1986 (10) TMI 65 - AT - Income Tax

Summary

Issues:
1. Disallowance of medical, mess, and vehicle maintenance expenses.
2. Charging of interest under section 201A for failure to deduct tax at source.

Analysis:

Issue 1 - Disallowance of Expenses:
The assessee contested the disallowance of medical, mess, and vehicle maintenance expenses. Regarding medical expenses, the CIT (A) disallowed Rs. 5,000 due to lack of details and a significant increase compared to the previous year. The ITAT upheld this decision, stating that the disallowance was proper. For mess expenses, the ITAT reduced the disallowance from Rs. 4,000 to Rs. 2,000, finding the initial amount excessive. Similarly, for vehicle maintenance expenses, the ITAT upheld the disallowance of Rs. 6,500, considering it reasonable based on past history and the claim amount. The ITAT's decisions were based on a thorough review of submissions and previous orders.

Issue 2 - Charging of Interest for Failure to Deduct Tax:
The dispute centered on whether the assessee was liable for interest under section 201A for not deducting tax at source. The ITAT affirmed the CIT (A) and ITO's decision to charge interest of Rs. 3,533. The assessee argued that the labour mates were not sub-contractors, hence tax deduction was not required. However, the ITAT agreed with the authorities, stating that the payment made to labour mates necessitated tax deduction. The ITAT emphasized the mandatory duty to deduct tax and upheld the interest charge. The ITAT found no grounds to interfere with the CIT (A)'s decision, as the assessee failed to demonstrate any exemption from tax deduction obligations. Consequently, the appeal was partly allowed, affirming the decisions on both disallowed expenses and interest charges.