2021 (12) TMI 365 - HC - Income Tax

TDS u/s 194C - Non deduction of TDS on freight payments made to Essar Steel - addition u/s 40(a)(ia) - as obtaining the PAN Card from the transporters, assessee is needed to furnish the same in the prescribed form to the prescribed authority within prescribed time - ITAT deleted the addition - HELD THAT - As decided in own case 2021 (12) TMI 232 - GUJARAT HIGH COURT there is no prescribed authority nominated under the provisions of law. Thus, in absence of such prescribed authority, no fault was attributed to the assessee obviously for not filing the details before such authority. The details filed by the respondent assessee along with Form No.26 naturally could be construed as sufficient compliance. No fault can be found with these detailed findings and the settled position of law. - Decided in favour of assessee. TDS u/s 194I - Additional discount given is by way of godown rent - HELD THAT - 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. 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 assessee though was not the legal owner of the vehicle, it has made the payment for acquisition of cars and thus, it is a beneficial owner. It is, therefore, held to be entitled for depreciation on the car. See Electro Ferro Alloys 2011 (10) TMI 495 - ITAT, AHMEDABAD Tribunal has rightly distinguished the concept of dominion ownership of the car. The question raised is answered accordingly. No substantial question of law raised - Decided against revenue.

Summary

Issues Involved:
1. Deletion of disallowance under section 40(a)(ia) of the Income Tax Act for non-deduction of TDS on freight payments.
2. Deletion of disallowance for additional discount given as godown rent without TDS deduction under section 194I.
3. Deletion of disallowance of depreciation on car and car expenses for cars registered in the name of the director.

Detailed Analysis:

1. Deletion of Disallowance under Section 40(a)(ia) for Non-Deduction of TDS on Freight Payments:
The appellant contested the ITAT's decision to delete the disallowance of ?2,59,03,812 made under section 40(a)(ia) for non-compliance with sections 194C(6) and (7). The Tribunal found that the assessee had fulfilled the conditions of section 194C(6) by obtaining PAN details from transporters and filing them with the TDS return. The court referenced the case of CIT vs. Valibhai Khanbhai Mankad, which established that once the conditions of section 194C(3) are met, the liability to deduct tax ceases. The Tribunal concluded that the assessee’s compliance with section 194C(7) by submitting PAN details was sufficient, and the absence of a prescribed authority for filing these details did not fault the assessee. The court upheld the Tribunal's decision, confirming that the assessee was not required to deduct TDS once the PAN details were furnished.

2. Deletion of Disallowance for Additional Discount Given as Godown Rent Without TDS Deduction under Section 194I:
The second issue involved the disallowance of ?5,48,921 for additional discount given as godown rent without TDS deduction under section 194I. The Assessing Officer added this disallowance, viewing the discounts as rent requiring TDS deduction. The CIT(A) deleted the addition, subject to verification. The Tribunal upheld this decision, noting that the discount was given to customers who owned their godowns and was not equivalent to rent. The Tribunal emphasized that the Assessing Officer could not dictate how the assessee should conduct its business affairs. The court agreed with the Tribunal, stating that the discount did not fall under the purview of section 194I and upheld the deletion of the disallowance.

3. Deletion of Disallowance of Depreciation on Car and Car Expenses for Cars Registered in the Name of the Director:
The third issue concerned the disallowance of depreciation on car expenses amounting to ?34,63,547, for cars registered in the director's name but used for business purposes. The Assessing Officer denied the depreciation, arguing that the cars were not company assets. The CIT(A) allowed the appeal, citing the Supreme Court's decision in Mysore Minerals Ltd. vs. CIT, which held that depreciation should be allowed to the person with dominion over the asset used for business purposes. The Tribunal supported this view, distinguishing between legal and beneficial ownership, and held that the company, as the beneficial owner, was entitled to depreciation. The court upheld the Tribunal's decision, confirming that the company was entitled to claim depreciation on the cars used for its business.

Conclusion:
The court dismissed the appeal, finding no substantial questions of law. It upheld the ITAT's decisions on all three issues, confirming the deletion of disallowances related to TDS on freight payments, additional discounts given as godown rent, and depreciation on cars registered in the director's name but used for business purposes.