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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI C.N. PRASAD, JM & SHRI RAJESH KUMAR, AM
आदेश / O R D E R PER RAJESH KUMAR, A. M:
These are the two appeals filed by the revenue against the two separate orders dated 27.2.2015 and 19.2.2015 passed by the ld.CIT(A) for the assessment years 2010-11 and 2011-12 respectively. Since issue involved in these appeal are common, therefore, for the sake of convenience, these appeals were clubbed together, heard together and are being dispose of by this consolidated order.
The sole issue raised in all the grounds of appeal is against the deletion of disallowance of Rs.18,88,96,088/- made u/s 40(a)(ia) of the Income Tax Act, 1961(hereinafter called the Act) by the AO and deleted by the ld.CIT(A).
Facts of the case are that the assessee filed return of income on 4.10.2010 declaring a loss of R.19,78,05,953/- which was processed under section 143(1) of the Act. Thereafter the case was selected under CASS and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO noticed that the assessee has failed to deduct Tax at Source as per the provisions of Act on the following payments : A) Legal and professional charges Rs.22,40,368/- B) Purchase of domain Rs.1,82,23,345/- C) Bandwith charges (in India) /-Rs.16,84,32,375 Accordingly, the AO disallowed the same under the provisions of section 40(a)(ia) of the Act for non deduction of tax at source.
The ld. AR, at the outset submitted that the issue raised in this appeal stands covered in its own case by the decision of the co-ordinate bench of the Tribunal in Assessment Years: 2007-08, 2008-09 & 2009-10, order dated 13/04/2016 and in ITA No.3116 and 3117/Mum/2014 for the assessment years 2010-11 and 2011-12, wherein an identical issue has been decided in favour of the assessee. The ld. AR prayed before the Bench that following the decision of the Co-ordinate bench of the Tribunal the appeal filed by the revenue should be dismissed and that of order passed by the ld. CIT(A) is upheld.
On the other hand, the ld. DR very fairly conceded to the contentions of the ld.AR.
We have heard both the parties and perused the material placed before us including the orders of the authorities below and the case law relied upon by the assessee. We find from the record that the similar issue has been considered by the Co-ordinate Bench of the Tribunal in (supra) and in ITA No.3116 and 3117/Mum/2014(supra) and decided the issue in favour of the assessee. As stated herein above the disallowance made under section 40(a)(ia) comprises namely (a) Legal and professional charges (b) Purchase of domain and (c) Bandwith charges (in India) amounting to Rs.22,40,368/-, Rs.1,82,23,345/- and Rs.16,84,32,375/- respectively. We find that the legal and professional charges and purchase of domain are covered by the decision of co-ordinate Bench of the Tribunal in assessee’s own case ITA No.4661,4662 and 4663/M/2013 as under :
“5.6. We have considered the submissions of the Ld. Counsel, but we are not able to accept the same fully at this stage. We shall like to refrain from creating any consistency in the decision of same issues arising in different years. Moreover, we find that lot of legal development has already taken place for deciding these issues, as has been contended by the Ld. Counsel also. Therefore, for the purpose of maintaining consistency, we find it appropriate to send this issue back to the file of the AO for re-examination of complete facts and deciding all these issues afresh after giving adequate opportunity of hearing to the assessee. The AO shall inter-alia take into account following submissions of the assessee before deciding this issue as per law and facts: (1) The liability of the assessee in deduction of tax at source cannot arises unless the AO holds that income in the hands of the payee is chargeable to tax in India, especially in view of judgment of Hon’ble Supreme Court in the case of GE India Technology Centre P. Ltd V/s. CIT and Another (2010) 327 ITR 456 (SC). Further, even if the liability of the payee is determined on the basis of retrospective amendments made by Finance Act, 2010 or Finance Act, 2012, even then, the obligation to deduct TDS cannot be created through retrospective legislation in view of detailed judgment of Hon’ble Delhi High Court in the case of New Skies Satellite BV (supra) and judgment of Hon’ble Bombay High court in the case of CIT vs. Siemens Aktiongesellschaft (310 ITR 320) (Bom) and various other judgments directly on this issue. (2) In those cases where the expenditure has been capitalized, the claim of depreciation if otherwise allowable under the law cannot be disallowed merely on the basis of application of section 40(a)(i) for failure to deduct tax at source. In support of his proposition, Ld. Counsel has relied upon the decision of Mumbai Bench of the Tribunal in the case of SKOL Breweries Ltd. (supra). The Ld. Counsel has also argued that there have been duplicate disallowances/additions by the officers. One item has been disallowed at more than one place. It is directed that the AO shall take into considerations these submissions and shall not make duplicate double disallowance/ additions of one item. In addition to the above, we further clarify that assessee is free to take all the factual and legal issues before the AO as may be considered appropriate as per law, and AO is also free to ask for further details and evidences from the assessee as may be considered appropriate as per law and facts and may also consider latest position of law as may be available as on the date of passing of the afresh assessment order, in addition to the judgments that may be relied upon by the assessee. Thus, with these directions, this issue is sent back to the file of the AO. Thus, ground no.3 may be treated as partly allowed for statistical purposes.”
As regard the third addition and other charges, the issue is now covered by the decision in assessee’s own case by the decision of the Co- ordinate Bench of the Tribunal in as under: “6.1. As mentioned elsewhere, the amendment was given a retrospective effect but by that time the assessee has already done the transactions without deducting tax at source. On these facts, the assessee cannot be held to have violated the provisions of Sec. 194J of the Act. Our view is fortified by the decisions of the Tribunal in the case of Channel Guide India Ltd. Vs ACIT 139 ITD 0049 and Rich Graviss Products (P) Ltd. 166 TTJ 329 and also by the decision in the case of New Bombay Park Hotel Pvt. Ltd Vs ITO in ITA No. 7641/M/2011. Respectfully following the decisions of the Coordinate Bench (supra), we do not find any reason to interfere with the findings of the Ld. CIT(A).”
From the above decisions it is abundantly clear that the case of the assessee is fully covered by the decisions of the Tribunal in assessee’s own case in the earlier yearr. Therefore, respectfully following the same, we decide the issue in favour of the assessee by dismissing the appeal of the revenue. ITA NO.2586/Mum/2015 9. Facts of the case are that the assessee filed return of income on 14.11.2011 declaring a loss of R.15,32,64,657/- which was processed under section 143(1) of the Act. Thereafter the case was selected under CASS and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO noticed that the assessee has failed to deduct Tax at Source as per the provisions of Act on the following payments : A) Legal and professional charges Rs.71,88,353/- B) Purchase of domain Rs.1,85,16,800/- C) Filing fees Rs.13,57,968/- D) Virtual storage Rs.1,11,22,701/- Accordingly, the AO disallowed the same under the provisions of section 40(a)(ia) of the Act for non deduction of tax at source.
We have decided these issue in favour of the assessee while deciding the appeal No. . Therefore, the decision rendered in would mutatis mutandi apply to this appeal as well. Therefore, the appeal filed by the revenue stands dismissed.
In the results both the appeals of the revenue stand dismissed. Order pronounced in the open court on 16th Jan, 2017. Sd sd (C.N. Prasad) (Rajesh Kumar) न्याययक सदस्य / Judicial Member ऱेखा सदस्य / Accountant Member भुंफई Mumbai; ददनधंक Dated : 16. 1.2017 SRL,Sr.PS