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TMI Blog2014 (7) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 2. As regards challenge to disallowance of internet service provider payments of Rs. 6,07,357/-: 1) The Learned CIT (A)-II though has concluded that it may not be proper to invoke section 194 I of Income Tax Act as opined by the Assessing Officer, ought not to have brought it within the purview of section 194 J of the Income Tax Act, 1961. 2) The Learned CIT (A) has held that legal interpretation is emerging rapidly to hold that in cases of service where men and materials are used in combination for making a facility available to a client, the concerned ISP obviously provides a technical service and payment received should constitute fees for such technical services as should be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) The appellant submits that the amendment submits that this amendment has been introduced as a retrospective amendment and there are judicial precedents that have ruled that retrospective amendments which entail in enhancement of tax incidence are constitutionally not valid. 8) The appellant submits that the expenses do not partake the character of royalty in its accounts for the year 2008-09 and it is only accounted as Internet charges. Neither would the appellant know if the recipient i.e. ISPs would be accounting as royalty receipts. 9) The appellant further submits that taxes have been deducted on all the categories of payments falling under Chapter XVII of the I.T.Act, 1961 and in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the share application money including share premium money. 2. On the facts and in the circumstances of the case, Ld CIT(A) is not justified in deleting the above addition accepting the contention of the assessee without making a detailed and complete verification either by himself or through the AO as required under Rule 46A." 4. The assessee has filed an application for condonation of delay under section 253(5) of the Income tax Act, 1961 on the ground that the order passed by the Commissioner of Income Tax (A) under section 250 on 18.12.2012 was received by the assessee on 11.1.2013, therefore, the last date of appeal application should have been made on 11.3.2013 but assessee has filed this appeal after 21 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any engaged in the business of software and hardware development projects from USA in the field of mobile computing and communications technologies. Assessee has filed return of income on 19.3.2010. The Assessing Officer completed the assessment under section 143(3) of the I.T.Act, 1961, inter alia, disallowing a sum of Rs. 6,07,357/- under section 40(a)(ia) being internet expenditure incurred by the assessee on the ground that assessee has failed to deduct the tax on the aforesaid mentioned sum of Rs. 6,07,357/- under section 194 I of the Act and also Rs. 5,85,45,120/- being the investment made by Dr. P.K.Mohanty, Trustee of TRFI in the capital of assessee company as unexplained cash credit on the ground that the genuineness of the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in detail. As held by the Hon'ble Supreme Court in the case of CIT vs. Kanpur Coal Syndicate, 53 ITR 25 (SC), the power of the CIT(A) is co-terminus with that of the AO. The Hon'ble Court has held that the first appellate authority can do what the AO can do and direct him to do what he has failed to do. Therefore, it was the duty of the CIT(A) to verify the source of investment of share application money. Since ld CIT(A) has failed to do the above exercise, we reverse the order of the CIT(A) and restore this matter to his file with a direction to decide the issue afresh in accordance with law after affording reasonable opportunity to both the sides. 9. In the result, appeals filed by the assessee and revenue are treated as allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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