TMI Blog2021 (12) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in a particular manner, so far as the first reason was concerned. The second reason, according to the Tribunal, of protection of section 194(i) of the Act on the discount extended was not sustainable. Again, the assessee had claimed the assessment as deduction, which cannot be equated with the rent. The CIT (Appeals) adjudicated the issue raised before it by allowing the appeal of the assessee subject to the directions, which has been discussed above. Hence, it did not interfere. Tribunal is absolutely right in holding that every assessee is required to decide its own business affairs. The manner of conducting the business also gives it a fillip, which shall need to be essentially decided by the assessee and no one can comment and run his business usurping his position. Again, the rational given on the discount and having held it a non-protection of the provisions of section 194(i) of the Act, would not require any interference. Depreciation on car and car expenses - Denial of claim as car purchased in the name of director cannot be said to be assets of the company - dominion ownership of the car - HELD THAT:- ITAT, the material available on record, when looked at, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first question raised herein is identical, except for the amount of disallowance. This Court, while deciding the Tax Appeal No.244 of 2021, dealt with the same in following manner: 2.The respondent assessee filed return on 30.09.20130 declaring total income of ₹ 8,65,92,110/- crores. It was processed under section 143(1) of the Income Tax Act ( the Act for short) and the same was selected for scrutiny. 3.Notice under section 142(1) of the Act along with questionnaire was issued on 27.08.2012. In response,the authorised representative of the company attended time to time. It was noticed that the respondent assessee had not deducted the tax under section 194(C) for the payments made to various transporters, this included the freight inward charges and clearing and forwarding charges. 4.The Assessing Officer rejected the contention of the respondent assessee that TDS was not deducted, as the same was not applicable as per the provisions of law. According to the assessee Company TDS was not to be deducted on payment made to the transporters as per Clause 6 of section 194(c). Again, the details of the transporters have been filledin at the time of filing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194C required a person responsible for paying any sum to resident-sub-contractor to deduct tax at source under given circumstances. It is not in dispute that ordinarily the assessee was required to make such deduction on the payments made to the sub-contractors, unless he was covered under the exclusion clause contained in sub-section (3) of section 194C of the Act. Such provision, as it stood at the relevant time, read as under:- Section 194C(3):- No deduction shall be made under sub-section(1) or sub-section (2) from - (i)the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor or subcontractor, if such sum does not exceed twenty thousand rupees: Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, subsection (2) shall be liable to deduct income-tax under this section: Provided further that no deduction shall be made under subsection (2), from the amount of any sum credited or paid or likely to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in sub-section (1) of section 139:] 5) From the above statutory provisions, it can be seen that under section 40(a)(ia) of the Act, payments made towards interest, commission or brokerage etc. would be excluded for deduction in computing the income chargeable under the head 'profits and gains of business or profession', where though tax was required to be deducted at source, is not deducted or where after such deduction, the same has not been paid on or before the due date. Thus for application of section 40(a)(ia) of the Act, the foremost requirement would be of tax deduction at source. 6) Section 194C, as already noticed, makes provision where for certain payments, liability of the payee to deduct tax at source arises. Therefore, if there is any breach of such requirement, question of applicability of section 40(a)(ia) would arise. Despite such circumstances existing, sub-section (3) makes exclusion in cases where such liability would not arise. We are concerned with the further proviso to sub-section (3), which provides that no deduction under sub-section (2) shall be made from the amount of any sum credited or paid or likely to be credited or paid to the subcontra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(a)(ia) of the Act. 10) When on the basis of the record it is not disputed that the requirements of further proviso were fulfilled, the assessee was not required to make any deduction at source on the payments made to the subcontractors. If that be our conclusion, application of section 40(a)(ia) would not arise since, as already noticed, section 40(a)(ia) would apply when there is a requirement of deduction of tax at source and such requirement is either not fulfilled or having deducted tax at source is not deposited within prescribed time. 9.Yet another decision of the High Court of Madras is reported in the case of Commissioner of Income Tax, Madurai vs.Sri Parameshwari Spinning Mills(P.)Ltd.,[2019] 10 taxmann.com 386(Madras), where sub-section 6 of section 194, which grants benefit to the assessee, is discussed along with subsection(7) of section 194. The Court held that this benefit comes with the condition of compliance of sub-section (7) of section 194(c). This is a procedure required to be followed. The Court held that non-filing of the statement in terms of sub-section(7) of section 194(C) cannot take away the benefit, which will accrue to the assessee under subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground that the assesee had not furnished form no.15J as required under Rule 29D. We find that the said decision is of no assistance to the case of the Revenue. 10. Mr.A.S.Sriraman, learned counsel for the assessee referred to the decision of the ITAT Jaipur in the case of ACIT Vs. Arihant Trading Co. reported in [176 ITD 397 (Jaipur-Tri)]. In the said decision it has been held that Section 194C(6) (7) are independent of each other and cannot read together to attract disallowance under Section 40(a)(ia) read with Section 194C of the Act 10. In the instant case also, as detailed above, the assessee company has not deducted the TDS of payment made to the transporters as per subsection( 6) of section 194(c). However, the details of the transporters have been filled-in in the TDS return, wherein their PAN cards also have been duly submitted to the Income-tax authorities, as this is a sufficient compliance of sub-section (7) of section194(c). The Tribunal was absolutely correct in upholding the version of the assessee. It also rightly held that after obtaining the PAN Card from the transporters, assessee is needed to furnish the same in the prescribed form to the prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification, disallowance of the amount was deleted. 8. When challenged before the Tribunal, it held that the discount offered by the assessee to its parties had been disallowed on two counts. Firstly, that they were owning their own godown in Mumbai and secondly, the assessee was paying the rent to those parties in the form of discounts extended to them and such discount is subject to the provisions of section 194(1) paying the rent in the garb of discounts. 9. The Tribunal rightly held that the Assessing Officer had no authority to sit on the arm chair of the assessee and direct the assessee to carry out its business affairs in a particular manner, so far as the first reason was concerned. The second reason, according to the Tribunal, of protection of section 194(i) of the Act on the discount extended was not sustainable. Again, the assessee had claimed the assessment as deduction, which cannot be equated with the rent. The CIT (Appeals) adjudicated the issue raised before it by allowing the appeal of the assessee subject to the directions, which has been discussed above. Hence, it did not interfere. 10. The Tribunal is absolutely right in holding that every assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Incometax 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 by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purpose of his business or profession. Assigning any different meaning would not subserve the legislative intent. 4.3.1 Further, the Ahmedabad I.T.A.T. in the case of Ambuja Synthetics Mills Pvt. Ltd. vs. the Dy. C.I.T., Range-1, Ahmedabad, on similar facts, decided the issue in favour of the assessee, by holding. It is not disputed that funds for purchases of the car- were provided by the assessee company which is als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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