about tcs
Jarnail Singh (Accountant) (31 Points)
22 May 2017
Sanjay S
(Chartered Accountant)
(1375 Points)
Replied 22 May 2017
Thats a good question.
It is notable that the term 'Motor Vehicle' has not been defined in the Income Tax Act, 1961. In such case, we may refer to other statutes to ascertain the meaning of the term.
It has been defined under section 2(28) of the Motor Vehicles Act, 1988. The excerpts are as given below:
(28) "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding 1[twenty-five cubic centimeters];
Hence the question is answered as follows:
1. Purchase of Tractor:
In Natwar Parikh & Co. Ltd. v. State of Karnataka & Ors., the Supreme Court had held that Tractor is a "Motor Vehicle" u/s 2(28) of MVA, 1988 since another prime function of a tractor is to use it as a goods carriage (by attaching a trailer carriage) and hence TCS may apply on purchase of this vehicle.
2. Purchase of Harvestor:
There are various controversial decisions in this case.
Notably, it was held in the case of Magtron Earth Movers v. ITO (2010) (Bang. ITAT), that machines such as harvesting combines, Road Layers/Rollers, etc cannot be considered as Motor vehciles for purpose of Income Tax Act, 1961 merely because it was capable of being used on the roads. Hence one may say that TCS may not apply on purchase of Harverstor Combines. Plz note that contrary views exist in this case.
Also Please note that TCS shall apply in BOTH of above cases, if the consideration paid in cash exceeds Rs. 2 Lakhs
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