Selva Ganesh Constructions Private Limited Vs ITO (ITAT Chennai)
ITAT Chennai held that claim of depreciation and other related expenses is allowed to the company as the cars, registered in the name of directors, are used for the purpose of business.
Facts-
The assessee challenged the order of the Commissioner of Income Tax (Appeals) confirming the action of AO in disallowing the expenses claimed by the Assessee without deduction of Tax Deducted at Source [TDS] by invoking the provision of Section 40(a)(ia) of the Act. Accordingly, AO made disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc.
Further, assessee also challenged the order of the Commissioner of Income Tax (Appeals) confirming the action of AO in disallowing the claim of depreciation and expenses on motor vehicles, i.e. insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Directors of the Assessee Company.
Conclusion-
Held that in case the recipients have disclosed the remunerations received from the Assessee in their individual tax returns and discharged the taxes payable there under, in those case, the disallowance should not be made in terms of the second proviso of Section 40(a)(ia) of the Act.
Held that the cars are registered in the name of the Directors but the vehicles are used for the purpose of business of the Assessee Company and even the funds towards the purchase of the vehicles were provided by the Assessee Company and they have been shown as assets of the Assessee Company in the balance sheet and in the fixed asset chart for claiming depreciation. In view of these facts, we are of the view that the Assessee is entitled for the claim of depreciation and other related expenses.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
Out of these five appeals of the Assessee, two appeals are arising out of two different orders of the Commissioner of Income Tax (Appeals) – 15, Chennai for the Assessment Years 2012 – 2013 and 2013 – 2014 in ITA No.218 & 219/2018-19/CIT(A)-15; dated 29.03.2019. For these two assessment years, assessments were framed by the Income Tax Officer, Corporate Ward – 6(2), Chennai u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter “the Act”) vide orders dated 28.12.2018. The other three appeals for the Assessment Years 2014 – 2015, 2015 – 2016 and 2016 – 2017 are arising out of the order of the Commissioner of Income Tax (Appeals) – 15, Chennai in ITA No.220, 213 & 222/2018-19/CIT(A)-15; dated 29.03.2019. Assessments for these three Assessment Years are made by the Income Tax Officer, Corporate Ward – 6(2), Chennai u/s.143(3) r.w.s.147 of the Act vide orders of different dates, i.e. 31.12.2018 and 26.12.2018.
2. The first common issue in these five appeals is as regards to the order of the Commissioner of Income Tax (Appeals) in confirming the action of the Assessing Officer in disallowing the expenses claimed by the Assessee without deduction of Tax Deducted at Source [TDS] and thereby the Assessing Officer invoked the provision of Section 40(a)(ia) of the Act and made a disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc. The Assessing Officer made the following disallowance by invoking the provisions of Section 40(a)(ia) of the Act for non-deduction of TDS and in the following Assessment Years.
Assessment Years 2012 – 2013:
