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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
This is an appeal by the Department against order dated 22nd March 2016, passed by the learned Commissioner (Appeals)–9, Mumbai, for the assessment year 2011–12.
The only issue raised by the Revenue in the present appeal pertains to deletion of disallowance made under section 40(a)(ia) of the Act amounting to ` 1,36,00,000.
2 M/s. Prime Broking Co. (I) Ltd.
Brief facts are, the assessee a company is engaged in the business of stock broking and allied services. For the assessment year under dispute the assessee filed its return of income on 29th September 2011, declaring total income of ` 1,68,93,654. During the assessment proceedings, the Assessing Officer noticing that the assessee has claimed deduction of ` 1,36,00,000 on account of reimbursement charges to M/s. Prime Securities Ltd. called upon the assessee to justify the claim with supporting evidence. In response, it was submitted by the assessee that such reimbursement is made to its holding company. Since, the assessee is carrying on its business on office premises taken on rent and maintained by holding company, therefore, the assessee reimbursed infrastructure charges which includes payment towards salary, rent paid and mobile bills of the director. It was further submitted, though, disallowance under section 40(a)(ia) of the Act for non–deduction of TDS on reimbursement charges was made in assessment year 2008–09 and 2009–10, the learned Commissioner (Appeals) deleted such disallowance and Department’s appeals against such order were dismissed by the Tribunal. Further, it was submitted, in any case of the matter the assessee having deducted tax at 2% on the reimbursement charges, no disallowance under section 40(a)(ia) of the Act can be made. The Assessing Officer, however, did not find merit in the submissions of the 3 M/s. Prime Broking Co. (I) Ltd.
assessee and held that the assessee was required to deduct tax on rent @ 10% under section 194–I of the Act and normal rates of tax on salary under section 192 of the Act. According to the Assessing Officer, assessee having failed to deduct tax at the prescribed rate, the payment made was liable for disallowance under section 40(a)(ia) of the Act. Though, the Assessing Officer agreed that in assessee’s own case for assessment year 2008–09 and 2009–10, the issue has been decided in favour of the assessee, however, mentioning that Department has preferred further appeal before the Hon'ble Jurisdictional High Court, he proceeded to disallow the amount of ` 1,36,00,000 under section 40(a)(ia) of the Act. The assessee challenged the said disallowance by preferring an appeal before the learned Commissioner (Appeals).
Learned Commissioner (Appeals) after considering the submissions of the assessee and taking note of the fact that in the preceding assessment year i.e., 2008–09 and 2009–10, deletion of disallowance made under section 40(a)(ia) was upheld by the Tribunal followed the same and deleted the disallowance in the impugned assessment year as well, subject to final outcome of the judgment of the Hon'ble Jurisdictional High Court on the issue in the preceding assessment years.
4 M/s. Prime Broking Co. (I) Ltd.
When the appeal was called for hearing, no one was present on behalf of the assessee in spite of issuance of notice of hearing. Therefore, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative.
We have heard the learned Departmental Representative and perused material on record. Undisputedly, in the assessment year 2008–09 and 2009–10, similar disallowance was made by the Assessing Officer in assessee’s own case and the learned Commissioner (Appeals) while deciding the issue raised in the appeals deleted the disallowance. Though, the Department filed an appeal before the Tribunal, the Tribunal upheld the decision of the learned Commissioner (Appeals). In the impugned assessment year, the learned Commissioner (Appeals) has simply followed the decision of the Tribunal in assessee’s own case for the preceding assessment years. In our view, no fault can be found with the approach of the learned Commissioner (Appeals) in this regard, since, he has abided with the decision of the superior appellate authority in assessee’s own case for preceding assessment years by following the norms of judicial discipline. However, to safeguard the interest of Revenue, he has also mentioned that the decision to delete the disallowance under section 40(a)(ia) of the Act is subject to final outcome of the decision of the Hon'ble Jurisdictional High Court in the appeals filed by the Revenue in 5 M/s. Prime Broking Co. (I) Ltd.
assessee’s case for assessment years 2008–09 and 2009–10. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals) on the disputed issue. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised.
In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 25.04.2018