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TMI Blog2016 (12) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. 3. On appreciation of the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned assessing Officer holding that the company has incurred legal and professional charges of Rs. 7,22,275/- on which TDS is deductible U/s. 194J of the Act. The action of the Learned Commissioner of Income Tax (Appeals) in not accepting the contention of the appellant company that no such expenses has been debited during the year is contrary to the facts and law and deserves to be deleted. 4. On appreciation of the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned assessing Officer holding that on the payment made against contract of providing plastic / tarpaulin sheets on rental basis to the tune of Rs. 3,72,192/-, TDS is deductible U/s. 194 of the Act. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. 3. Briefly stated facts are that a surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted (VWEMCL) that VWEMCL have provided an order dated 02.04.2003 passed by the Hon'ble ITAT, SMC Bench, Ahmedabad, wherein it was held that VWEMCL was not carrying on any business by providing services to its own members, on the doctrine of mutuality embedded therein. The doctrine of mutuality vis-a-vis Income under the Income Tax Act, is also been clarified by the Hon'ble Apex Court in the case of Chelmsford Club Vs. CIT [2000] 109 Taxman 215 (SC). The appellant company being one of the members of VWEMCL, and having the doctrine of mutuality embedded therein, such amount paid by the appellant to the said mutual concern is not covered under the definition of "contract" for the purpose of sec. 194C of the Act. Considering the above, no TDS is deductible from the aforementioned payment and kindly may be allow this ground of appeal. I have considered the facts of the case carefully. In deciding appeal in the case of Vapi Waste & Effluent Management Company Limited (VWEMCL), I have held that the said entity does not qualify for the concept of mutuality and thereby the profits earned by the company is subject to tax. In view of this, the contention of the ld. AR is rejected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faulted because the provisions u/s. 194I is very clear to this effect. Thus this ground of appeal is dismissed." 14. Regarding the hiring expenses of Rs. 3,72,192/-, it was contended that the said expenditure was incurred against the contract of providing plastic and tarpaulin sheets on rental basis. It was also argued that these were used for protecting goods and other items during monsoon season and Section 194I of the Act is not applicable on these items. 15. Ld. DR, on the other hand, supported the orders of the lower authorities. 16. Having considered the rival contentions, perused the material available on record and gone through the orders of the authorities below, we find that ld. CIT(A) confirmed the action of the ld. AO, by following observations:- "6.5 With respect to hiring expenses of Rs. 3,72,192/-, the AR submitted that the said amount was incurred against the contract of providing plastic/tarpaulin sheets on rental basis so that the same can be used for protecting goods and other items from monsoon. The AR argued that the use of plastic sheet/tarpaulin is not covered under the provision of section 194I of the Act. The appellant company has already deducted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted before the ld.CIT(A) that considering the above, no TDS is deductible from the aforementioned payment and may be allowed this ground of appeal. The ld.CIT(A) considered the facts of the case carefully. In deciding appeal in the case of Vapi Waste & Effluent Management Company Ltd. (VWEMCL), the ld.CIT(A) held that the said entity does not qualify for the concept of mutuality and thereby the profits earned by the company is subject to tax. In view of this, the contention of the ld.AR is rejected and the action of the AO is confirmed by the ld.CIT(A). The ld.AR of the assessee further submitted in respect of interest and bill discount expenses of Rs. 5,05,234/- that the income on account of discounting of receivable was made to Union Bank of India, which is excluded either as a banking company to which the banking regulation Act 1949 applies. Thus, the payments made to the Bank is not subject to sec. 194A of the Act. There is a force in the submissions made by the ld.AR. Sec. 194A of the IT Act is not applicable in the case of Banking Company to which the Banking Regulation Act 1949 applies. Thus, the ld.CIT(A) held that the tax and interest levied in this connect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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