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TMI Blog2022 (11) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Assessments for these three Assessment Years are made by the Income Tax Officer, Corporate Ward - 6(2), Chennai u/s.143(3) r.w.s.147 of the Act vide orders of different dates, i.e. 31.12.2018 and 26.12.2018. 2. The first common issue in these five appeals is as regards to the order of the Commissioner of Income Tax (Appeals) in confirming the action of the Assessing Officer in disallowing the expenses claimed by the Assessee without deduction of Tax Deducted at Source [TDS] and thereby the Assessing Officer invoked the provision of Section 40(a)(ia) of the Act and made a disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc. The Assessing Officer made the following disallowance by invoking the provisions of Section 40(a)(ia) of the Act for non-deduction of TDS and in the following Assessment Years. Assessment Years 2012 - 2013: Sl. No. Particulars Amount [1] Office rent paid to Directors 12,00,000.00 [2] Payment made to Hypercube Architect 2,28,970.00 [3] Director remuneration - Mr. Ganesh 6,00,000.00 [4] Director remuneration - Mr. Rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest paid to Shri Ganesh (Director) amounting to Rs.14,27,080/-, he has instructions from the assessee not to press these disallowances. Accordingly, the Assessee is not interested to prosecute these disallowances for the reason that these are debatable issues and hence he is ready to pay the taxes on the same. The learned Counsel for the Assessee before us stated that the payments of remunerations to the Directors are not subject to TDS and consequentially the same are not subject to rigors of Section 201 of the Act for the reason that the Assessee had disclosed the income with respect to these two amounts received and included the same in the return of income filed by these two recipients and paid the taxes due thereon. The learned Counsel for the Assessee further stated that these two Directors, Mr. Ganesh and Mr. Rathinavel had disclosed the remuneration received from the Assessee in their individual income tax returns and discharged the taxes payable there under, except for the Assessment Year 2014 - 2015 in the case of Mr. S. Ganesh who has not filed the return of income for that particular year. 5. When these facts were confronted to the learned Senior Departmental Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns and discharged the taxes payable there under in terms of the second proviso to Section 40(a)(ia) of the Act or not? The Assessing Officer will accordingly allow the claim after verifying the same. Thus, this common issue in all these years is allowed partly as indicated above. 7. The next common issue in all these five appeals of the Assessee is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in disallowing the claim of depreciation and expenses on motor vehicles, i.e insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Directors of the Assessee Company. 8. The brief facts are that the Assessing Officer had disallowed the following motor vehicle expenses in the following Assessment Year's-: Particulars A.Y 2012-13 A.Y 2013-14 A.Y 2014-15 A.Y 2015-16 A.Y 2016-17 Depreciation 5,22,069 5,56,100 4,72,685 4,01,782 1,61,515 Insurance 14,980 36,570 1,44,533 56,688 53,943 Interest on Vehicle Loan 3,02,234 3,00,929 2,11,327 1,14,715 89,791 Vehicle Maintenance 2,56,623 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation is allowable in the hands of the company, even if it is registered in the name of its Director provided that the vehicle is used for the purpose of business of the company and income derived there from was shown as income of the company. In the instant case there is no dispute with regard to the fact that the vehicles are used for the purpose of business of the Assessee Company. In the case of the Commissioner of Income Tax Vs. Basti Sugar Mills Company Limited [2002] 257 ITR 88 (Delhi), the Hon'ble Delhi High Court approved the decision of the Tribunal in holding that since the vehicle is a movable asset, the registration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. In the instant case, the funds for purchase of vehicles have been provided by the Assessee Company and they have been shown as assets of the Assessee Company. Hence, in our view, the Assessee Company should be considered as owner for all practical purposes and hence it is entitled for depreciation. In view of the direct decision of the Hon'ble Gujarat High Court is available on this issue, we prefer to follow the same to that rendered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer amounting to Rs.60.00 lakhs in respect of the payment titled "Pannallur Minister Expenses". 14. The brief facts are that the Assessing Officer on verification of the impounded books of accounts noticed that on 03.11.2015, the Assessee has made a payment of Rs.60.00 lakhs which is entered as cash paid towards the "Pannallur Minister Expenses". The Assessing Officer had brought out this in his assessment order as under: Date Particulars Vch. Type Vch. No. Debit 03.11.2015 Cr. Ganesh Imprest: Cash paid towards Panallur Minister Expenses details overleaf through Ganesh unoffi total 1,74,00,000/- already 4,00,000/- add Rs.60,00,000/- balance Rs.1,10,00,000/- (50.00 Lakhs singing of Minister and Rs.60.00 Lakh go singing tharanum) Journal 1060 60,00,000 The Assessing Officer has then treated the Rs.60.00 lakhs as hit by Explanation 1 to Section 37(1) of the Act and stated that this expenditure incurred is clearly prohibited by law, because no payment can be made to Minister's expenses. There are no such expenses for the purpose of business and therefore he disallowed the payment of Rs.60.00 lakhs that was claimed as business expenses. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4.00 lakhs, the Assessing Officer will verify as to whether this Rs.4.00 lakhs is already considered in the payments disallowed of Rs.18,04,800/- and accordingly he will decide the claim of the Assessee after verification. Thus, this issue in the Assessee's appeal is partly allowed. 18. The next issue in these appeals for the Assessment Years 2015 - 2016 and 2016 - 2017 is as regards to the disallowance in respect of the interest payment u/s.40A(3) of the Act. 19. The brief facts are that the Assessing Officer during the course of the assessment proceedings has made the following disallowance by invoking the provisions of Section 40A(3) of the Act being payment exceeding Rs.20,000/- as mandated under the said Section, as under: A.Y. 2015 - 2016 : Rs.1,15,99,772/- A.Y. 2016 - 2017 : Rs.8,17,500/- 20. Now before us, the learned Counsel for the Assessee stated that the Assessing Officer while culling out the alleged cash payments made from the data seized classified amounts entrusted for payment to the workers in the construction sites besides other legitimate expenses classified the imprest amount given in lumpsum to be disbursed in smaller fractions to the workers and ot ..... 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