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2015 (4) TMI 370 - AT - Income TaxNon deduction of tax at source on conversion charges under section 194C - CIT (A) deleting the disallowance made under section 40(a)(ia) - Held that:- Contention of the Department, that the ratio laid down by the ITAT Visakhapatnam Special Bench in case of Merilyn Shipping & Transports vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] is not applicable, cannot be accepted. Since the Department has not controverted the fact that the entire amount of ₹ 5,98,13,357 was paid by the assessee during the relevant previous year and nothing remained payable on the last day of the previous year, in our view, as per the ratio laid down in case of Merilyn Shipping & Transports vs. ACIT (Supra), no disallowance under section 40(a)(ia) can be made. Accordingly, the CIT (A)’s order on this issue deserves to be upheld. Since we have held that no disallowance can be made under section 40(a)(ia) as the assessee has paid the amount during relevant previous year, we do not find it necessary to go into the issue whether or not provisions of section 194C is at all applicable to the payments made by assessee claimed to be in the nature of reimbursements. - Decided against revenue. Revision u/s 263 - non consideration of applicability of section 40(a)(ia) to payment made to M/s. Aditya Spinners Ltd. has made the assessment order erroneous and prejudicial to the interests of the Revenue - Held that:- in the impugned assessment year also, no disallowance can be made under section 40(a)(ia) of the Act as the entire payment, as claimed by the assessee was made during the relevant previous year and nothing remained payable. Therefore, as there cannot be any disallowance under section 40(a)(ia) of the Act, assessment order cannot be held to be erroneous and prejudicial to the interest of the Revenue. Moreover on a perusal of the assessment order, it appears the Assessing Officer after conducting enquiry and applying his mind to the materials brought on record, as far as it relates to conversion expenses, has passed the assessment order. Whether provisions of section 194C will be applicable to conversion expenses claimed to be in the nature of reimbursement, in our view, is a debatable issue on which more than one view is possible. That being the case, assessment order passed cannot be considered to be erroneous and prejudicial to the interests of the Revenue so as to empower learned CIT to revise it under section 263 - Decided in favour of assessee.
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