TMI Blog2013 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... out certain work then certainly the TDS provisions are attracted and the assessee was obliged under the Act to deduct tax at source. Even as per the break up given by the assessee certain payments have been made towards hire charges of plants, generators, and other equipment which certainly attract TDS provisions. As the assessee has not deducted at source from the payments made to M/s Ushakiran Movies Ltd., in our view, the disallowance made u/s 40(a)(ia) was justified. - Decided against the assessee. - ITA No. 1271/Hyd/2012 - - - Dated:- 8-2-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. Shri M. Ravindra Sai Shri V. Sivakumar ORDER Per Saktijit Dey, Judicial Member: These are cross appeals directed against the order of CIT(A)-V, Hyderabad dated 06/06/2012 for the assessment year 2009-10. ITA NO. 1272//Hyd/2012 - appeal by the revenue 2. Ground No. 1 5 are general in nature, hence, needs no adjudication. 3. Ground Nos. 2 3 relate to deletion by the CIT(A) of the addition made by the Assessing Officer u/s 40(a)(ia) of the Act on account of non-deduction of tax at source on the chit dividend paid to the subscribers. 4. At the outset, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer while disallowing proportionate expenditure has considered the entire expenditure debited to the P L a/c which was incurred by the assessee in its head office and branches. If at all proportionate disallowance has to be considered, then, it has to be made from the subscription expenses in the respective branches where collection was made on account of subsidiary companies. 9. The CIT(A) after considering the submissions of the assessee and materials produced before him, agreed with the assessee that a very small portion of expense can actually be said to have been incurred towards collection of subscriptions for other group companies. Therefore, the entire expenditure of 104 crores cannot be considered for proportionate disallowance as it is only the staff in certain branches who would be collecting such subscription along with their own work. The CIT(A) observing that such expenditure is not discernible from the profit and loss a/c restricted the disallowance to an amount of Rs. 1.00 lakh. 10. Aggrieved the revenue is in appeal before us. 11. We have heard the submissions of the parties and perused the materials on record. Though the Assessing Officer is correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with various market facilities created in film city, all the payments are subject to TDS provision irrespective of nature of each payment. The Assessing Officer relying upon a decision of the Hon'ble Supreme Court in case of Chaturbhuj Vithaldas Jasari V/s. Moreswar Parashram, AIR 1954 SC 236, held that the assessee having defaulted in deducting tax at source on payments of Rs. 61,07,575/- made to M/s Ushakiran Movies Ltd. disallowed the same u/s 40(a)(ia) and added back to the total income. 14. The assessee being aggrieved of such disallowance, filed an appeal before the CIT(A). 15. In course of hearing before the CIT(A) the assessee submitted that the amount of Rs. 61,07,575/- consist of payment of Rs. 11,41,614/- made to M/s Ushakiran Movies Ltd. out of amount due to it as on 01/04/2008 and the balance represents payment towards the purchase of various items made by the assessee from M/s Ushakiran Movies Ltd. It was further submitted that out of the purchases made certain purchases were subjected to VAT and the some are not liable as per AP Value added Tax Act and as such the payments are not liable for TDS. The assessee further submitted that TDS under the IT Act depen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and stationery charges, postage and communication, vehicle spares, business promotion expenses, car maintenance, staff meeting expenses, lighting equipment charges, generator hire charges, man power charges, telephone expenses, natural plant hire charges, etc. The learned counsel further submitted that an amount of Rs. 11,41,614/- was paid out of the opening balance and does not relate to an expenditure for the year under dispute. The learned counsel referring to clause 16 of the MoU submitted that the assessee has to reimburse to M/s Ushakiran Movies Ltd. all charges and cost for utilizing the infrastructural facilities on the basis of the debit note issued by M/s Ushakiran Movies Ltd. The learned counsel submitted that the expenditure incurred being in the nature of reimbursement the assessee is not required to deduct tax at source. That besides certain payments were made towards purchases on which TDS provision is not attracted. 18. The learned Departmental Representative, on the other hand, strongly supporting the orders of the authorities below submitted that the payments having been made under the composite contract the assessee was required to deduct tax, hence, the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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