BU India Private Limited , Mumbai V. The Deputy Commissioner of Income TAx Circle-5(1)(1), Bangalore

ITA 1492/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7590 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK JHA
• Assessee Lawyers: AJITH SHAH
• Keywords: Recovery proceedings; Transfer pricing; Opportunity of being heard; Set aside
• Section: 40(a)(ia); 194C; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 1491 TO 1493 /BANG/201 8 ASSESSMENT YEAR S :20 1 2 - 1 3 TO 2014 - 15 M/S. BU INDIA PRIVATE LIMITED, (FORMERLY KNOWN AS RAY AND KESHAVAN DESIGN ASSOCIATES PVT. LTD.), 4 TH & 5 TH FLOOR, EMPIRE PLAZA II, CTS NO. 9, VILLAGE HARIYALI, LBS MARG, VIKHROLI (WEST), MUMBAI 400 083. PAN: AABCR7274F VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5 (1) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI AJITH SHAH, CA RESPONDENT BY : SHRI D.K. JHA, ADDL. CIT (DR) DATE OF HEARING : 15 .04.201 9 DATE OF PRONOUNCEMENT : 25 .04.201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE AND THESE ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LD. CIT (A)-5, BANGALORE ALL DATED 14.11.2017 FOR ASSESSMENT YEARS 2012-13 TO 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 1491/BANG/2018 ARE AS UNDER. 1. DISALLOWANCE OF REIMBURSEMENT OF EXPENSES MADE BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISES U/S 40(A)(I) OF THE ACT- RS. 3,22,529/-: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OFINCOME TAX (APPEALS) OUGHT TO HAVE HELD THATREIMBURSEMENT OF EXPENSES OF RS.3,22,529/- MADE BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISES WAS NOT AN INCOMECHARGEABLE TO TAX AND HENCE, THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCETHEREON UNDER SECTION 195 OF THE ACT. CONSEQUENTLY, OUGHT TO HAVE DIRECTED THE AO TODELETE THE DISALLOWANCE OFRS. 3,22,529/- MADE UNDER SECTION 40(A)(I) OF THE ACT. ITA NOS. 1491 TO 1493/BANG/2018 PAGE 2 OF 8 2. ADDITIONS MADE TO THE INCOME RETURNED SOLELY RELYING ON THE INFORMATION CONTAINEDIN FORM NO.26AS - RS.84,33,029/-: 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OFINCOME TAX (APPEALS) OUGHT TO HAVE HELDTHATTHE AMOUNTS AS PER BOOKS AND AS APPEARINGIN FORM 26AS STAND DULY EXPLAINED AND ACCORDINGLY, OUGHT TO HAVE DIRECTED THE AO TODELETE THE FOLLOWING ADDITIONS MADE: SR. NO. NAME OF THE PARTY AMOUNT (RS.) (I) GLAXO SMITHKLINE CONSUMERS HEALTH CARE PVT. LTD. 63,08,029/- (II) NOVA MEDICAL CENTRE PVT. LTD. 21,25,000/- TOTAL 84,33,029/ - WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATE 2.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OFINCOME TAX (APPEALS) OUGHT TO HAVE HELDTHAT ADDITIONS MADE TO THE INCOME RETURNEDSOLELY BY RELYING ON THE INFORMATION CONTAINED IN FORM NO.26AS IS BAD IN LAW ANDACCORDINGLY, OUGHT TO HAVE DIRECTED THE AO TO DELETE FOLLOWING ADDITIONS. SR. NO. NAME OF THE PARTY AMOUNT (RS.) (I) GLAXO SMITHKLINE CONSUMERS HEALTH CARE PVT. LTD. 63,08,029/- (II) NOVA MEDICAL CENTRE PVT. LTD. 21,25,000/- TOTAL 84,33,029/ - 3. DISALLOWANCE OF CAR HIRE CHARGES OF RS.4,45,600/- U/S 40(A)(IA) OF THE ACT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE PROVISIONS OF SECTION 194-I APPLY TO CAR HIRE CHARGES FOR DEDUCTION OF TAX AT SOURCE AND NOT SECTION 194-C AND CONSEQUENTLY, OUGHT TO HAVE DIRECTED THE AO TO DELETE DISALLOWANCE OF CAR HIRE CHARGES OF RS. 4,45,600/- MADE UNDER SECTION 40(A)(IA) OF THE ACT. 4. DISALLOWANCE OF CAR HIRE CHARGES OF RS. 5,55,000/- U/S 40(A)(IA) OF THE ACT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) THROUGH INADVERTENCE HAS STATED THAT THE CAR HIRE CHARGES OF RS. 5,55,000/- ISINADMISSIBLE UNDER ITA NOS. 1491 TO 1493/BANG/2018 PAGE 3 OF 8 SECTION 40(A)(IA), NOTWITHSTANDING THE FACT THAT TAX THEREON HAS BEENDEDUCTED AT SOURCE (UNDER SECTION 194-I) AND THE SAID AMOUNTS HAVE NOT BEEN SUBJECTMATTER OF DISALLOWANCE BY THE AO AND FURTHER ACCORDINGLY THE AO SHOULD BE DIRECTED TOIGNORE THE DIRECTIONS OF THE LD. CIT(A) AS REGARDS THE DISALLOWANCE OF RS. 5,55,000/- INRESPECT OF THE SAME. 5. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED FOR HEREINABOVE SHOULD BE GRANTED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAYBE NECESSARY. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 IN ITA NO. 1492/BANG/2018 ARE AS UNDER. 1. DISALLOWANCE OF CAR HIRE CHARGES OF RS. 4,12,529/- U/S 40(A)(IA) OF THE ACT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE HELDTHAT THE PROVISIONS OF SECTION 194-I APPLY TO CAR HIRE CHARGESFOR DEDUCTION OF TAX AT SOURCE AND NOT SECTION 194-C AND CONSEQUENTLY, OUGHT TO HAVEDIRECTED THE AO TO DELETE DISALLOWANCE OF CAR HIRE CHARGES OF RS. 4,12,529/- MADE UNDER SECTION 40(A)(IA) OF THE ACT. 2. DISALLOWANCE OF CAR HIRE CHARGES OF RS.2,92,000/- U/S 40(A)(IA) OF THE ACT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) THROUGH INADVERTENCE HAS STATED THAT THE CAR HIRE CHARGES OF RS. 2,92,000/- WASINADMISSIBLE UNDER SECTION 40(A)(IA), NOTWITHSTANDING THE FACT THAT TAX THEREON HAS BEENDEDUCTED AT SOURCE (UNDER SECTION 194-I) AND THE SAID AMOUNT WAS NOT SUBJECT MATTER OFDISALLOWANCE BY THE AO AND FURTHER ACCORDINGLY THE AO SHOULD BE DIRECTED TO IGNORE THEDIRECTIONS OF THE LD. C1T(A) AS REGARDS THE DISALLOWANCE OF RS. 2,92,000/- IN RESPECT OFTHE SAME. 3. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED FOR HEREINABOVE SHOULD BE GRANTED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAYBE NECESSARY. 4. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2014-15 IN ITA NO. 1493/BANG/2018 ARE AS UNDER. 1. DISALLOWANCE OF CAR HIRE CHARGES OF RS. 1,50,000/- U/S 40(A)(IA) OF THE ACT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE HELDTHAT THE PROVISIONS OF SECTION 194-I APPLY TO CAR HIRE CHARGESFOR DEDUCTION OF ITA NOS. 1491 TO 1493/BANG/2018 PAGE 4 OF 8 TAX AT SOURCE AND NOT SECTION 194-C AND CONSEQUENTLY, OUGHT TO HAVEDIRECTED THE AO TO DELETE DISALLOWANCE OF CAR HIRE CHARGES OF RS. 1,50,000/- MADE UNDER SECTION 40(A)(IA) OF THE ACT. 2. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED FOR HEREINABOVE SHOULD BE GRANTED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAYBE NECESSARY. 5. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IN ASSESSMENT YEAR 2012-13, ONE OF THE ISSUES INVOLVED IS REGARDING DISALLOWANCE OUT OF REIMBURSEMENT OF EXPENSES MADE BY THE ASSESSEE TO ITS AE OF RS. 3,22,529/- MADE BY THE AO U/S. 40(A)(I) OF IT ACT. THEREAFTER HE SUBMITTED THAT THE SECOND ISSUE INVOLVED IN THIS YEAR IS REGARDING ADDITION OF RS. 84,33,029/- MADE BY THE AO BY RELYING ON THE INFORMATION CONTAINED IN FORM NO. 26AS. HE SUBMITTED THAT THE THIRD ISSUE INVOLVED IS REGARDING DISALLOWANCE OF CAR HIRE CHARGES OF RS. 4,45,600/- AND RS. 5.55 LAKHS MADE BY THE AO U/S. 40(A)(IA) OF IT ACT. 6. THEREAFTER HE SUBMITTED THAT IN ASSESSMENT YEAR 2013-14, ONLY ISSUE INVOLVED IS REGARDING DISALLOWANCE OF CAR HIRE CHARGES OF RS. 4,12,529/- AND RS. 2.92 LAKHS U/S. 40(A)(IA) OF THE IT ACT. 7. THEREAFTER HE SUBMITTED THAT IN ASSESSMENT YEAR 2014-15, THE ONLY ISSUE INVOLVED IS REGARDING DISALLOWANCE OF CAR HIRE CHARGES OF RS. 1.50 LAKHS MADE BY THE AO U/S. 40(A) (IA) OF THE ACT. 8. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ALL THE THREE ORDERS PASSED BY THE CIT (A) ARE VERY CRYPTIC. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN ASSESSMENT YEAR 2012-13, THE ISSUE INVOLVED ABOUT DISALLOWANCE OF REIMBURSEMENT OF EXPENSES MADE BY THE ASSESSEE TO ITS AE U/S. 40(A)(I) OF RS. 3,22,529/- WAS DECIDED BY CIT(A) AS PER PARA 5 OF HIS ORDER FOR THAT YEAR. FOR THE SAKE OF READY REFERENCE, PARA 5 FROM THE ORDER OF CIT (A) FOR ASSESSMENT YEAR 2012-13 IS REPRODUCED HEREINBELOW. 5. I HAVE CONSIDERED THE ABOVE GROUNDS OF APPEAL, STATEMENT OF FACTS AND WRITTEN SUBMISSIONS FILED BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER. THE APPELLANT HAS RAISED THREE GROUNDS OF APPEAL AND THE FIRST GROUND IS ON THE DISALLOWANCE OF REIMBURSEMENT OF ITA NOS. 1491 TO 1493/BANG/2018 PAGE 5 OF 8 EXPENSES MADE BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISES OF RS. 3,22,529/- U/S 40(A)(I) OF THE ACT. THE ASSESSING OFFICER HAS DISALLOWED THE REIMBURSEMENT OF EXPENSES OF RS. 3,22,529/- TO ASSOCIATED ENTERPRISES, BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT. DURING THE APPELLATE PROCEEDINGS THE APPELLANT COULD NOT ESTABLISH THAT THE EXPENSES ARE REIMBURSABLE BY THE ASSOCIATED ENTERPRISES AND THEREFORE THE PROVISIONS OF SEC. 40(A)(I) OF THE ACT CANNOT BE INVOKED. THEREFORE, THE ADDITION MADE U/S. 40(A)(I) IS HEREBY UPHELD. 10. FROM THE ABOVE PARA REPRODUCED FROM THE ORDER OF CIT (A), IT IS SEEN THAT THE ORDER IS VERY CRYPTIC. ON PAGE NO. 22 OF THE PAPER BOOK FOR ASSESSMENT YEAR 2012-13, THE INVOICE IS AVAILABLE IN RESPECT OF HONG KONG DOLLARS 31,123 EQUIVALENT TO RS. 2,08,350/-. SIMILARLY ON PAGE NO. 29 OF THE PAPER BOOK IS THE COPY OF ANOTHER INVOICE FOR GREAT BRITAIN POUND (GBP) 1,360.95 EQUIVALENT TO RS. 1,14,180/-, TOTAL AMOUNT OF THESE TWO INVOICES IN RUPEES TERMS COMES TO RS. 3,22,530/-. WE FAIL TO UNDERSTAND WHAT IS THE OBJECTION OF CIT (A) AND WHAT IS THE BASIS OF HIS DECISION AS PER PARA 5 REPRODUCED ABOVE. 11. THE ISSUE REGARDING ADDITION OF RS. 84,33,029/- WAS DECIDED BY CIT(A) AS PER PARA 6 OF HIS ORDER FOR ASSESSMENT YEAR 2012-13. FOR THE SAKE OF READY REFERENCE, THIS PARA IS REPRODUCED HEREINBELOW. 6. GROUND NO.2 IS ON THE ADDITIONS MADE TO THE INCOME RETURNED SOLELY RELYING ONTHE INFORMATION CONTAINED IN FORM NO. 26AS OF RS.84,33,029/-.EVENDURING THEAPPELLATE PROCEEDINGS THE APPELLANT COULD NOT RECONCILE THE DIFFERENCE. THOUGH, THE APPELLANT RELIEDON FEW CASE LAWS FOR THE PROPOSITIONS THAT THE ADDITION MADE TO INCOMERETURNED SOLELY RELYING ON THE AIR INFORMATION/FORM 26AS CANNOTBE SUSTAINED. AS SUCHTHE DIFFERENCE AS PER 26AS COMPARED WITH THE BOOKS OF ACCOUNT WAS IN RESPECT OF GLAXOSMITHKLINE CONSUMERS HEALTH CARE PVT. LTD. AND NOVA MEDICAL CENTRE PVT LTD. THEAPPELLANTSUBMITTED THAT THEY COULD BE SOME OTHER REASON SUCH AS WRONG USE OF TAN, WRONG ACCOUNTING BY GLAXO, MISMATCH YEAR OF THE ACCOUNTING. FURTHER SUBMITTED THAT IF THE AGGREGATE TRANSACTIONS FOR THREE YEARS TAKEN TOGETHER THEN THE AMOUNT AS PER THE BOOKS AND FORM 26AS ARE THE SAME. HOWEVER, THE APPELLANT SHOULD HAVE RECONCILED YEAR-WISE AND ASCERTAINED THE CORRECT REASON AS TO WHY SUCH DIFFERENCE WAS THERE. MERE RELYING ON FEW CASE LAWS WITHOUT HAVING ANY PLAUSIBLE EXPLANATION WILL NOT BE CONSIDERED AS THE ONUS CASTED UPON THE APPELLANT IS DISCHARGED. THEREFORE, THE EXPLANATION GIVEN BY THE APPELLANT IS NEITHER PLAUSIBLE NOR ACCEPTABLE. THE GROUND ON THIS ISSUE IS DISMISSED. ITA NOS. 1491 TO 1493/BANG/2018 PAGE 6 OF 8 12. FROM THE ABOVE PARA REPRODUCED FROM THE ORDER OF CIT(A), IT IS SEEN THAT THIS ISSUE WAS ALSO DECIDED BY CIT(A) IN A VERY CRYPTIC MANNER. IN THE PAPER BOOK BEFORE US, THE ASSESSEE HAS FILED RECONCILIATION STATEMENT WITH FORM 26AS ALONG WITH THE EXPLANATIONS FOR DIFFERENCES AND THE SAME IS AVAILABLE ON PAGES 33 AND 34 OF PAPER BOOK FOR ASSESSMENT YEAR 2012-13. AS PER THE CERTIFICATE GIVEN BY THE ASSESSEE IN THE PAPER BOOK, ALL THE DOCUMENTS CONTAINED IN THE PAPER BOOK WERE BEFORE AO AND CIT(A) BOTH. HENCE THIS RECONCILIATION STATEMENT WAS AVAILABLE BEFORE CIT(A) ALSO. THE CIT(A) HAS NOT POINTED OUT ANY SPECIFIC MISTAKE IN THE RECONCILIATION STATEMENT AND HE HAS SIMPLY STATED THAT THE ASSESSEE SHOULD HAVE RECONCILED YEAR-WISE AND ASCERTAINED THE CORRECT REASON AS TO WHY SUCH DIFFERENCE WAS THERE. IN OUR CONSIDERED OPINION, LD. CIT(A) SHOULD HAVE PASSED A SPEAKING AND REASONED ORDER. 13. THE THIRD ISSUE IN RESPECT OF DISALLOWANCE U/S. 40(A)(IA) OUT OF CAR HIRE CHARGES OF RS. 4,45,600/- AND RS. 5.55 LAKHS WAS DECIDED BY LD. CIT(A) AS PER PARA NO. 7 OF HIS ORDER AND THIS PARA IS ALSO REPRODUCED HEREINBELOW FOR READY REFERENCE. 7. THE THIRD GROUND IS RELATED TO THE DISALLOWANCE OF CAR HIRE CHARGES OFRS,4,45,600/- U/S.40(A)(IA)OF THE ACT. DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT IT HAD TAKEN ON LEASE CARS WITHOUT ANY DRIVER OR ANY SERVICES AND IT HAD ENTERED INTO AGREEMENTS FOR CAR LEASE. AS PER THE TERMS OF THE AGREEMENTS THE RESPECTIVE PARTIES ARE NOT REQUIRED TO PROVIDE ANY SERVICES BUT IT IS THE APPELLANT WHO SHALL BE USING THE VEHICLE ON ITS COSTS. THE AGREEMENTS DO NOT REQUIRE THE OWNER OF THE VEHICLE TO DO ANY WORK AT ALL. THE APPELLANT PAYS A FIXED SUM FOR OBTAINING THE CAR ON LEASE. SECTION 194C CONTEMPLATES FOR WORK BEING DONE AND WORK IS DEFINED AS INCLUDING CARRIAGE OF GOODS OR PASSENGERS BY ANY OTHER MODE OF TRANSPORT OTHER THAN BY RAILWAYS. HOWEVER, SINCE NO WORK IS CARRIED OUT BY THE VEHICLE OWNERS, THE PROVISIONS OF SECTION 194C DO NOT GET ATTRACTED. AS AGAINST THE SAME, SECTION 194 I SPECIFICALLY CONTEMPLATES LIABILITY WITH ANY PERSON PAYING RENT TO DEDUCT TAX FOR USE OF ANY MACHINERY OR PLANT OR EQUIPMENT. HENCE PROVISIONS OF SECTION 194I GETS ATTRACTED WHERE AN ASSESSEE TAKES MACHINERIES ON LEASE AND PAYS RENT FOR THE SAME. THE APPELLANT SUBMITTED THAT THE PAYMENT FOR USE OF CAR GETS COVERED U/S. 194I OF THE ACT AND NOT U/S. 194C OF THE ACT AS HELD BY THE ASSESSING OFFICER. THAT BEING SO, THE APPELLANT, WHEREVER THE PAYMENT EXCEEDED THE THRESHOLD LIMIT OF RS. 1,80,000/-, DEDUCTED TAX AT SOURCE THEREON U/S. 194I OF THE ACT AND CONSEQUENTLY, DID NOT DEDUCT TAX AT SOURCE ON THE PAYMENT MADE TO INDIVIDUALS DID NOT EXCEED RS. ITA NOS. 1491 TO 1493/BANG/2018 PAGE 7 OF 8 1,80,000/-. THE LEGAL DECISIONS WHEREIN IT WAS HELD THAT WHEN A CONTRACT IS ENTERED OR HIRING OF VEHICLES / EQUIPMENTS SIMPLICITOR WITHOUT ANY WORK INVOLVED, THEN THE PROVISIONS OF SECTION 194-I OF THE ACT WOULD APPLY AND NOT SECTION 194C OF THE ACT. FOR THIS PROPOSITION THE APPELLANT RELIED ON THE FOLLOWING CASE LAWS: THREE STAR GRANITED (P.) LTD V. ACIT, (2014) 98 DTR 9 (KER) ITO V. BHARAT SANCHAR NIGAM LTD, (2014) 64 SOT 138 (MUM TRIB.) BHARAT ELECTRONICS LTD V. DCIT, (2012) 50 SOT 172 (DELHI) THE APPELLANT FURTHER SUBMITTED THAT IT HAS ALREADY PAID THE ENTIRE CAR HIRE CHARGES FOR THE YEAR AND NO AMOUNT IS PAYABLE AS OF YEAR-END. PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS OF END OF THE YEAR AND IT CANNOT BE INVOKED TO DISALLOW AMOUNTS WHICH HAVE BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR. FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVOKED TO DISALLOW CAR HIRE CHARGES PAID DURING THE YEAR AND CONSEQUENTLY DISALLOWANCE MADE IN RESPECT OF CAR HIRE CHARGES OF RS. 4,45,600/- BE DELETED. HOWEVER, THE POINT OF TIME AT WHICH THE DEDUCTION IS TO BE MADE ESTABLISHES THAT THE PROVISIONS ARE MANDATORY. FOR INSTANCE, UNDER SECTION 194C OF THE ACT, A PERSON RESPONSIBLE FOR PAYING THE SUM IS REQUIRED TO DEDUCT TAX AT THE TIME OF CREDIT OF SUCH SOURCE UNDER VARIOUS PROVISIONS OF CHAPTER XVII-B. THIS VIEW IS SUPPORTED BY THE JUDGMENTS OF THE CALCUTTA AND MADRAS HIGH COURTS. THE PURPOSE OF SECTION 40(A)(IA) IS TO ENSURE THE RECOVERY OF TAX. THERE IS NO INDICATION IN THE SAID SECTION THAT THIS OBJECT WAS CONFINED TO THE RECOVERY OF TAX FROM A PARTICULAR TYPE OF TAXPAYER FOLLOWING A CERTAIN ACCOUNTING PRACTICE. THEREFORE, IT CAN BE INFERRED THAT THE QUESTION AS TO WHETHER THE OBLIGATION AROSE TO WITHHOLD TAXES AT THE TIME OF MAKING CERTAIN PAYMENTS UNDER VARIOUS PROVISIONS OF CHAPTER XVII-B OF THE INCOME TAX ACT 1961 OR NOT IS TO BE DECIDED BEFORE INVOKING THE PROVISIONS OF SEC. 40(A)(IA) WHICH IS THE CAUSE OF ACTION. IT IS SEEN FROM THE PAYMENTS MADE TOWARDS CAR HIRE CHARGES THE PAYMENTS MADE TO MR. GUTENBERG AND MR. ASHUTOSH KARKHANIS EXCEEDED RS. 1,80,000/- WHICH MANDATES THE DEDUCTOR TO DEDUCTED TAX AT SOURCE U/S. 194C OF THE INCOME TAX ACT 1961. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT TO THE EXTENT TO THESE TWO PAYMENTS IS HEREBY UPHELD. 14. FROM THE ABOVE PARA REPRODUCED FROM THE ORDER OF CIT (A), IT IS SEEN THAT THIS ISSUE WAS ALSO DECIDED BY CIT (A) IN A VERY CRYPTIC MANNER. 15. FOR THE REMAINING TWO YEARS ALSO, THE ISSUE REGARDING DISALLOWANCE U/S. 40(A) (IA) OUT OF CAR HIRE CHARGES WAS DECIDED BY CIT (A) IN A CRYPTIC MANNER. IN VIEW OF THE ABOVE FACTUAL POSITION, WE ARE OF THE CONSIDERED OPINION THAT THE ENTIRE ISSUE IN ALL THE THREE YEARS SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH DECISION BY WAY OF A SPEAKING AND REASONED ORDER AFTER ITA NOS. 1491 TO 1493/BANG/2018 PAGE 8 OF 8 PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. HENCE WE SET ASIDE THE ORDER OF CIT (A) IN ALL THE THREE YEARS AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION BY WAY OF A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. IN VIEW OF THIS DECISION, NO ADJUDICATION ON MERIT IS CALLED FOR AT THE PRESENT STAGE. 16. IN THE RESULT, ALL THE THREE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH APRIL, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.