Commissioner Of Income Tax vs Bmr & Associates
2010 Latest Caselaw 1892 Del

                THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Judgment delivered on: 12.04.2010

+               ITA 619/2010

COMMISSIONER OF INCOME TAX                              ... Appellant

                                    - versus -

BMR & ASSOCIATES                                        ... Respondent

Advocates who appeared in this case : -

For the Appellant       : Ms Rashmi Chopra
For the Respondent      : None

CORAM:
HON'BLE MR. JUSTICE BADAR DURREZ AHMED
HON'BLE MR. JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. The revenue is in appeal against the order of the Income-tax

Appellate Tribunal dated 13.08.2009 passed in ITA No.2324/Del/2009

relating to the assessment year 2006-07. The issue before the Tribunal was

whether the car lease rentals were covered under Section 194 I or under

Section 194 C of the Income-tax Act, 1961 (hereinafter referred to as 'the

said Act').

2. The Assessing Officer held that the said payments were in

relation to a transport contract which was covered under Section 194 C and

there was an obligation on the assessee to deduct the TDS. Since the

assessee had not carried out this obligation, the assessee was not entitled to

any allowance under Section 40(a)(ia) of the said Act. The Commissioner

of Income-tax (Appeals) examined the agreement entered into between the

assessee and the lease rental company, namely, Kotak Mahindra Primus Ltd

and came to the conclusion that it was only intended for providing the

vehicles on lease to the assessee. The lessor was neither liable to provide a

driver to the assessee nor was it responsible for the day-to-day maintenance

or upkeep of the vehicles, which were also given to the assessee for a fixed

period. The Commissioner of Income-tax (Appeals) also found that the

lessor was not responsible in any manner for carrying passengers or goods

and, therefore, the agreement could not be said to be a contract for carrying

of goods or passengers as envisaged in clause (c) of Explanation III to

Section 194 C.

3. Before the Tribunal also, the revenue was unable to dispute the

fact that the vehicles in question were given on lease and that they did not

carry any responsibility of the day-to-day maintenance or upkeep of the

vehicles. Thus, both the Commissioner of Income-tax (Appeals) and the

Income-tax Appellate Tribunal have returned findings of fact that the

contract was not a transport contract, but merely entailed the taking of

vehicles on lease and the payments were in the nature of lease rentals

simplicitor. Consequently, the disallowance made by the Assessing Officer

under Section 40(a)(ia) was liable to be deleted and it was ordered

accordingly.

4. We find that the Tribunal has, on findings of the fact, come to

the correct conclusion and no interference is called for with the impugned

order. No substantial question of law arises for our consideration. The

appeal is dismissed.

BADAR DURREZ AHMED, J

V.K. JAIN, J APRIL 12, 2010 dutt