ACIT 16(1), MUMBAI vs. HINDUSTAN THOMPSON ASSOAICATES P. LTD, MUMBAI

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ITA 1208/MUM/2017Status: DisposedITAT Mumbai04 July 2018AY 2011-124 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the disallowance under Section 40(a)(ia) is not applicable when there is a short deduction of tax. It followed its own earlier decisions and the decision of the Kolkata High Court in Samir Tekriwal's case, which favored the assessee.

What were the facts?

The Revenue appealed against the deletion of disallowance made under Section 40(a)(ia) by the CIT(A). The disallowance pertained to payments made to field agents for market research and data analysis, which the Assessing Officer considered liable for TDS under Section 194J.

What were the issues?

Whether disallowance under Section 40(a)(ia) is attracted due to short deduction of TDS, and whether payments for market research and data analysis fall under Section 194J.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194J

AI-generated summary — verify with the full judgment below

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Appellant by : Shri M.C. Omi Ningshen (DR) Respondent by : Shri Arvind Sonde (Advocate) Date of Hearing : 04.07.2018 Date of Pronouncement : 04.07.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER;

1.

This appeal by Revenue is directed against the order of ld. Commissioner of Income-tax (Appeals)-4, Mumbai [ld. CIT(A)] dated 22.11.2016 for Assessment Year 2011-12. The Revenue has raised the following grounds of appeal:

1. "Whether on facts, in circumstances of the case and as per law, the Ld.CIT (A) has erred in directing to delete the disallowance u/s 40(a)(ia) in respect of payments made to field agents without appreciating that the aforementioned payments were made for conducting market research survey and on data analysis/tabulation, thus falling under section 194J of the Act and warranting deduction of tax at 10%.

2. Whether on facts, in circumstances of the case and as per law, the Ld.CIT (A) has erred in directing to delete the disallowance 40 (a)(ia) without even examining the issue of applicability of proper provisions under TDS Chapter to the payment under dispute. 3. The appellant prays that the order of CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored.

Mum 17-Ms Hindustan Thompson Associates Pvt. Ltd

2.

At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that the ground of appeal raised by Revenue is covered in favour of assessee by the decision of Tribunal in assessee’s own case for Assessment Year 2009-10. The ld. CIT(A) deleted the addition under section 40(a)(ia) on the basis of decision of Tribunal in assessee’s own case for Assessment Year 2005-06 to 2010-11.

3.

On going through the grounds of appeal and the decision of Tribunal in assessee’s own case for earlier years. The ld. Departmental Representative (DR) for the Revenue submits that he rely on the order of assessing officer.

4.

We have considered the rival submission of the parties and have gone through the orders of Tribunal in assessee’s own case for Assessment Year 2010-11 in dated 13.07.2016. We have noted that similar ground of appeal was raised by assessee in earlier years and the Tribunal while relying upon the decision of Tribunal in assessee’s own case for Assessment Year 2008-09 & 2009-10 passed the following order:

5.

We have heard the rival contentions and perused the orders of the authorities below and the decision of the Co-ordinate Bench in assessee's own case for Assessment Years 2008-09 and 2009-10. The Co-ordinate Bench for the Assessment Year 2009-10 in dated 19.02.2016 considered similar issue and held that provisions of Sec. 40(a)(ia) have no application when there is short deduction of tax observing as under: "We have heard the rival submissions and perused the material before us. We find that the Hon'ble Kerala High Court in the case of P V S Memorial Hospital (supra), has held that deduction of TDS under wrong provision of law will not save assessee from disallowance u/s. 40(a)(ia)of the Act. However, the Kolkata High Court in the matter of Samir Tekriwal (supra), has held that expenses are not liable to be disallowed u/s.40(a)(ia)on account of short deduction of tax. The Hon'ble jurisdictional High Court has not decided the issue. Thus, we are faced with two diagonally opposite 2 Mum 17-Ms Hindustan Thompson Associates Pvt. Ltd

views about applicability of the provisions of section 40 (a)(ia)of the Act. We find that the Hon'ble Bombay High Court has in the case of Ashok Kumar Parekh (186 IT R212)has dealt with the binding precedence of the High Court judgments. Here, we would also like to reproduce the a portion of the judgment delivered by the Hon'ble Bombay High Court in the case of Siemens India Ltd.(156ITR11) and same reads as under : " So far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is (functioning), irrespective of the pendency of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a conflict between different High Courts, he must follow the decision of the High Court within whose jurisdiction he is (functioning), but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the Tribunal has decided a point in favour of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee." Considering the above,we are taking the view which is in favour of the assessee.We are following the judgment of Samir Tekriwal (supra)of the Hon'ble Kolkata High Court as well as the orders of the Mumbai Tribunal delivered by it for the earlier years.Effective ground of appeal is decide against the AO." Respectfully following the said order, we uphold the order of the Ld. CIT(A) on this issue and dismiss the Revenue's appeal.

5. Considering the decision of Tribunal in assessee’s own case, the grounds of appeal raised by Revenue are dismissed.

6.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 04.07.2018.

Sd/- Sd/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 04.07.2018 SK Copy of the Order forwarded to : 1. Assessee 2. Respondent 3 Mum 17-Ms Hindustan Thompson Associates Pvt. Ltd

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