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2016 (1) TMI 662 - ITAT KOLKATA

2016 (1) TMI 662 - ITAT KOLKATA - TMI - TDS u/s 194C - Addition on account of payment of software charges without making TDS - CIT(A) deleted the addition - Held that:- All the relevant details were available before AO but he has not exercised his power to verify the purchase bills. The AO has just only treated the purchase transaction as software development charges on premise and on the basis of nomenclature shown in financial statement of assessee. It is pertinent to note that merely nomencla .....

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fore, the provision of TDS will not be attracted. In view of this, we are inclined not to interfere with the order of Ld. CIT(A) - Decided in favour of assessee

Addition on account of payment of training charges to M/s Leggiadro Consultancy Pvt. Ltd. without making TDS - CIT(A) deleted the addition - Held that:- Assessee has incurred this expense for upgrading the knowledge of the personnel of the company. As and when there is a query about the technical matter the employees used to a .....

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raised by Revenue is dismissed.- Decided in favour of assessee

Addition on account of reimbursement of expenses without making TDS - CIT(A) deleted the addition - Held that:- AO has disallowed the expense on account of violation of TDS provision. However, as per the submission of assessee this transaction of reimbursement was out of purview of TDS provision besides this, we further find from the order of AO that expense incurred by assessee were in the nature of salary, wages, electr .....

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HMED, AM For the Petitioner : Shri P B Pramanik, JCIT-SR-DR For the Respondent : Shri Ravi Tulsiyan, FCA ORDER PER: WASEEM AHMED: This appeal by the Revenue is arising out of order of Commissioner of Income Tax (Appeals)-I, Kolkata in appeal No.417/CIT(A)-I/Wd-2(3)/08-09 dated 10.09.2010. Assessment was framed by ITO Ward-2(3), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 31.12.2008 for assessment year 2006-07. 2. First issue .....

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tion of new software package/products/components etc., Therefore the provision u/s 194-C/J will not attract to the said transaction. However, AO found from the books of account that the assessee has booked an expense of ₹ 4,46,354/- under purchase head. Therefore, AO has disallowed the claim of assessee and added it to the income of assessee. 4. Aggrieved, assessee preferred appeal before Ld. CIT(A) who deleted the addition made by Assessing Officer by observing as under:- "The A/R ha .....

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e. In the circumstances, this ground could go in favour of the appellant. The Ground is allowed." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us on the following ground:- "1. That on the facts and circumstances of the case the Ld. CIT(A) has erred din deleting the additions of ₹ 1,02,39,690/- on account of payment of Software charges without making TDS despite the fact that software charges was paid for the services of vendor for new alternative techno .....

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h the parties and perused the materials available on record. Ld. DR submitted that it is not a case of purchase of software and drew our attention on page 3 to 19 of assessee's paper book where the bills for software purchase were placed and on these bills it was clearly mentioned in the column of particulars that description/service rendered. Hence, it is beyond doubt that invoice has been issued by party to assessee for developing the software which has to be classified as service and acco .....

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ssessing Officer. On the other hand, Ld. AR submitted paper book running from pages 1 to 37 and he submitted that it is the purchase of software from market and there was no service of any type taken from the party from whom the software was purchased. Ld. AR further drew our attention on the bills of purchase where in some of the bills in the particular column only software product/component was mentioned which are placed from pages 3 to 27 of the paper book. Ld. AR said that AO has not verifie .....

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f the expense will not change the nature of the expense per se and he relied on the order of Ld. CIT(A). From the aforesaid discussion, we find that AO has disallowed the expense claimed by assessee on account of violation of provision of Sec. 194-C of the Act and AO inferred from the classification of the expense under head "software development charges" was liable for TDS. However, we find force from the submission made by Ld. AR before us that it is a pure transaction of purchase. T .....

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/- which was shown under the head "training charges" and said expense is attracting the provision of TDS but assessee failed to deduct TDS from the payment made to the concerned party. On question by AO to assessee regarding the violation of TDS provision, the assessee submitted that such expense was incurred for online facility from the above said company for providing on line training to the employees on purely technical matters. However, AO disregarded the claim of assessee and disa .....

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ot against any service of technical nature rendered. The AO's observation appears a bit premature more so as he has not provided any clinching facts for evidence or case law to buttress his presumption. This ground also succeeds." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 9. We have heard rival contentions of both the parties and perused the materials available on record. Ld. DR supported the orders of AO whereas Ld. AR supported the order of Ld. CIT(A) .....

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rovision of TDS as this expense relates to up-gradation of the knowledge of its employees and for this purpose the assessee has availed certain online facility. Therefore, we are not inclined to interfere into the order of Ld. CIT(A). Hence, this ground raised by Revenue is dismissed. 10. Next ground raised by Revenue in this appeal is that Ld. CIT(A) has erred in deleting the addition of ₹ 39,05,827/- on account of reimbursement of expenses without making TDS. 11. During the year assessee .....

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ee and M/s NSE.IT.Ltd. Therefore, the provision of Sec. 194C is very much applicable. On finding the violation of TDS provision, AO disallowed the said sum and added it to the income of assessee. 12. Aggrieved, assessee preferred appeal before Ld. CIT(A) who deleted the addition made by Assessing Officer by observing as under:- "I have gone through the relevant records, agreement furnished before me and find that there was legitimate expenditure which was reimbursed to NSE-IT Limited as per .....

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e circumstances narrated. This ground is allowed." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 13. We have heard rival contentions of both the parties and perused the materials available on record. Ld. DR vehemently relied on the order of Assessing Officer whereas Ld. AR relied on the order of Ld. CIT(A) and he submitted that there was a joint agreement between assessee and NSE-IT Ltd. and copy of said agreement is placed on pages 28 to 32 of the paper book. .....

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