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TMI Blog2013 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... gent had deducted the TDS on these payments and paid to the exchequer within prescribed time. Thus, we do not find any reason to intervene in the order of CIT(A). - Decided in favor of assessee. - I.T. A. No. 3871/AHD/2008 & 2743/AHD/2012 - - - Dated:- 27-8-2013 - Shri D. K. Tyagi J. M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri Sanjay R. Shah A. R. For the Respondent : Shri K. C. Mathews Sr. D. R. ORDER Per Shri Anil Chaturvedi, A. M. 1. These two appeals one filed by the Assessee and the other filed by the Revenue against the order of CIT(A)-VI, Baroda dated 9.09.2008 for assessment year 2005-06. 2. The facts as culled out from the order of lower authorities are as under: 3. Assessee is a subsidiary of Gujarat Narmada Valley Fertilizers Co. Ltd. (GNFC) which holds 56.4% of equity shares of Assessee Company and is engaged in the business of manufacturing and sale of chemicals. Assessee filed its return of income for A.Y. 2005-06 declaring total income at Rs. NIL under normal provisions of the Act after setting off of unabsorbed business losses and depreciation. The case was selected for scrutiny and thereafter the assessment was framed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication. 2nd ground is with respect to disallowance of lease rent paid during the year amounting to Rs. 7,68,99,864/- 4. During the course of assessment proceedings, Assessing Officer noticed that Assessee has paid lease rent of Rs. 7,68,99,864/- to its holding company, GNFC Ltd. in respect of assets taken on lease. The break up of lease is lease rent for CPP Rs. 5,95,95,456/- and lease rent for NOX/Incinerator Rs. 1,73,04,408/-The Assessee was asked to explain the interest component of lease rent. Assessing Officer relying on the decision for A.Y. 2000-01 was of the view that the Assessee was the owner of the assets and therefore the lease rent claimed to have been paid by Assessee was not admissible to the extent of capital component. He was further of the view that the transaction of purchase of assets owned by the Assessee has only been financed by GNFC Ltd. and therefore the interest component of lease rent is admissible in the hands of the assessee. Further on perusing the lease agreement, he noticed that the total gross lease rentals to be received or the entire lease period was Rs. 47,42,58,600/-. In the absence of any details with respect to the interest componen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assets. The argument of the Revenue Department was that at the end of lease period, the ownership of the vehicle is transferred to the lessee at a nominal value not exceeding 1 % of the original cost of the vehicle, making the assessee in effect a financer. However, the Hon'ble Court was not persuaded to agree with the said argument of the Revenue Department. According to the Court, as long as the assessee has a right to retain the legal title of the vehicle against the rest of the world, it would be the owner of the vehicle in the eyes of law. At one point, the Hon'ble Court has noted an observation of the Tribunal that the gist of the decision of the Apex Court in the case of Shaan Finance (P) Ltd. is that where the business of the assessee consists of hiring out machinery and/or where the income derived by the assessee from the hiring of such machinery is business income, the assessee must be considered as having used the machinery for the purpose of business. In the present case, it is worth to mention that GNFC Ltd. has shown the lease rent as income in its hand under the head "business income". That assessment is required to be considered in the present case while deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent and any payment made to them would be liable for TDS. The plea of the appellant though attractive is thus not acceptable. The disallowance of Rs. 1259291/- is thus confirmed. 10. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 11. Before us, the learned A.R. submitted that the issue is the present ground is covered in assessee's favour in view of the decision of Tribunal in Assessee's own case for A.Y. 2006-07 in ITA No. 827 1003/Ahd/2010 order dated 14.09.2012. He also placed on record, the copy of the aforesaid order. He thus urged that since the facts in the year under appeal are identical to that of A.Y. 2006-07 no disallowance under Section 40(a)(ia) was called for. The learned D.R. on the other hand relied on the order of Assessing Officer. 12. We have heard the rival submissions and perused the material on record. We find that on identical facts , the Co-ordinate Bench of Tribunal in Assessee's own case for A.Y. 2006-07 in ITA No. 827 a 1003/Ahd/2010 has deleted the addition by holding as under: 34 Ground no.6 is against deleting the disallowances u/s. (40)(a)(ia) on account of non deduction of IDS on CHA- charges paid of Rs.6,93,372/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. is applicable for payment made to principal to principal. Thus, he prayed to confirm the order of the CIT(A). 37 We have perused the order of the authorities below and heard the arguments both the sides. The nature of payment is reimbursement of actual expenses incurred by the agent which necessary evidence has been filed before us. The agent had deducted the TDS on these payments and paid to the exchequer within prescribed time. Thus, we do not find any reason to intervene in the order of CIT(A). Accordingly, we dismiss the appeal of the Revenue. 13. Since the facts in the present appeal are identical to that of A.Y. 06-07. Respectfully following the decision of the Co-ordinate Bench for A.Y. 06-07, we are of the view that in the present case no disallowance under section 40(a)(ia) is called for. We therefore delete the disallowance made by the Assessing Officer. Thus this ground of the Assessee is allowed. 14. In the result the appeal of the Assessee is partly allowed. ITA No. 2743/Ahd/2012(A.Y. 2005-06) (Revenue's appeal) 15. While framing the assessment under Section 143 Assessing Officer made disallowance on account of lease rent of Rs. 7,68,99,864/- and disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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