THE PR. COMMISSIONER OF INCOME TAX -5 vs. JBM AUTO LTD

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ITA/396/2019HC DelhiDLHC01002027201822 April 2019Author: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE PRATEEK JALAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in the present appeal. For the first issue concerning Section 14A, the Court followed its previous decisions in Commissioner of Income Tax-IV v. Holcim India Private Limited and Cheminvest Limited v. Commissioner of Income Tax-VI, and its own decision in Principal Commissioner of Income Tax-6, New Delhi v. Mcdonald’s India Private Limited, which held that Section 14A disallowance is not applicable when no exempt income is earned. For the second issue regarding TDS under Section 194J, the Court relied on the Supreme Court's decision in Commissioner of Income Tax v. Kotak Securities Limited. The Supreme Court held that Section 194J applies to specialized, exclusive services, not common general facilities like listing and custodian fees paid to stock exchanges. Therefore, TDS was not required on such payments, and the disallowance under Section 40(a)(ia) was not justified. Consequently, the appeal was dismissed.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax-5, appealed against an order concerning Assessment Year 2012-13. The appeal raised questions of law that were identical to those decided in a previous appeal for Assessment Year 2011-12 (ITA No. 1107/2018). In that prior appeal, the High Court had dismissed the Revenue's appeal, finding no substantial question of law. The present appeal by the Revenue seeks to urge similar grounds. The assessee, JBM Auto Ltd., was represented by none in the present proceedings.

What were the issues?

1. Whether a substantial question of law arises regarding the disallowance under Section 14A of the Income Tax Act, 1961, when the assessee had not earned any exempt income in the relevant assessment year. 2. Whether a substantial question of law arises concerning the disallowance of expenditure under Section 40(a)(ia) for alleged failure to deduct TDS under Section 194J on listing and custodian fees paid to stock exchanges and depositories. Assessee's contentions: The judgment does not record any specific contentions made by the assessee in the present appeal. However, it refers to the previous appeal where the assessee's position would have been considered. Revenue's contentions: The Revenue argued that disallowance under Section 14A was warranted. The Revenue also contended that TDS was required to be deducted under Section 194J on listing and custodian fees paid to National Stock Exchange, Bombay Stock Exchange, and National Securities Depository Limited, leading to disallowance under Section 40(a)(ia).

Which sections of the Income-tax Act were involved?

Section 260A,Section 14A,Section 40(a)(ia),Section 194J

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~61 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 396/2019 & CM Nos.18429-30/2019 THE PR. COMMISSIONER OF INCOME TAX -5... Appellant Through : Mr. Ruchir Bhatia, Sr. Standing Counsel with Mr. Puneet Rai, Adv. versus JBM AUTO LTD ..... Respondent Through : None. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE PRATEEK JALAN

O R D E R %

22.04.

2019

The questions of law sought to be urged in the present appeal by the Revenue under Section 260A of the Income Tax Act for Assessment Year 2012-13, were the subject matter of a previous appeal (ITA No.1107/2018, The Principal Commissioner of Income Tax-5 v. JBM Auto Ltd. decided on 22.10.2018) for A.Y.2011-12. The court had dismissed the Revenue’s appeal with the following reasons : “The first issue raised by the Revenue pertains to disallowance under Section 14A of the Act. It is accepted and admitted that the assessee had not earned any exempt income in this year. In these circumstances, following the ratio of the decisions of this Court in Commissioner of Income Tax-IV versus Holcim India Private Limited, (2014) 272 CTR 282 (Delhi) and Cheminvest Limited versus Commissioner of Income Tax-VI, (2015) 378 ITR 33(Del) and our decision of the even date in ITA No. 725/2018, Principal Commissioner of Income Tax-6, New Delhi versus Mcdonald’s India Private Limited, no substantial question of law arises as the issue is covered by the aforesaid decisions against the Revenue.

The second issue raised in the present case relates to the alleged failure on the part of the assessee in deducting TDS on listing and custodian fee of Rs.1,48,905/- paid to by the definition of the term "technical services" under Section 194J of the Act on which TDS was required to be deducted.

In view of the aforesaid position, no substantial question arises for consideration and the appeal is accordingly dismissed.”

This court in the above order held that no substantial question of law arises for consideration, which applies in the present case as well. Accordingly, no question of law arises in the present appeal which is hereby dismissed.

S. RAVINDRA BHAT, J

PRATEEK JALAN, J APRIL 22, 2019 aj

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