DCIT, CIRCLE -22, KOLKATA, KOLKATA vs. M/S. DELOITTE HASKINS & SELLS, KOLKATA

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ITA 2479/KOL/2017Status: DisposedITAT Kolkata12 October 2018AY 2013-143 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 noted that similar grounds were decided by a co-ordinate bench in previous assessment years. Following judicial consistency, the Tribunal held that rent on computer hire was reimbursement, subscription/technology fees had no profit element, and insurance expenses were for business purposes.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting three disallowances made by the Assessing Officer. These disallowances pertained to rent on computer hire, subscription and technology fees, and indemnity insurance expenses.

What were the issues?

Whether rent on computer hire and subscription/technology fees attract TDS, and if indemnity insurance expenses are allowable business expenditures.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194I,Section 194J,Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA

Before: Shri P.M. Jagtap & Shri, S.S. Godara

आदेश /O R D E R Per S.S.Godara, Judicial Member:-

1.

This Revenue’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (Appeals)-6, Kolkata’s order dated 12.09.2017 passed in case No.CIT(A), Kolkata-6/10066/2016-17 involving proceedings u/s 143(3) of the I.T. Act, 1961, ‘in short the Act’.

Heard both the parties. Case file perused.

2.

It emerges from the case file that the Revenue has raised 3 substantive grounds seeking to revive the Assessing Officer’s action invoking section 40(a)(ia) disallowance of Rs. 62,88,782/- qua rent paid on hire of computers and Rs. 67,71,416/- in the nature of subscription and technology fees; both M/s. Deloitte Haskin & Sells Page 2 without deducting TDS thereby holding the same to be in the nature of rent and fees for technical services u/s 194I and 194J as well as disallowing / adding indemnity insurance expenses of Rs. 13,45,821/- u/s 37(1) of the Act; respectively. The CIT(A) has all these three disallowances / additions in the course of lower appellate proceedings.

3.

We notice at the outset that the Revenue had raised the very substantive grounds in its appeals & 588/K/2016 for assessment years 2010-1 & 2011-12, respectively. The said co-ordinate bench’s order dated 11.07.2018 held that rent paid on hiring computers in issue is in the nature of mere reimbursement not attracting any TDS deduction. Learned co- ordinate bench thereafter concluded qua the second issue of subscription and technology fees that the same could not have been treated as fee for technical services since there was no profit element embedded therein. Coming to the 3rd issue of indemnity insurance expenses, it held this expenditure had to be wholly and exclusively incurred for the purpose of assessee’s business u/s 37 of the Act. Both the learned representatives are ad-idem during the course of hearing that the CIT(A) has followed his earlier findings in the impugned assessment year mutatis mutandis while deleting all these three disallowances / additions in question. We therefore adopt judicial consistency qua all these three issues to decline Revenue’s corresponding substantive grounds.

4.

This Revenue’s appeal is dismissed. Order pronounced in the open court 12/10/2018

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