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TMI Blog2012 (5) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ade payment to only procure the vehicle on rent, without the services of the drivers, which had been provided by the assessee. The AO's view was that it was not a payment of rent for the naked vehicles but amounted to a contract for running of the vehicles covered u/s 194C for which the TDS should have been deducted. - held that:- Since this is not a payment of rent, it amounted to be contract amount paid to the owners of vehicle in pursuant to contract, which attract provision of section 194C - Decided against the assessee. - ITA No. 2216/Ahd/2009, - - - Dated:- 9-12-2011 - D.K. Tyagi, A. Mohan Alankamony, JJ. A.K. Patel, Sr. DR for the Appellant Parmanand Khatri, AR for the Respondent ORDER D.K. Tyagi:- 1. This is an appeal filed by the Revenue against the order of ld. CIT(A) dated 17.04.2009 wherein following grounds have been raised:- (1) The ld. CIT(A) was not justified in directing to allow the depreciation on the new vehicles of Rs.6,36,084/- made on account of disallowance of interest u/s 14A of the IT Act, 1961. (2) The ld. CIT(A) was not justified in deleting the addition of Rs.2,00,000/- on account of unexplained cash credits u/s 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question have been purchased through out the year and they have not necessarily been bought at the fag end of the year. While on one hand the AO has taxed the receipts arising out of the use of these vehicles, his stand that depreciation is not allowable in the absence of details filed appears contradictory. There is nothing on record that the AO has tried to disprove the sand of the appellant, which was duly supported by audit report that the vehicles have been used during the year. Vide letter dated 10/12/2008 the appellant has filed copies of purchase bills etc. The case in question stood selected for scrutiny w.e.f. 12.03.2007 and therefore the AO had ample time to collect information, if he had any apprehension, to rebut the assessee's stand. The ground of appeal is therefore accepted. The AO is directed to allow the depreciation on the new vehicles purchased during the year also, which comes to Rs.6,35,082/-." Against this order of the ld. CIT(A) the Revenue is in appeal before the Tribunal. 4. The ld. DR submitted that before the AO the assessee failed to furnish evidence in respect of purchase of vehicle, passing thereof with RTO, date of put to use of the said vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment to the assessee by cheque. The AO found the explanation and evidence incomplete and insufficient. According to him the partners did not have enough land holding to generate the cash surplus to be deposited with the firm. Regarding the payment through cheque, the AO stated that nothing was made available at the assessment stage in support of the contention. Accordingly, he made the addition of the entire amount of Rs. 2,00,000/-. 8. The assessee carried the matter in appeal before ld. CIT(A) wherein it reiterated the submissions made before the AO. Reference was also made to the trading account from M/s Maan Pharmaceuticals (P) Ltd. from where the assessee has taken Rs.1,00,000/- and forwarded to the firm. It was stated that the AP's assumption that the requisite quantity of crops may not be put to use on the given land were incorrect. The two partners who gave their sources as agricultural income were not assessed to tax, the third was an income-tax assessee. The ld. CIT(A) stated that once the lenders had been identified and they accepted the factum of having advanced the sum, applicability of section 69 gets very restrictive. In the case the monies had been introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action against the individual partners which was not done. Ld. counsel of the assessee had relied on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Jagdish B.Agarwal (2010) 45 DTR (Guj) 197. The assessee had duly explained the introduction of capital and the AO was not justified in disallowing the capital introduced by partners in the hands of the assessee firm. The ld. CIT(A) has rightly deleted the addition of Rs.2,00,000/- made u/s 68. 11. We have heard the rival parties and perused the record. We are of the opinion that the issue before us is now covered in favour of the assessee by the decision of Hon'ble Gujarat High Court in the case of Pankaj Dyestuff Industries in I.T. Ref.No.241/1993 decided on 6.7.2005 wherein Hon'ble Gujarat High Court observed in para-13 as under:- "13. Applying the aforesaid principles to the facts of the present case, it is apparent that the assessee had furnished the details which would discharge the onus which lay on the assessee. It is not the case of the revenue that the partners of the assessee firm are fictitious. The Income Tax Officer has not disputed that the credits in the accounts of the partners were not deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the parties to whom the rent of the vehicles paid were filed and it was stated that the agreement clearly stated that only rent was to be paid by the assessee to the parties. It was stated that the salary expenses debited in the profit and loss account was exclusively for the salary expenses of the drivers and they had been used as and when required. The ld. AR also referred to the detailed bills of diesel purchases in the name of the assessee wherein the various numbers of the hired vehicles were mentioned to support the contention that the diesel for running of the vehicle had been brought by the assessee and not by the said contractors. 14. The ld. CIT(A) considered all the facts of the case, the contention raised by the AO and the submissions of the Assessee. He deleted the addition by observing as under:- "5.2 The issue has been given due consideration. From the details filed by the appellant, it can be seen that a case has been made that it has hired only vehicles where the rest of the activities has been done by it only, namely providing the drivers, providing the diesel etc. This has been done with reference to the agreement as well as with reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was clearly mentioned that after deducting 10% commission balance would have to be paid to the owner. Since this is not a payment of rent, it amounted to be contract amount paid to the owners of vehicle in pursuant to contract, which attract provision of section 194C of the Act on amount of Rs.39,04,731/- it was rightly disallowed by the AO under section 40(a)(ia) of the Act. The ld. CIT(A) has wrongly deleted the addition. 16. On the other hand, the ld. counsel of the assessee supported the order of ld. CIT(A) and reiterated the submissions made before him. 17. After considering the rival submissions we find that the AO made the addition of Rs.39,04,731/- u/s 40(a)(ia) for non-deduction of tax from the payments made to the owners of vehicles hired by the assessee. The assessee's stand was that it had made payment to only procure the vehicle on rent, without the services of the drivers, which had been provided by the assessee, whereas the AO's version was that it was not a payment of rent for the naked vehicles but amounted to a contract for running of the vehicles covered u/s 194C for which TDS should have been deducted. The ld. CIT(A) has given relief to the assessee by r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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