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TMI Blog2013 (8) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 14-8-2013 - Shri R. P. Tolani And Shri T. S. Kapoor,JJ. For the Petitioner : Shri Gautam Jain, CA. For the Respondent : Shri Bhim Singh, Sr. DR. ORDER Per T. S. Kapoor, AM:- This is an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-IX, New Delhi dated 22.10.2010. The grounds of appeal taken by Revenue are as under: "1. On the facts and circumstances of the case, the Ld. CIT (A) has erred in law and on the facts in deleting the addition of Rs.29,17,172/- made by the Assessing Officer u/s 40(a)(ia) of the Income Tax Act on account of non deduction of TDS on denting and painting expenses. 2. On the facts and in circumstances of the case, the Ld. CIT (A) has erred in law and on the facts in deleting the addition of Rs.11,31,388/- made by Assessing Officer u/s 40(a)(ia) of the Act under the head free service charges. 3. The appellant craves leaves to add, alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal." 2. The case was earlier heard on 4th July, 2013 but was re-fixed on 22.07.2013 to seek certain clarification and was fixed for hearing on 06.08.2013 on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re yourgoodself had asked for nature of expenses of Rs.11,88,388/- under the head 'Free Service Charges Paid' for which we had replied vide point no.9 of our letter dated 18.12.2009 and now yourgoodself has asked for the partywise complete detail of payment made under the head 'Free Service Charges Paid' alongwith the explanation and justification for non-deduction of TDS. As mentioned earlier vide point no.9 of our earlier letter dated 18.12.2009, we would like to once again state that the expenses booked under this head relate to payments made to other Maruti Dealers who service the vehicles sold by the assessee since the buyer of the vehicle has a choice/option to get the Free Service done from any authorized Maruti Dealer. This is a normal practice followed by all Maruti Dealers. There is no provision of any TDS deduction applicable on such payments. The assessee has also received an amount of Rs.6,60,818.04 from other Dealers and on that also no TDS has been deducted. Without prejudice to the above submission, we would also like to know under which section yourgoodself would like to cover the TDS applicability on the expenses booked under the head 'Free Service Charges Pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny books of accounts except copy of ledger and, therefore, the Assessing Officer was justified in not accepting the claim of assessee that TDS was not applicable and hence he rightly made the disallowance u/s40(a) (ia). 7. Ld. AR on the other hand read from the brief synopsis filed and submitted that amount of denting and painting expenses was comprised of three items of expenditure which included consumption of paints, payment of employees and daily wagers and consumables. In respect of consumption of paints, the Ld. AR invited our attention to paper book page 87 wherein bills of purchases of paint amounting to Rs.16,61,141/- was placed. Our attention was also invited to copies of purchase bills placed at paper book page 88 to 111 of paper book. He further submitted that this purchase added to opening stock of paints made out the consumption of paint at Rs.17,39,489.74. In view of the fact that bulk of expenditure under the head denting and painting consisted of consumption of paints, there was no requirement of TDS. 8. Regarding payment of Rs.988964 relating to payments of daily wagers our attention was invited to paper book page 155 to 161 wherein sample of vouchers pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical services and brought under the provisions of section 194J.. 12. As regards the applicability of provisions of section 194C it was submitted that no single payment exceeding Rs.50,000/- was made to any dealer and our attention was also invited to paper book page 112 and to 115. Therefore, it was argued that section 194C was also not applicable, in the present case. 13. We have heard the rival parties and have gone through the material placed on record. The Assessing Officer had made the first addition of Rs.29,70,172/- on account of non production of bills and vouchers and on the basis of the fact that assessee had not furnished the details of payments. The Assessing Officer in his order vide para 5.2 has held as under: "Vide entry dated 29.12.2009 the assessee specifically asked to produce the complete bills and vouchers pertaining to these expenses but the assessee fail as required. However, one more opportunity was allowed to the assessee to produce on 31.12.2009 but the assessee has neither attended fixed for today nor produce any books of accounts/ copies. In the absence of original bills and vouchers and the nature of expenses would not be asserted and the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct between dealer and customer is independent and separate contract. The customer in terms of the sale contract with the dealer approaches the dealer for these free services. It is the customer who avails the service for the cost paid by him as part of the sale price of the vehicle he purchases from dealer during the warranty period. It is the dealer who renders the service to the customer pursuant to independent contract. The fact that the customer can approach any dealer for obtaining free service does not alter the position as it is a case of convenience and mutual arrangement drawn by the company. The reimbursement is not for services rendered by the dealer to the customer but in discharge of the warranty obligation included in the sale price. It is in term of a independent contract of sale which stipulates that the assessee should reimburse the cost incurred by the dealer if and when it performs free services to the ultimate customer. On this factual matrix, it would be wrong to hold that the dealer has rendered technical services as contemplated u/s 194J to the assessee for which the assessee paid a particular amount to the dealer and non-deduction of tax at sources on such p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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