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TMI Blog2010 (1) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the withdrawals made in the books of account, the AO estimated a sum of Rs.76,286/- as undisclosed income utilized for household purposes – Held that:- quantum of expenses towards school fees and considering the fact that the AO has also disallowed part of the car expenses, it will be fair and reasonable if the addition towards low withdrawal is estimated to Rs.40,000/-, appeal of the assessee is partly allowed. - ITA No. 968/Bang/2009 - - - Dated:- 29-1-2010 - N.L. Kalra, George George K, JJ. Ramasubramaniyan for the Appellant Jacinta Zimik Vashai for the Respondent ORDER N.L. Kalra: The assessee has filed an appeal against the order of learned CIT(A)-II, Bangalore dated 31st July, 2009. 2. The first grievance of the appellant is that the learned Assessing Officer has erred in disallowing Rs.11,26,500/-u/s 40(a)(ia). Alternatively, it has been contended that the assessee has made payment to the extent of Rs.5,14,725/- after considering the deduction made by Indian Oil Corporation Ltd. and therefore, disallowance u/s 40(a)(ia) could not have been made beyond Rs.5,14,725/-. 2.1. The Assessing Officer noticed that the assessee has shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has paid Rs.11,26,500/- to the various truck owners after keeping Rs.26,185/- (being TDS amount) as his income from transport business. The assessee has stated that upto 2004-05 the amount held was 3% plus TDS made by IOC but from the year 2005-06 it is only TDS which is taken as income as per the oral agreements with truck owners for which there is no documentary evidence. The provisions of sec.40(a)(ia) are applied and addition of Rs.11,26,500/- is made under this Section". 2.2. Before the learned CIT(A), it was submitted that the assessee acted only on behalf of the truck owners and he has not entered into any sub-contract with the truck owners. The payment made to the truck owners does not represent subcontract payments. The assessee has not debited the amount to the profit and loss account and therefore, the same cannot be treated as an expenditure to be disallowable u/s 40(a)(ia). Alternatively it was submitted that the assessee entered into MoU with a person who was having two trucks and therefore, the assessee was not liable to deduct tax at source. The assessee obtained Form No.15I from Shri S.K. Athaulla Khan and accordingly, no tax was required to be deducted. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to assign, subrogate, subject or part with his/their right title and interests under this contract for any reason whatsoever, or change the ownership of the truck. The contractor shall not cause or allow any change in the constitution of its firm without obtaining the prior written consent of the Corporation". 2.5. There are other clauses in the agreement which contain as to how the payments are to be made and what are the liabilities of the person to whom the contract awarded. It is true that the assessee entered into a Memorandum of Understanding with Shri Athaulla Khan. In order to comply with the clauses of the agreement with Indian Oil Corporation Ltd., it is mentioned in the MoU with Shri Athaulla Khan that the vehicle will be resold back to Shri Athaulla Khan by the transporter i.e. the assessee. As per the MoU, it is clear that Shri Athaulla Khan, who was owning the truck, agreed to act as Manager of the transporter i.e. the assessee. A MoU made between the appellant and Shri Athaulla Khan made it clear that the appellant made such MoU in view of clause mentioned in the contract awarded to him by the IOC. It is true that the assessee mentioned in the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or credit was given. Form has not been filed by that date. 2.7. The learned AR submitted that 40(a)(ia) will not be applicable in respect of an amount, which is not debited to profit and loss account. For this proposition, the learned AR relied on the following judgements:- - A W Figgis and Co. Ltd. vs. CIT 256 ITR 268; - Indian Carbon Ltd. vs. Inspecting ACIT 200 ITR 759 - CIT vs. Noble and Hewatt (P) Ltd. 305 ITR 324 - Dynavision Ltd. vs. ACIT 121 ITD 461 (Chennai) TM We have seen that Hon'ble Calcutta High Court in the case of A W Figgis (supra) held that the assessee collected sales tax as broker. We have already held that assessee is not receiving commission but got transport contract. Hence, this decision is of no help. Other decisions are in respect of applicability of section 43B. In all other cases, the liabilities were shown in balance sheet which means that amounts are payable but are not to be claimed as expenses. In the instant case, the assessee is receiving the entire payment from IOCL and hence payments made to other parties become expenses in the case of assessee. Book entries are not conclusive and one has to consider the allowability as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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