the Ld. A.R. As admitted by the A.O himself the funds for purchase of the cars were provided by the appellant. The Hon'ble Supreme Court in the case of Mysore Minerals Ltd. Vs. C.I.T. 239 ITR 775 (S.C) has held that the section of the I.T. Act, 1961, confers a benefit of the assessee. The provision should be so interpreted and the words used therein should be assigned such meaning as would enable the assessee to secure the benefit intended to be given by the Legislature to the assessee. It was further held by the Hon'ble Supreme Court that the term owned as occurring in section 32(1) of the Income-tax Act must be assigned a wider meaning. The Hon'ble Supreme Court has held as under: It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 of the Act would be best fulfilled b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draw support and guidance from the order of this Tribunal in case of ITO vs. Electro Ferro Alloys Ltd. in ITA no 2773/Ahd/2009 reported in 25 taxmann.com 458 where the relevant finding of the coordinate bench reads as under: 5. 2. On consideration of the facts of the appellant's case it is noticed that the motor car was purchased, though in the name of the appellant's director, it was purchased out of the funds of the appellant-company and it is also not in dispute that the motor car was purchased for the purpose of business of the appellant. Thus the motor car being, business asset of the appellant and purchased for the purpose of business and used as such by the appellant, in view of the decision in the case of Mysore Minerals Ltd. [1999] 239 ITR 775 (SC) referred to above and other decisions cited by the learned authorised representative, I hold that the disallowance made by the Assessing Officer on this ground is not justified and hence the same is directed to be deleted. 22. 2 In the present case it is not disputed that investment was made by the assessee in purchase of the motor car. It is shown as asset in the balance-sheet of the company. If expenditure fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of appeal of the assessee is allowed. 27. The 2nd issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the disallowance of the commission expenses amounting to ₹ 55,14,372/- only. 28. The assessee in the year under consideration has claimed an expense of ₹ 74,37,729/- under the head commission which were paid to 15 parties. Out of such 15 parties, one party namely M/s C.M. Smith Sons Ltd was paid the commission by the assessee for an amount of ₹ 55,14,372/- only. The assessee to establish the genuineness of the commission paid to such party has filed the copy of the income tax return of the party, confirmation from party and the copy of agreement. The assessee also filed the details of the sales generated through the involvement of such commission agent namely M/s C.M. Smith Sons Ltd. 28.1 However, the AO found certain defects in the agreement filed by the assessee. It was pointed out by the AO that this agreement was made dated 01st January 2010 but there was no sale made by it through the involvement of impugned commission agent in the financial year ending 31st March 2010. Similarly th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritten submission filed appellant has not been able to demonstrate the nature and scale of services rendered by Smith and Sons Ltd. The submission is beside the point. Judicial Opinion is well settled that the payment of commission is allowable only on the assessee furnishing evidence in support of the services rendered. Therefore impugned disallowance of commission is upheld. This ground of appeal is dismissed. 30. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 31. The learned AR before us submitted that the assessee has incurred commission expenses in the regular course of its business and therefore the same is eligible for deduction under section 37 (1) of the Act. 32. On the other hand the learned DR before us submitted that the services rendered by the commission agent have not been brought on record by the assessee. Therefore, it can be inferred that the commission expenses has not been incurred in the course of the business. The learned DR vehemently supported the order of the authorities below. 33. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which requires the fulfilment of the following ingredients: i. Expenditure should not be covered under the specific sections, i.e., 30 to 36; ii. Expenditure should not be of capital nature; iii. Expenditure should have been incurred during the previous year; iv. Expenditure should not be of a personal nature; v. Expenditure should have been incurred wholly or exclusively for the purpose of the business or profession. 33.4 All of the five conditions mentioned above are to be satisfied before one can claim any expense as a deduction under this section. The last condition requires for allowing the claim of the expenses that the expenditure should have been incurred wholly or exclusively for the purpose of the business. This is a very vexed question, and a lot of litigation revolves around this issue. In fact, once the assessee has furnished the details for the deduction of commission expenses, the onus is shifted upon the AO to reject the contention of the assessee with valid reasoning and not on the basis of surmise and conjecture. 33.5 Indeed 2 of the parties were the old parties of the assessee yet the assessee hired services for the commission agent. Now th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial expediency and business need of an organisation are concerned, it is not the viewpoint of a revenue officer which should count but it should be the viewpoint of an ordinary business men dealing with a situation like the one faced by the particular assessee in question. It is, therefore, from that particular viewpoint that the question has to be approached. 33.9 In view of the above and after considering the facts in totality, we are of the view that the commission paid by the assessee to the party was disallowed by the AO based on his surmise and conjecture which is unwarranted under the provisions of law. The AO has been empowered by the statute under the different sections including the provisions of section 131/133(6) of the Act which authorizes to conduct the investigation/enquiries in the claim made by the assessee before disallowing the same on finding procedural lapses. Thus we do not find any reason to uphold the order of the authorities below. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed. 33.10 In the result, the appeal of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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