9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1005 - AT - Income TaxTDS u/s 194C - horse transportation charges paid - whether CIT(A) erred in not considering that the charges were in effect reimbursement of expenses paid by the horse owners for the transportation and the subsidy for each horse which is an allowable business expenditure - CIT-A categorizing race horses as livestock and including them within the definition of Goods u/s.194C - HELD THAT - We noted that these payments in the name of horse transportation charges or transport subsidy provided to horse owners by the assessee is nothing but reimbursement on account of fodder charges, food of horse or to meet part of the transportation expenses. Once, this is the fact that these are reimbursement of expenses, the assessee is not liable to TDS u/s.194C of the Act. Further, this issue is covered by the decision of Bangalore Bench of ITAT in the case of Mysore Race Club Limited, 2022 (4) TMI 1426 - ITAT BANGALORE - Respectfully following the same, we delete the disallowance and allow this ground of assessee s appeal. Addition of entrance fee paid by non-voting members - Scope of principle of mutuality - HELD THAT - In view of the recent decision of Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited, 2021 (1) TMI 488 - SUPREME COURT and the decision of Hon ble Supreme Court in the case of Bankipur Club Ltd. 1997 (5) TMI 392 - SUPREME COURT we are of the view that the assessee is entitled for claim of principle of mutuality in regard to entrance fee received from non-voting members. Hence, we allow this issue of assessee s appeal. TDS u/s 194J - telecast expenses as Host Club expenses - disallowance of reimbursement of expenses for non-deduction of TDS u/s.194J by invoking the provisions of section 40(a)(ia) - HELD THAT - We noted that the AO as well as the CIT(A) was of the view that the explanation of reimbursement cannot be accepted and according to them, the full facts of the telecast charges incurred by Hyderabad Race Club not being on record and the profit element in the reimbursement made by Hyderabad Race Club cannot be ruled out. According to AO as well as the CIT(A), the assessee has to deduct TDS u/s.194J of the Act and therefore, the disallowance was made u/s.40(a)(ia) of the Act. We noted that in the similar state of facts, the Bangalore Bench of ITAT in the case of M/s. Mysore Race Club Limited in 2022 (4) TMI 1426 - ITAT BANGALORE has considered this issue of reimbursement of expenses given to Bangalore Turf Club by Mysore Race Club Ltd., and on these reimbursement of expenses, TDS was not deducted and Tribunal i.e., Bangalore Bench of the Tribunal held that the matter was restored back to the file of the AO - Thus we restore this issue back to the file of the AO. The AO will decide in term of directions given by Bangalore Bench, which is reproduced above. This issue of assessee s appeal is set aside to the file of the AO. Disallowance of police and fire service charges - HELD THAT - We noted that the AO has disallowed these charges as the assessee has not filed any evidence to prove the payments made. Even the CIT(A) has disallowed stating that the assessee is unable to produce any vouchers or unable to put any defense in support of its ground. Now, before us, the ld.counsel made a simple plea that let the matter go back to the file of AO to provide one more opportunity to the assessee to produce the evidence. Hence, we set aside this issue back to the file of the AO.
Issues Involved:
1. Disallowance of horse transportation charges. 2. Addition of entrance fee paid by non-voting members. 3. Disallowance of reimbursement of expenses for non-deduction of TDS under section 194J. 4. Disallowance of police and fire service charges. Detailed Analysis: 1. Disallowance of Horse Transportation Charges: The first common issue in the three appeals concerns the disallowance of horse transportation charges for the assessment years 2012-13, 2013-14, and 2014-15. The assessee claimed these charges as business expenses, arguing they were subsidies given to horse owners for transporting horses to race venues. The Assessing Officer (AO) disallowed these expenses due to a lack of documentary evidence proving the genuineness and business purpose. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the disallowance on the grounds that the assessee failed to deduct TDS under section 194C, invoking section 40(a)(ia). The Tribunal, referencing the Bangalore Bench's decision in the Mysore Race Club Limited case, held that these payments were reimbursements and not liable for TDS under section 194C. Consequently, the Tribunal deleted the disallowance and allowed the assessee's appeal on this issue. 2. Addition of Entrance Fee Paid by Non-Voting Members: The second common issue pertains to the addition of entrance fees paid by non-voting members, which the AO treated as taxable income, not falling under the principle of mutuality. The CIT(A) upheld this view, citing the Supreme Court's decision in the Citizen Co-operative Society case. The Tribunal, however, noted that the non-voting members had usage rights similar to other members, except on race days and in management activities. Citing the Supreme Court's decision in Bankipur Club Ltd. and the Tribunal's decision in Madras Cricket Club, the Tribunal held that the entrance fees collected from non-voting members fell under the principle of mutuality and were not taxable. Thus, the Tribunal allowed the assessee's appeal on this issue. 3. Disallowance of Reimbursement of Expenses for Non-Deduction of TDS under Section 194J: In the appeal for the assessment year 2013-14, the issue involved the disallowance of reimbursement of telecast expenses for non-deduction of TDS under section 194J. The AO and CIT(A) disallowed these expenses, arguing that the payments were not mere reimbursements but contractual obligations. The Tribunal, referencing the Bangalore Bench's decision in Mysore Race Club Limited, restored the issue to the AO to verify whether the primary liability to deduct TDS lay with the recipient club and whether the recipient had deducted TDS. The Tribunal directed the AO to re-examine the matter and decide accordingly. 4. Disallowance of Police and Fire Service Charges: The final issue in the appeal for the assessment year 2013-14 concerns the disallowance of police and fire service charges due to a lack of evidence. Both the AO and CIT(A) disallowed these charges as the assessee failed to provide supporting vouchers. The Tribunal, upon the assessee's request for another opportunity to produce evidence, set aside the issue to the AO for re-examination. Conclusion: The Tribunal allowed the appeals for the assessment years 2012-13 and 2014-15 and allowed the appeal for the assessment year 2013-14 for statistical purposes, directing the AO to re-examine the issues of reimbursement of telecast expenses and police and fire service charges. The Tribunal's decision emphasized the principle of mutuality and the nature of reimbursements in determining the taxability of the disputed amounts.
|
