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2016 (3) TMI 445 - ITAT MUMBAI

2016 (3) TMI 445 - ITAT MUMBAI - TMI - TDS u/s 194C OR 194J - royalty and connection charges - disallowance u/s 40(a) - Sort deduction of tax under different or wrong provision of the section - AO'S case that such payment is on account of “royalty” covered within the ambit of section 9(1)(vi) and therefore the TDS should have been deducted under section 194J - Held that:- If there are two conflicting decisions of non-jurisdictional High Courts, then the decision in favour of the assessee should .....

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ion of the section.

Moreover, in this case, Ld. Counsel has pointed out that the amount paid to Hathway Cable and Datacom Ltd. has been offered to tax in the return of income filed by the said concern, therefore, in view of the second proviso to section 40(a)(ia) no disallowance under section 40(a)(ia) should be made. This proposition now has been settled by the Hon’ble Delhi High Court in the case of CIT vs Ansal Land Work [2015 (9) TMI 79 - DELHI HIGH COURT], wherein held that such .....

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ent passed under section 143(3) for the assessment year 2010-11, on the following grounds of appeal:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the rate of tax deducted at source @ 2% instead of 10% u/s 194J of the act under the head professional and Technical Services as Royalty of ₹ 54,27,239/-. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred n allowing TDS @ 2% u/s 194C deduction instead of @ .....

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section 194C on the ground that the payment has been made in pursuance of a works contract. In response to the show cause notice as to why the TDS should not deducted under section 194J being payment on account of TDS on professional / technical services and why disallowance under section 40(a)(i) should not be made, the assessee submitted that, Royalty and connection charges do not fall within the ambit of royalty . In fact assessee was not required to deduct TDS, however, by way of abundant p .....

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A) has decided this issue in favour of the assessee and accordingly, following the same, he allowed this issue in favour of the assessee. 4. Before us, the Ld. Counsel for the assessee submitted that in the AY 2009-10, the Ld. CIT(A) has decided this issue in favour of the assessee after relying upon the decision of ITAT Kolkata Bench in the case of DCIT vs S K. Tekriwal. Against the said appellate order no appeal was filed by the Department before the Tribunal. Thus, rule of consistency should .....

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if the assessee has deducted tax under TDS under section 194C instead of 194J no disallowance under section 40(1)(ia) should be made on account of short deduction of tax at source. However, the Ld. Counsel very fairly, pointed out that there is one, Kerala High Court decision in the case of CIT vs M/S. PVS Memorial Hospital Ltd, in ITA No. 16 of 2014 order dated 20.07.2015 wherein the Hon ble High Court has held that TDS has to be deducted under the right section, because the word tax-deductible .....

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hat the amount has been paid to M/s Hathway Cable and Datacom Ltd., which has been assessed to tax and has already offered this income in the return of income. Therefore, in view of the Second Proviso to section 40(a)(ia), brought in the statute by Finance Act, 2012, no disallowance can be made. Now there are catena of Tribunal decisions holding that this amendment though brought w.e.f. 01.04.2013 is retrospective in nature. Not the Hon ble Delhi High Court in the case of CIT vs Ansal Landmark T .....

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come in the return of income can be verified. 7. We have considered the rival contentions and perused the relevant finding given in the impugned orders and also the decisions relied upon by the parties. The assessee has made payment towards connection charges to M/s Hathway Cable and Datacom Ltd. On which the assessee has deducted TDS under section 194C. The AO s case is that, such payment is on account of royalty covered within the ambit of section 9(1)(vi) and therefore the TDS should have bee .....

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na fide belief or under any wrong impression had deducted the tax under a wrong provision or section which has led to short-deduction of tax, then that itself will not lead to disallowance under section 40(a)(ia). In case of M/s Punit Securities Pvt Ltd (supra) the Tribunal following the said decision had observed and held as under : 6. We have heard the rival submissions and also perused the relevant findings given in the impugned order. Admittedly, the assessee has deducted TDS on transaction .....

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urce under chapter XVII B and such a tax, has not been deducted or after deduction has not been paid on or before the due date specified in 139(1). In other words, there are only twin conditions for disallowance u/s 40(a)(ia), firstly, tax which was deductable has not been deducted and secondly, after deduction has not been paid. If both the conditions are satisfied then only disallowance u/s 40(a)(ia) can be made. The section does not envisages that, if the assessee has deduced the tax under wr .....

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