Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 15, Chennai, dated 10.08.2016 and pertains to assessment year 2012-13.
The first issue arises for consideration is with regard to disallowance of `55,12,070/- under Section 40(a)(ia) of the Income- tax Act, 1961 (in short 'the Act').
Shri R. Durai Pandian, the Ld. Departmental Representative, submitted that the assessee has deducted tax at `1,16,29,880/- instead of `1,21,81,087/-. According to the Ld. D.R., the assessee was expected to deduct tax at 10% but the assessee has deducted lesser tax than the applicable rate. Therefore, the Assessing Officer disallowed the claim of the assessee under Section 40(a)(ia) of the Act. However, the CIT(Appeals) by placing reliance on the order of this Tribunal in ACIT v. Leather India in dated 11.06.2013 and judgment of Calcutta High Court in CIT v.
S.K. Tekriwal (15 taxman.com 289), allowed the claim of the assessee. According to the Ld. D.R., even short deduction may be subject matter of disallowance under Section 40(a)(ia) of the Act.
On the contrary, Shri M. Karunakaran, the Ld.counsel for the assessee, submitted that what was contemplated in Section 40(a)(ia) of the Act is non-deduction of tax and not short deduction of tax. According to the Ld. counsel, it is not the case of the Revenue that the assessee has not deducted tax at all. Instead of 10%, the assessee has deducted at lesser rate. It does not amount to non-deduction of tax. Therefore, according to the Ld. counsel, the CIT(Appeals) has rightly placed his reliance on the decision of the order of this Tribunal and allowed the claim of the assessee.
We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 201(1A) of the Act.
Section 201(1A) of the Act enables the Assessing Officer to levy interest on the tax which was not deducted by the assessee. We have also carefully gone through the provisions of Section 40(a)(ia) of the Act, which does not say that even for short deduction or part deduction, disallowance has to be made proportionately. When the Parliament in their wisdom provides for levy of interest on the part of the tax which was not deducted, whereas omitted to include enabling provision for levy of interest or disallowance in Section 40(a)(ia) of the Act. In other words, the provisions of Section 40(a)(ia) of the Act does not enable the Assessing Officer to disallow any proportionate amount for short deduction or lesser deduction of tax at source. In fact, this Bench of the Tribunal in M/s Roca Bathroom Products Pvt. Ltd. in examined this issue and by an order dated 18.12.2015, found that there cannot be any disallowance for short deduction of tax. In view of the above order of this Tribunal, we do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
The Revenue has taken one more ground with regard to disallowance of content development charges of `88,31,257/-.
Referring to the order of the CIT(Appeals), Shri R. Durai Pandian, the Ld. Departmental Representative submitted that the CIT(Appeals) remanded the matter back to the file of the Assessing Officer. The assessee claimed before the Assessing Officer that services were rendered outside India and the recipient of the amount has no permanent establishment in India. Therefore, this issue was remitted back to the file of the Assessing Officer by the CIT(Appeals), which is beyond his jurisdiction. According to the Ld. D.R., under Section 251(1) of the Act, the CIT(Appeals) has no authority to remit back the matter to the file of the Assessing Officer.
On the contrary, Shri M. Karunakaran, the Ld.counsel for the assessee, submitted that the assessee specifically claimed before the Assessing Officer as well as the CIT(Appeals) that the services were rendered outside India and the person who received the payment does not have any permanent establishment in India.
Therefore, the amount received from the assessee is not taxable in the hands of the recipient in India, hence, tax is not deductible. The CIT(Appeals), according to the Ld. counsel, directed the Assessing Officer to verify the material that may be filed by the assessee, therefore, there is no error in the order of the CIT(Appeals).
We have considered the rival submissions on either side and perused the relevant material available on record. We have also carefully gone through the provisions of Section 251 of the Act. In respect of the payment said to be made outside India, the CIT(Appeals) directed the Assessing Officer to verify the documents that may be filed by the assessee and thereafter decide in accordance with law. Section 251 of the Act does not enable the CIT(Appeals) to remand the matter back to the file of the Assessing Officer. The CIT(Appeals) has to himself examine the matter and dispose of the issue raised by the assessee. In the case before us, no material is available on record to suggest that the services were rendered outside India and the recipient has no permanent establishment in India. Therefore, we are unable to uphold the order of the order of the CIT(Appeals). The issue raised by the assessee needs reconsideration by the Assessing Officer. Accordingly, this Tribunal is of the considered opinion that the Assessing Officer has to reconsider the issue. Accordingly, the order of the CIT(Appeals) is modified and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer. The Assessing Officer shall examine the documents that may be filed by the assessee and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.