The Tax Publishers2020 TaxPub(DT) 3891 (Mad-HC) : (2021) 276 TAXMAN 0244

INCOME TAX ACT, 1961

Section 147 Section 40(a)(ia)

Where machine hire charges paid by assessees to various contractors or sub-contractors were fully disclosed in books of account and audit reports furnished by tax auditor, and also by way of replies to notice issued by AO during course of original assessment proceedings, wherein, it was contended that payments were not rentals and thereby did not attract section 194-I, there was no failure on part of assessee to truly and fully disclose relevant materials before AO, so as to invoke extended period of limitation beyond four years.

Reassessment - Validity - Issue as regard addition under section 40(a)(ia) for non deduction of tax at source on machine hire charges - Machine hire charges paid by assessees to various contractors or sub-contractors were fully disclosed in books of account and audit reports

Issue was as regards validity of reopening of assessment by AO initiated after expiry of four years, wherein AO made addition under section 40(a)(ia) for non deduction of tax at source on machine hire charges. Held: Machine hire charges paid by assessees to various contractors or sub-contractors were fully disclosed not only in books of account and audit reports furnished by tax auditor, but way of replies to notice issued by AO during course of original assessment proceedings. It was contended while giving reply to audit objection that payments, did not amount to rentals and thereby did not attract section 194-I. There was no failure on part of assessee to truly and fully disclose relevant materials before AO during the course of original assessment proceedings. Extended period of limitation beyond four years after the end of relevant assessment years, could not be invoked for re-assessment proceedings under section 147/148 in view of the first proviso to section 147.

REFERRED : URC Construction (P) Ltd. v. Asstt. CIT 2017 TaxPub(DT) 1468 (Chen-Trib).

FAVOUR : In assesee's favour.

A.Y. : 2007-08 & 2008-09



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