COMMISSIONER OF INCOME TAX, AAYAKAR BHAWAN, PANAMA CHOWK, JAMMU Vs. JAMKASH VEHICLEADES PVT. LTD, B.C. ROAD, JAMMU

JUDGEMENT

(1.) The instant appeal by the Revenue filed under Section 260-A of the Income Tax Act, 1961 (for brevity the Act) is directed against order dated 25.09.2012 passed by the Income Tax Appellate Tribunal, Amritsaf Bench in ITA no. 304(ASR)/2010 in respect of assessment year 2006-07. The Revenue has claimed that the following substantive question of law whether the Tribunal is right in law and in facts in deleting the additions made under Section 40 (a) (ia) on lease rent paid, on expenses and on account of interest paid.

(2.) The assessee-respondent is a dealer of Maruti Cars. It is also engaged in repairs, service of the cars and other allied matters. It had filed original return of income for the assessment year 2006-07 on 31.11.2006 which was subsequently revised declaring an income of Rs.21,64,600/. The assessment was completed under Section 143(3) of the Act in which additions were made disallowing under Section 40 (a) (ia) rent paid on lease, on expenses and on account of interest paid.

(3.) On appeal, the CIT(A), Bathinda partly allowed the appeal of the assessee-respondent and deleted the addition in respect of disallowance under Section 40 (a) (ia) made on lease rent of Rs. 15,60,000/- by holding that the lease rent paid is on account of plant and machinery as per the MOU and there is no requirement under Section 194-1 to deduct tax at source on any rent for machinery. It was further held that the expenditure of Rs. 15,60,000/- has been incurred during the year and there was nothing payable. The CIT(A) followed the principle that the only expenditure which remained payable and on which tax has not been deducted and not deposited would attract application of provisions of Section 40 (a) (ia) by following the judgment of IT AT Jaipur Bench in the case of M/s Jaipur Vidyut Vitran Nigam Ltd. v. DCIT,2009 123 TTJ 888. Likewise, disallowance under Section 40 (a) (ia) made on expenses of Rs.46,86,912/- was also deleted by the CIT(A) by placing reliance on the same judgment and the same principle.