Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 867 - AT - Income TaxPenalty u/s 271C - assessee company had not complied with the TDS provisions properly - assessee company was held to be liable to deduct TDS from the payment of internet connectivity charges and specialised line rental u/s 194J being in the nature of royalty by relying on Explanations 4, 5 and 6 to section 9(1)(vi) inserted by the Finance Act, 2012 with retrospective effect - CIT(A) did not approve this view of AO by holding that the liability to deduct tax at source was governed by section 9(1)(vi) as it existed before the Finance Act, 2012 - Held that:- As rightly pointed out by assessee this view taken by the CIT(A) is supported by various judicial pronouncements including the decision of Mumbai Bench of this Tribunal in the case of Channel Guide India Ltd. vs ACIT [2012 (9) TMI 95 - ITAT MUMBAI] wherein it was held that the assessee cannot be held to be liable to deduct tax at source by relying on the subsequent amendments made in the relevant provision with retrospective effect - it was impossible for the assessee to deduct tax in the F.Y. 2003-04 when as per the legal position prevalent in the said F.Y., the obligation to deduct tax was not on the assessee -we uphold the impugned order of the Ld. CIT(A) holding that the assessee was not liable to deduct tax at source from the amount in question paid towards internet connectivity charges and specialised line rental u/s 194J and dismiss Ground No. 1 of the Revenue’s appeal. TDS u/s 194I - liability to deduct tax at source from the amount paid towards internet connectivity charges and specialized line rental - Held that:- In the case of Destimoney Securities Pvt. Ltd. vs ITO [2017 (8) TMI 714 - ITAT MUMBAI] at similar situation held that the lease line charges were paid by the assessee to the internet service provider for faster internet access on dedicated lease line and as such the said payment had been made for use of telecommunication services / connectivity for transmission of voice / data facility provided by the vendors and not for use of any asset involved in provision of such facility / service covered in section 194I of the Act - the assessee, therefore was not liable to deduct tax at source u/s 194I of the Act and he could not be treated as the assessee in default u/s 201(1)/201(1)A of the Act in respect of failure to deduct tax at source from the payment made towards lease line charges. - decided in favour of assessee TDS from salary payment to employees - considering the house property loss resulting from the deduction on account of interest on housing loan while making deduction of tax at source from the payment of salary to some employees who had also claimed exemption on account of house rent allowance u/s 10 - Held that:- CIT(A) however found that these two benefits were governed by two independent provisions and since the concerned employees had satisfied the conditions for claiming the benefits under these two independent provisions, there was no violation on the part of the assessee of the Income Tax Act. At the time of hearing before us, the learned DR has not able to raise any material contentions to reduce or controvert the decisionrendered by the Ld. CIT(A) on this issue or the reasons given while arriving at the same. - Decided against revenue Penalty u/s 271C - treating the assessee company as the assessee in default for the alleged non-deduction or short deduction of tax at source from the concerned payments - Held that:- Since the said issue has already been decided by us in the foregoing portion of this order while disposing of the respective appeals of the assessee and revenue holding that the assessee company could not be treated as the assessee in default u/s 201(1)/201(1A) of the Act, the consequential penalty imposed by the A.O. u/s 271C of the Act for the alleged default of the assessee for compliance with the relevant TDS provision is liable to be cancelled. - Decided in favour of assessee
|