TMI Blog2015 (5) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... not part-take the character of interest and consequently, the assessee was not liable to deduct tax at source. Disallowance of expenses - We do not find any infirmity in the CIT (A)’s disallowing meager expenditure of ₹ 2.00 lakhs only, as a very little expenses would be actually deployed for collection of subscription from other group companies. Collection was done as minor additional work along with their regular employment. We confirm the order of the CIT (A) on this issue. Additional evidence - We admit the additional evidence as the same substantiated the merits of the case and the evidence goes to the root of the issue, relying on the decision of the Hon'ble Bombay High Court in the case of Smt. Prabhavati S. Shah [1998 (2) TMI 107 - BOMBAY High Court] and Abhay Kumar Shroff [1997 (6) TMI 75 - ITAT PATNA]. We set aside the issue to the file of the AO to consider the additional evidence and re-decide the issue in accordance with law. - Appeal filed by the Revenue is dismissed and the appeal of the assessee is allowed for statistical purposes. - ITA No.1620/Hyd/2013 And ITA No.1564/Hyd/2013 - - - Dated:- 11-2-2015 - Shri P.M. Jagtap And Smt.Asha Vijayaraghavan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a solitary issue relating to deletion by the learned CIT(A) of the disallowance of ₹ 188.44 crores made by the Assessing Officer under S.40a(ia) of the Act, on account of dividend paid by the assessee company to its chit subscribers without deduction of tax at source, treating the same as expenditure in the nature of interest. 16. We have heard the arguments of both the sides and also perused the relevant material on record. As agreed by the learned representatives of both the sides, the issue involved in the appeal of the Revenue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in assessee s own case for assessment year 2008-09 rendered vide order dated 24.2.2012 in ITA No.973/Hyd/2011, wherein a similar disallowance made by the Assessing Officer was held to be unsustainable, following the decision of the Madras high Court in the case of Bilahari investments (P)Ltd.(288 ITR 39), wherein it was held that the dividend distributed by the assessee did not part-take the character of interest and consequently, the assessee was not liable to deduct tax at source. The said decision of the Tribunal rendered in assessee s own c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 = 18,87,903 7. The assessee stated during appeal proceedings that it is not just the assessee company which makes certain collections on behalf of the other group companies, but the other group companies also reciprocate. However, it was stated that the AO had made the disallowance proportionate to the entire expenditure debited to the P L a/c. It was submitted that if at all proportional disallowance was to be made, it was to be made from the subscription expenses and not from the entire expense. 8. The CIT (A) held that a very small portion of expense can actually be imputed to collection of subscriptions for other group companies and the entire expenditure of ₹ 120.00 crores cannot be proportionately allocated as it is only the staff in certain branches who would be collecting such subscriptions along with their own work. The CIT (A) observed that such expenditure cannot be clearly discerned from P L a/c and hence restricted the disallowance to ₹ 2.00 lakhs as expenditure on collection of subscription for other group companies. Aggrieved, Revenue has raised Ground 5 as follows: Ground No. 5. The CIT (A) ought to have confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of accounts invoices include VAT which were treated as purchases in nature. Further it is submitted by the assessee that all payments are made as per MoU entered by both parties. On verification of MOU it is observed that M/s Movies Ltd has to provide marketing services to M/s Margadarsi Chit Fund Pvt Ltd for the purpose of commercial exploitation of the various facilities created in film city. In this MOU there is a clause as per which M/s Margadarsi Chit Fund Pvt Ltd has to reimburse all the charges/costs for utilizing infrastructural facilities. This clearly shows that all the payments made by M/s Margadarsi Chit Fund Pvt Ltd to M/s Ushakiron Movies Ltd is as per this MOU. Out of these payments some are subjected to TDS in thepretext of purchases. This is not acceptable. Because all the payments are made in connection with a composite contract with M/s Ushakiron Movies Ltd in connection with marketing of various facilities created in film city. Hence irrespective of nature of each payment, all the payments should have subjected to TDS. In this connection it is relied on Hon'ble Supreme Court decision in case of Chatturbhuj Vithaldas Jasari v. Moreshwar Parashram (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses into reimbursement of expenses and other payments, the nature of the payment made by the appellant does not change. For example, if there is a contract for construction, TDS is to be deducted on the entire payment made to the contractor. If the contractor artificially breaks up the payment into reimbursement of expenses on cement, labour, steel etc and the balance amount not connected to materials, it is nothing but a methodology for non deduction of TDS. In the same way, the appellant cannot artificially break up the contract into TDS vs. non-TDS components. The contract with M/s Ushakiron Movies was for providing marketing services and all components are part and parcel of this contract. Hence, the CIT(A) agreed with the AO and confirmed the addition of ₹ 52,12,366 u/s 40(a)(ia) of the Act . 15. On appeal before us, the ld Counsel for the assessee filed petition to admit additional evidence under Rule 29 of the I.T. Rules which read as follows: 3. The applicant submits that the payment made by it to M/s Ushakiron Movies Ltd is included by them in their regular income and the same was offered for tax. Thus, as per the amended provisions of section 40(a)(ia) of th ..... 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