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Income Tax Appellate Tribunal, “A’’ BENCH : BANGALORE
Before: SHRI B.R BASKARAN & SHRI PAVAN KUMAR GADALE
PER BENCH: All the appeals filed by the assessee are directed against the orders passed by Ld CIT(A)-12, Bengaluru and they relate to the assessment years 2007-08 to 2010-11. In all these appeals, the assessee is challenging the order passed by Ld CIT(A) confirming the interest charged u/s 201(1A) of the Act for belated payment of TDS amount.
We heard the parties and perused the record. The assessee company is authorised to distribute license for software products as per the agreement entered by the assessee with M/s Ansys Inc. USA. The payment to the USA company for purchase of software licences was made after deduction of TDS. The AO noticed that the assessee has remitted the TDS amount belatedly and accordingly levied interest u/s 201(1A) of the Act in all the years under consideration.
The assessee challenged the orders so passed by the AO by filing appeals before the Ld CIT(A), inter alia, contending that there was no obligation on its part to deduct TDS and hence the AO was not justified in charging interest u/s 201(1A) of the Act. However, despite giving several opportunities, the assessee either sought adjournment (or) did not reply (or) prayed for abeyance by stating that the question as to whether the payment made for purchase of software is royalty or not? is pending before Hon’ble Supreme Court. In view of non-cooperation, the Ld CIT(A) proceeded to pass the order and confirmed the interest charged by the AO by observing that the Hon’ble jurisdictional Karnataka High Court has held the payments for purchase of software as royalty in the case of Samsung Electronics Company Ltd (345 ITR 494). Accordingly the Ld CIT(A) held that the assessee is liable to deduct tax at source from the payment made to USA company. Since the TDS amount deducted by the assessee was remitted belatedly, the Ld CIT(A) confirmed the orders passed by the AO and accordingly dismissed the appeals filed by the assessee in all the years.
Aggrieved, the assessee has filed these appeals before us.
We heard the parties and perused the record. We notice that the Ld CIT(A) has, in effect, passed the orders ex-parte, as the assessee was seeking adjournment from time to time on one reason or another. Hence there was no occasion for the assessee to furnish its contentions against the levy of interest u/s 201(1A). In our view, the assessee should be provided with proper opportunity of being heard. Accordingly we set aside the orders passed by Ld CIT(A) in all the years under consideration and restore them to his file for adjudicating the issues afresh, after affording adequate opportunity of being heard to the assessee. We also direct the assessee to fully co-operate with the Ld CIT(A) by furnishing all the information and explanations for expeditious disposal of appeals.
In the result, all the appeals of the assessee are treated as allowed for statistical purposes.
Order pronounced in the Open Court on 5th May, 2019.