The Income Tax Appellate Tribunal (ITAT), New Delhi Bench allowed deduction of expenditure on goods carriages taken on hire. The appeal has been preferred by Shakir Ahmad, the assessee.
The Commissioner of Income Tax (CIT(A)) sustained the additions in respect of disallowance of expenses on account of truck maintenance charges of Rupees one lakh, driver and conductor’s salary of Rupees eighteen lakhs, labour charges of Rupees thirty thousand, truck hire charges of Rupees seventy-three thousand, labour charges of Rupees two lakhs in respect of loading and unloading of goods.
The Counsel for the Revenue,Om Parkash submitted that the claim of the assessee is not tenable under the law and the CIT(A) has rightly rejected the same. He submitted that the assessee cannot compute it as per section 44AE of the Income Tax Act, 1961 for the part of the year and the remaining part under normal provisions thereby, claiming deduction of business expenditure against the business receipts.
The Counsel for the assessee, P. C.Yadav submitted that Section 44AE of the Income Tax Act operates in different fields and during the part of the year if the receipts fall outside the purview of section 44AE of the Income Tax Act. In that event, there would not be embargo under law for offering such receipts under the normal provisions of law and submitted that the CIT(A) has therefore, committed an error for not allowing deduction of expenditure to the assessee.
After considering the detailed submissions from the part of the assessee and revenue, a Bench consisting of Kul Bharat, Judicial Member observed that “In the present case, the assessee has taken certain goods carriages on hire which is not owned by the assessee and the assessee claimed certain expenses related to such carriages which is disallowed by the lower authorities. The CIT(A) has not appreciated this aspect.”
“Therefore, the AO is directed to give deduction of expenditure which related to the goods carriages which were not owned by the assessee but taken on hire from the open market for carrying out the transportation activities.”
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