Case Law Details
CIT Vs Texas Instruments India Pvt. Ltd. (Karnataka High Court)
Conclusion: Neither Section 194-C nor 194-I of the Act would be applicable to the lease financing of motor vehicles; thus there could have been no disallowance on the ground that there was no tax deduction at source made by the Assessee.
Held: Assessee had claimed deduction under Section 80JJ(AA) for the Assessment Year 2008-2009 in respect of employment of new workmen for the said year. Assessee had also sought for deduction in computing the income chargeable under the head “profits and gains of business or profession”, as regards the amounts paid towards lease rental on lease finance of cars obtained by assessee and had contended that there was no tax liability to be paid thereof nor any deduction at source required to be done thereon since the same was not covered under Section 194-C or under Section 194-I. AO had held that assessee was not eligible for any deduction under Section 80JJ(AA) and since assessee had not deducted tax at source on the lease rentals for the cars/vehicles in terms of Section 194-C, the expenditure claimed in the computation of income was disallowed and added back to the total income of assessee under Section 40(a)(ia) on the ground that the workmen as regards whom assessee had sought for deduction under Section 80JJ(AA) had not completed 300 days of employment during the previous year. It was held that the period of 300 days as mentioned under Section 80JJAA could be taken into consideration both in the previous year and the succeeding year for the purpose of availing benefit under Section 80JJAA. It was not required that the workman works for entire 300 days in the previous year. Hence, in the facts and circumstances of the case, the software engineer being workman having satisfied the period of 300 days, assessee was entitled to claim deduction under Section 80JJAA. Admittedly, assessee had lease financed the vehicles for the use of its employees. The lease financing company did not provide any particular service as a driver or otherwise for the purpose of usage of the car. On the car having been provided, the maintenance of the same was to be carried out by the employee of Assessee, and the lease financing company had no role to play in the same. The only transaction entered into between assessee and the lease financing company was to make payment of the amounts due to the company, and the car would be handed over to the employee through assessee. Thus there being no work as such being carried out by the lease financing company nor any service as such being rendered by the said company, therefore, neither Section 194-C, nor 194-I of the Act were applicable; thus there could have been no disallowance on the ground that there was no tax deduction at source made by assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
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