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2017 (1) TMI 440 - AT - Income TaxRevision u/s 263 - assessee has not deducted tax at source on payment of bandwidth charges/leaseline charges and computer maintenance charges TDS 194J - AO failed to apply the provisions of section 40(a)(ia) - Held that:- Respectfully following the decision in case of Estel Communications P. Ltd. (2008 (3) TMI 327 - DELHI HIGH COURT) we hold that payment made towards bandwidth/leaseline charges not being in the nature of royalty, provisions of section 194J would not be applicable. Therefore, no disallowance u/s 40(a)(ia) can be made. As can be seen, view expressed by different high courts as well as ITAT on the issue are divergent. While, in majority of the decisions a view favourable to assessee has been taken, in the decision of Hon’ble Madras High Court a view against assessee has been taken. Thus, it is apparent that, more than one view is possible on the issue. That being the case, the view taken by AO while allowing expenditure claimed being one of the possible view supported by judicial pronoucements, provisions of section 263 cannot be invoked on the pretext that assessment order is erroneous and prejudicial to the interests of revenue. The impugned assessment year proceedings u/s 201 were also initiated against assessee for non-deduction of TDS u/s 194J on payment of bandwidth charges and ultimately orders were passed by raising demand u/s 201(1) and 201(1A). When assessee preferred appeal against the said order, ld. CIT(A) decided the issue in favour of assessee by holding that assessee is engaged in trading of bandwidth, hence, the provisions of section 194J are not applicable. It was brought to our notice by ld. AR, this order of ld. CIT(A) has been accepted by the department as no further appeal was filed. This contention of ld. AR remained uncontroverted. Thus, as can be seen from the aforesaid facts, opinion of the departmental authorities on applicability of section 194J to payment of bandwidth charges are also different. Therefore, the assessment order cannot be held to be erroneous and prejudicial to the interests of revenue on such a debatable issue - Decided in favour of assessee
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