MEGA WIN SWITCHGEAR PRIVATE LIMITED,SALEM vs. ACIT CIRCLE 1, SALEM

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ITA 2048/CHNY/2018Status: DisposedITAT Chennai26 November 2019AY 2013-144 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the assessee did not make an application under Section 195(2) for determination of the proportionate tax, the proportionate disallowance could not be determined. Consequently, the ground challenging this was dismissed.

What were the facts?

The assessee made payment for testing charges to a foreign entity without deducting TDS. The Assessing Officer disallowed the expense under Section 40(a)(i). The assessee's appeal challenged the CIT(A)'s failure to direct disallowance of an appropriate proportion of the sum chargeable to tax under Section 195(1).

What were the issues?

Whether proportionate disallowance under Section 195(1) can be determined without an application under Section 195(2) for determining the proportionate tax liability.

Which sections of the Income-tax Act were involved?

Section 40(a)(i),Section 195(1),Section 195(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO

Hearing: 26.11.2019

आदेश / O R D E R

PER SHRI GEORGE MATHAN, JUDICIAL MEMBER :

1.

This is an appeal filed by the assessee directed against the order of the learned Commissioner of Income Tax (Appeals), Salem (hereinafter called as ‘CIT(A)’) in dated 25.04.2018 for the assessment year 2013-14.

2 -: 2. Ms. Sriniranjani , Advocate represented on behalf of the Assessee and Ms. R. Anitha, JCIT represented on behalf of the Revenue.

3.

It was submitted by the learned Authorized Representative that the appeal had been adjudicated by the Co-ordinated Bench of this Tribunal against the assessee vide order dated 08.11.2018. It was a submission that however as Ground No.4 of the assessee’s appeal had not been specifically adjudicated, the order of the Tribunal had been recalled for the purpose of adjudicating Ground No.4 vide Miscellaneous Application Order dated 07.06.2019 in Miscellaneous Petition No.49/Chny/2019.

It was submitted by the learned Authorized Representative that the assessee had made payment on testing charges to M/s. Korea Electrotechnology Research Institute, Korea. The same was disallowed by invoking the Provisions of Section 40(a)(i) of the Income Tax Act, 1961 on account of non-deduction of TDS. It was a submission that in Ground No.4, the assessee has challenged the action of the Assessing Officer and the learned CIT(A) in not directing disallowance of an appropriate proportion of the sum chargeable to tax as mentioned in sub-section (1) of Section 195 that was liable to be disallowed.

At this point, the learned Authorized Representative was requested to point out whether the assessee has made the application u/s.195(2) of the Income Tax Act, 1961 for determination of the appropriate proportion of the sum so chargeable and on which the TDS is liable to be deducted under sub-

3 -: section (1) of Section 195. To this, the learned Authorized Representative submitted that such an application u/s.195(2) has not been made.

4.

In reply, the learned Departmental Representative vehemently supported the order of the learned Assessing Officer and the learned CIT(A).

It was a submission that as the application u/s.195(2) has not been 5. made, no proportionate tax could be determined.

6.

We have considered the rival submission and perused the materials available on record.

7.

As it has been clearly admitted that no application u/s.195 (2) has been made, the proportionate tax that is liable to be deducted in respect of the proportionate income cannot be determined and consequently Ground No.4 of the assessee’s appeal stands dismissed.

8.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open Court on 26th November, 2019 in Chennai.

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