Case Law Details
Sri. Singonahalli Chikkarevanna Gangadharaiah Vs ACIT (ITAT Bangalore)
Conclusion: Where a vehicle was provided by assessee to the concerned parties and assessee was to bear the vehicle expenses actually incurred by the cab owners which will be reimbursed by the parties concerned, reimbursement of actual expenses incurred by assessee could not be treated as payment subject to TDS under section 194C.
Held: AO noticed from the profit and loss account of assessee that assessee had debited a sum for vehicle hire charges paid and a certain sum for petrol and diesel expenses paid. Assessee was asked to produce details of TDS on expenses, however, assessee was failed to do so. Subsequently, assessee submitted PAN card from cab drivers and owners for whom hire charges were paid and that the cab drivers and owners were all regular income-tax payers and hence as per section 194C no TDS was made where PAN was provided. According to the AO section 194C will only apply to a contractor during the course of business of plying, hiring or leasing goods carriages and not to a contractor engaged in the business of plying passenger vehicle. Accordingly, AO held the assessee liable to deduct TDS and disallowed a sum for vehicle hire charges, u/s 40(a)(ia) of the Act. It was held as agreed by and between assessee and the cab owners, a vehicle was to be provided by assessee to the parties and thus, assessee was to bear the vehicle expenses actually incurred by the said cab owners and which will be reimbursed by the parties concerned. If bills for such expenses incurred by the said cab owners were separately raised by them on assessee in addition to bills for hire charges and since the amount of bills so raised was towards the actual expenses incurred by them, there was no element of any profit involved in the said bills. It was thus a clear case of reimbursement of actual expenses incurred by assessee and the same, therefore, was not of the nature of payment covered by section 194C requiring assessee to deduct tax at source therefrom, where bills were raised separately by the cab owners for reimbursement of actual expenses incurred by them. As such, the provisions of section 194C were not applicable to the reimbursement of actual expenses and the assessee was not liable to deduct tax at source from such reimbursement.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal filed by the assessee is directed against the order of the CIT(A), dated 16.01.2018. The relevant assessment year is 2014-2015.
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