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The Income Tax Officer, The D.C.I.T., Circle-2 (Exemption) , Panchkula Versus Haryana State Counseling Society

2016 (6) TMI 213 - ITAT CHANDIGARH

Disallowance u/s 40(a)(ia) - non deduction of TDS - Held that:- assessee is a registered trust - Held that:- The undisputed facts of the case are that in the assessment year 2008-09, the assessee was registered under section 10(23C)(iv) of the Act and claimed exemption under the said Act. Similarly, in assessment years 2009-10, 2010-11, since the assessee was registered under section 12AA of the Act, the income was claimed to be exempt under section 11 of the Act. It is also a fact on record tha .....

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essee and also the findings of the learned CIT (Appeals) that the provisions of section 40(a)(ia) of the Act can be invoked only for the purposes of computing the income under the head "business income". Since the income is not computed under this head, the provisions of section 40(a)(ia) of the Act cannot be invoked. - Decided in favour of assessee - ITA No. 277/Chd/2012, C.O.No.16/Chd/2012, ITA No.170/Chd/2013, C.O.No.11/Chd/2013, ITA No.533/Chd/2014, ITA No.203/Chd/2015, C.O.No.10/Chd/2015 - .....

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Cross Objections against the appeals in ITA No.277/Chd/2012, ITA No.170/Chd/2013 and ITA No.203/Chd/2015. 2. Since the facts and circumstances are identical in all the appeals, the same were heard together and are being disposed off by this consolidated order for the sake of convenience. The decision given in ITA No.277/Chd/2012 for assessment year 2008-09 shall apply mutatis mutandis to all the appeals filed by the Revenue. ITA No. 277/Chd/2012 3. Briefly, the facts of the case are that During .....

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le to Income Tax Act, there was no need to deduct TDS, therefore disallowance under section 40(a)(ia) of the Act cannot be made. The learned CIT (Appeals) after considering the submissions of the assessee, allowed the appeal of the assessee stating that the disallowance under section 40(a) (ia) of the Act is not warranted in view of the grant of exemption under section 10(23C)(iv) to the assessee by the Commissioner of Income Tax, Panchkula. for the year under consideration. Further, the learned .....

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e to add or amend the grounds of appeal before the appeal is heard and disposed off. 3. It is prayed that the order of Ld.CIT(A) be set aside and that of the A.O. may be restored." 6. The learned D.R. while arguing before us started with the fact that it is undisputed that the impugned payments made to third person are liable to TDS under various sections in Chapter-XVII of the Act. It was stated that the arrangement of various Chapters and sections under such Chapters in the Act carries a .....

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s correct, he goes to enjoy the benefits of such sections or else the income is taxable under different heads of the income as per the provisions under Chapter-IV of the Act. In this way, he tried to demonstrate that the Act makes it very clear that all persons who are entitled to exemption of income under sections 10 or 11 of the Act are first liable to tax under the Act In other words, persons entitled to exemption of income under sections 10 or 11 of the Act are chargeable to tax under differ .....

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order of the Amritsar Bench of the Tribunal in the case of Municipal Committee Vs. ITO, 46 Taxmann.263, a copy of the order was placed on record. 7. The learned counsel for the assessee relied on the order of the learned CIT (Appeals) and stated that since the income of the assessee is not taxable under the head "income from business or profession", the provisions of section 40(a)(ia) of the Act are not applicable on it. Reliance was placed on the order of the Mumbai Bench in the case .....

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e on record. The undisputed facts of the case are that in the assessment year 2008-09, the assessee was registered under section 10(23C)(iv) of the Act and claimed exemption under the said Act. Similarly, in assessment years 2009-10, 2010-11, since the assessee was registered under section 12AA of the Act, the income was claimed to be exempt under section 11 of the Act. It is also a fact on record that on the impugned payments, the assessee have not deducted tax, as required under the provisions .....

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of section 40(a)(ia) of the Act can be invoked only for the purposes of computing the income under the head "business income". Since the income is not computed under this head, the provisions of section 40(a)(ia) of the Act cannot be invoked. This proposition has been laid down by various Benches of the Tribunal as well as the High Courts. We are not in agreement with the arguments of the learned D.R. that first an assessee is to be liable to be taxed under the Act before he claims fo .....

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ed under this Act, the proposition laid down by various High Courts and Bench of the Tribunal is that the provisions of section 40(a)(ia) of the Act being a part of Chapter-IV of the Act, cannot be invoked in such circumstances. 9. Before parting, in dealing with the argument raised by the learned D.R. with regard to the exemption under sections 10 or 11 of the Act, to be provided only once the income is computed under a specific head, we find the answer in the judgment of the Hon'ble Punjab .....

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expression 'total income' the following words are added in brackets : 'as computed in accordance with the other provisions of this Act'. This emphasises that wherever Parliament considered that the computation should be in accordance with the provisions of the Act, it introduced the concept by using appropriate language. In the absence of any such language in s. 11(1), we consider that the computation as envisaged by the other provisions of the Act cannot be imported into s. 11( .....

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