ACIT 11(1), MUMBAI vs. HINDUSTAN THOMSPON ASSOCIATES P. LTD, MUMBAI

आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, ‘एच’ खंडपीठ अिधकरण खंडपीठ खंडपीठ मुंबई खंडपीठ मुंबई मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI “H” BENCH सव"ी सव"ी सव"ी राजे"" सव"ी राजे"" राजे"", लेखा राजे"" लेखा लेखा सद"य लेखा सद"य सद"य एवं सद"य एवं एवं राम लाल नेगी एवं राम लाल नेगी राम लाल नेगी, , , , "याियक सद"य राम लाल नेगी "याियक सद"य "याियक सद"य "याियक सद"य Before S/Sh. Rajendra,Accountant Member & Ram Lal Negi,Judicial Member आयकर आयकर आयकर अपील आयकर अपील अपील संसंसंसं/.ITA No.746/Mum/2014,िनधा"रण अपील िनधा"रण िनधा"रण वष" िनधा"रण वष" वष"/Assessment Year-2009-10 वष" Asstt. Commissioner of Income tax- Mumbai-400 020. Parel,Mumbai-400 013. PAN:AAACH 1463 M (अपीलाथ" /Appellant) (""यथ" / Respondent) C.O. No.128/Mum/2015-िनधा"रण िनधा"रण िनधा"रण वष" िनधा"रण वष" वष"/Assessment Year-2009-10 वष" Hindustan Thompson Associates ACIT-11(1) Pvt. Ltd.Mumbai-400 013. Vs. Mumbai-400 020. (""या"ेपक /Cross Objector) (""यथ" / Respondent) िनधा"रती िनधा"रती िनधा"रती ओर िनधा"रती ओर ओर सेसेसेसे/Assessee by : Shri Arvind Sonde-AR ओर राज"व क" ओर से/ Revenue by : Shri Rahul Raman-CIT-DR सुनवाई सुनवाई सुनवाई क" सुनवाई क" क" तारीख क" तारीख तारीख / Date of Hearing : 17.02.2016 तारीख घोषणा क" तारीख / Date of Pronouncement : 19.02.2016 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 अिधिनयम 1961 क" क" क" धारा क" धारा धारा 254 धारा 254(1)केकेकेके अ"तग"त अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश 1961 1961 254 254 Order u/s.254(1)of the Income-tax Act,1961(Act) खंडपीठ खंडपीठ केकेकेके अनुसार खंडपीठ खंडपीठ अनुसार अनुसार PER Bench- अनुसार Challenging the order dated 11.11.2013 of CIT(A)-3,Mumbai,the Assessing Officer (AO) has filed the present appeal.The assessee has filed cross objections.Assessee-company, engaged in the business of manpower supply cable services etc.,filed its return of income on 29.9.09 declaring income of Rs.137.57 crores. 2.The effective Ground of appeal is about deleting the disallowance of Rs.47.38 crores, made u/s.40(a)(ia)of the Act,on account of short deduction of TDS.During the assessment proceedings,the AO found that the assessee had deducted tax u/s. 194C of the Act for the payments made to field agents for conducting research survey,data compilation and tabulation. He held that the services availed by the assessee were in the nature of technical services,that tax should have been deducted u/s. 194J of the Act.Vide his order sheet entry dated,26.2.13,he asked the assessee to show cause as to why the disallowance should not be made for short deduction of tax.After considering the submission of the assessee,the AO held that the services availed by the assessee were in the nature of technical and professional services,that such services were governed by the provisions of section 194J of the Act,that it had not deducted due taxes.Finally,the AO,invoking the provisions of section 40(i)(ia)of the Act, made a disallowance of Rs.47,38,35,252/-to the total income of the assessee. 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him it was contended that short deduction of tax would not attract provisions of section 40(a)(ia)of the Act,that in the earlier years the Tribunal had decided the issue in its favour.The FAA,referred to the order of his predecessor passed for the AY..2008-09 and allowed the appeal filed by the assessee. 4.Before us,the Departmental Representative(DR)argued that failure to deduct tax as per the 1

746/M/14-Hindustan Thompson Aassociates P.Ltd.

provisions of section 194 J would result in disallowance of section 40(a)(ia)of the Act.He relied upon the case of P V S Memorial Hospital,delivered by the Hon’ble Kerala High Court(60taxmann.com.69).The Authorised Representative(AR)contended that the Tribunal had dismissed the appeals filed by the AO for the earlier three AY.s..He relied upon the cases of S K Tekriwal(260CTR73). 5.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 juri ictional High Court has not decided the issue.Thus,we are faced with two diagonally opposite 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 juri iction 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 juri iction 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. CO.128/M/15 6.While deciding the appeal of the AO,we have decided the issue in favour of the assessee and against the AO.Hence,the CO filed by the assessee is treated as infructuous. As a result appeal filed by the AO and CO filed by the assessee stand dismissed. फलतः िनधा"रती अिधकारी क" अपील और िनधा"रती का ""या"ेप नामंजूर "कया जाता है. Order pronounced in the open court on 19th February, 2016. आदेश क" घोषणा खुले "यायालय म" "दनांक 19th फरवरी, 2016 को क" गई । (राम लाल नेगी /Ram Lal Negi) (राजे"" / RAJENDRA) "याियक सद"य /JUDICIAL MEMBER लेखा लेखा लेखा सद"य लेखा सद"य सद"य / ACCOUNTANT MEMBER सद"य मुंबई/Mumbai,"दनांक/Date: 19.02. 2016 व.िन.स.Jv.Sr.PS. 2

746/M/14-Hindustan Thompson Aassociates P.Ltd.

आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत 1.Appellant /अपीलाथ"