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TMI Blog2016 (2) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... he violation u/s 40A(3) of the Act is independent of other addition made on estimated basis by the Learned AO for want of supporting bills and vouchers. Moreover, the Learned AO had duly reduced the amount of cash expenses exceeding ₹ 20,000/- while making the estimated disallowance of expenses and hence the action of the Learned AO cannot be faulted with. - Decided against assessee - ITA No. 1184/Kol/2012 - - - Dated:- 20-1-2016 - Shri Mahavir Singh, Judicial Member, and Shri M. Balaganesh, Accountant Member For The Appellant: Shri Dinabandhu Naskar, JCIT, ld.Sr.DR For The Respondent: Shri Subash Agarwal, Advocate, ld.AR ORDER SHRI M.BALAGANESH, AM This appeal of the revenue arises out of the order of the Learned CIT(A), 1, Kolkata in Appeal No. 369/CIT(A)-I/Wd-1(1)/08-09 dated 02-05-2012 for the assessment year 2007-08 against the assessment order passed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The first issue to be decided in this appeal is as to whether the provisions of section 40(a)(ia) of the Act could be invoked in respect of hire charges paid to financier of vehicle loans obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire and part towards the payment of price. The agreed amount payable bythe hirer in periodical instalments cannot, therefore, be characterised as interest payable in any manner within the meaning of section 2 (28A) of the Income-tax Act, as it is not in respect of any money borrowed or debt incurred in this view of the matter it is clarified that the provisions of section 194A of the Income-tax Act are not attracted in such transactions. (Instruction No. 1425 F. No. 275/9/801T(B) dated 16-11-81 from CBDT. Vol. XXVII No. 3 page 403.) In view of the aforesaid circular, we hold that the payment of hire charges does not fall under the term interest as defined in section 2(28A) of the Act and consequently the payments are not liable for deduction of tax at source u/s 194A of the Act. Hence no disallowance u/s 40(a)(ia) of the Act is warranted. Accordingly, the ground no. 1 raised by the revenue is dismissed. 3. The next ground to be decided in this appeal is as to whether the provisions of section 40(a)(ia) of the Act could be invoked in respect of lorry hire charges and trailer hire charges incurred by the assessee to the extent of ₹ 7,32,032/- and ₹ 1,01,213 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... play, to set aside this issue to the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction. Accordingly the ground no. 2 raised by the revenue is allowed for statistical purposes. 4. The next issue to be decided in this appeal is as to whether the depreciation could be disallowed in respect of vehicles in the facts and circumstances of the case amounting to ₹ 6,09,570/-. 4.1. The brief facts of this issue is that the Learned AO observed that the assessee had purchased two vehicles bearing registration number NL-01-D-2921 and NL-01-D- 3621 under hire purchase scheme from M/s Jayabharat Credit Ltd vide hire purchase agreement dated 30.3.2007. The Learned AO felt that the vehicles are not put to use by the assessee before 31.3.2007 and further found that the vehicles were registered only on 11.4.2007 and 12.4.2007 respectively and accordingly felt that the assessee is not entitled for depreciation for Asst Year 2007-08. In response to show cause notice, the assessee replied before the Learned AO th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details filed by the assessee before the Learned CIT(A). In the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh based on the evidences submitted by the assessee before the Learned AO. The assessee is also at liberty to file fresh documents and evidences to substantiate its claim of deduction. No finding is given by us with regard to the allowability of depreciation on vehicles based on the usage of the vehicles by the assessee. Accordingly the ground nos. 3 4 raised by the revenue are allowed for statistical purposes. 5. The next issue to be decided in this appeal is as to whether the depreciation could be disallowed in respect of unserviceable crane in the facts and circumstances of the case amounting to ₹ 1,41,894/-. 5.1. The brief facts of this issue is that the Learned AO observed that the assessee had purchased a scrap and unserviceable crane from M/s Scrap (India) Howrah 711202. The Learned AO on verification of the invoice thereon held that is not a genuine transaction and no plant and machinery was purchased and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the ground nos. 5 6 raised by the revenue are allowed for statistical purposes. 6. The last issue to be decided in this appeal is as to whether the disallowance u/s 40A(3) of the Act could be made in the facts and circumstances of the case in the sum of ₹ 74,974/- and ₹ 33,528/- . 6.1. The brief facts of this issue is that the assessee claimed ₹ 27,54,531/- as expenses on account of tyres and tubes and ₹ 51,64,185/- on account of Diesel Mobil. The Learned AO observed from the ledger account that most of the expenses were incurred through journal entries or cash payments. The Learned AO observed that total cash payments exceeding ₹ 20,000/- were made to the extent of ₹ 3,74,874/- and ₹ 1,67,643/- and accordingly sought to disallow 20% of the same amounting to ₹ 74,974/- and ₹ 33,528/-. The Learned CIT(A) on first appeal deleted the disallowance. Aggrieved, the revenue is in appeal before us on the following ground:- 7. Ld.CIT(A)-1, Kolkata has erred in deleting the additions u/s. 40A (3) amounting to ₹ 1,08,5021- ( 74,974 + 33,5281-) making observation that ad hoc disallowance of expenditure under these hea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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