2017 (1) TMI 45 - AT - Income Tax

TDS u/s 194C - Disallowance of vehicle hire charges - non deduction of tds - Held that - Since the payments are below ₹ 20,000/- limit and it is not contravening any provision of section 194C, there is no obligation on the part of the assessee to acquire the details of PAN or registration certificate from the temporary transporters, we are inclined to allow the ground raised by the assessee and delete the disallowance made by the AO towards vehicle hire charges. Disallowance u/s 40a(ia) - non deduction of tds on interest on car loan - Held that - Even though, AR submitted that it is EMI payment and hire charges as per hire purchase agreement but no document was filed before us nor before the revenue authorities. Accordingly, the grounds raised are rejected. Disallowance of cash payment for maintenance expenses - Held that - No doubt the bills/vouchers are self made or not authorized bills and we agree with the assessee that in this line of business for such repairs, no proper bills are made. But, assessee can insist for proper bills or resorting to do the service from the registered dealers. In our view, the action of the AO/CIT(A) is proper. Hence, the ground raised by the assessee is dismissed.

Summary

Issues: Disallowance of vehicle hire charges, Disallowance u/s 40a(ia), Disallowance of cash payment

Disallowance of Vehicle Hire Charges:
The assessee, a transport company, filed its return for AY 2010-11 declaring an income of ?92,95,090. The AO disallowed ?1,20,03,110 of vehicle hire charges due to lack of proper documentation and TDS details. The CIT(A) upheld the disallowance, stating insufficient details provided. However, the assessee argued that the payments were below TDS limits and submitted supporting documents. The tribunal noted the importance of trip sheets as proof of service and allowed the claim as no TDS was required for payments below ?20,000.

Disallowance u/s 40a(ia):
The AO disallowed ?3,39,125 for non-TDS on payments to Tata Motors Ltd. The CIT(A) confirmed the disallowance as the AR did not provide hire purchase agreement details. The AR argued that it was an EMI payment under a hire purchase agreement, citing a Board Instruction. However, as no evidence was presented, the tribunal rejected the claim.

Disallowance of Cash Payment:
The AO disallowed 25% of ?13,30,770 in cash vehicle maintenance charges due to lack of verifiable bills. The CIT(A) upheld the disallowance, noting self-made bills were not verifiable. The AR argued that in their business, proper bills were not common for minor repairs. The tribunal agreed with the AO/CIT(A) that proper documentation should be insisted upon, dismissing the appeal.

The tribunal partly allowed the appeal on 28th December, 2016, based on the above analysis.