Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 419 - ITAT VISAKHAPATNAM

2016 (8) TMI 419 - ITAT VISAKHAPATNAM - TMI - TDS u/s 194C - whether expenditure incurred by the assessee towards subscription charges paid to pay channels is in the nature of direct expenditure coming under the provisions of section 28(1) of the Act or an expenditure coming under the general deductions under the provisions of section 37 of the Act - Held that:- The expenditure incurred is in the nature of direct expenditure, therefore, not coming under any of the provisions of section 30 to 38 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

- The revenue has failed to brought on record any evidences to prove that the findings of the fact recorded by the Ld. CIT(A) is incorrect. Therefore, we are of the view that the CIT(A) has rightly deleted the additions made by the A.O. under the provisions of section 40(a)(ia) of the Act, by holding that the expenditure incurred by the assessee is not coming under the provisions of section 30 to 38 of the Act, hence no disallowance can be made u/s 40(a)(ia) for non deduction of TDS. We do n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eals filed by the revenue and cross objections filed by the assessee are directed against the separate, but identical orders of CIT(A), Visakhapatnam for the assessment years 2007-08 & 2009-10. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed off, by way of this common order for the sake of convenience. 2. The brief facts of the case are that the assessee is a Private Limited company which is engaged in the business of providing Multi system .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the information called for. During the course of assessment proceedings, the A.O. noticed that the assessee has paid subscription charges to pay channels without deducting tax at source u/s 194C of the Act. The A.O. further observed that the expenditure incurred by the assessee is in the nature of broadcasting and telecasting charges as defined u/s 194C of the Act and accordin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

red towards subscription charges paid to pay channels is a direct expenditure incurred to earn the income, which falls under the scope of section 28 of the Act, but not coming under the express provisions provided u/s 30 to 38 of the Act, therefore, no disallowance can be made u/s 40(a)(ia) of the Act for non deduction of TDS. The assessee further submitted that any expenditure incurred which is in the nature of direct expenditure incurred to earn the income is allowable as deduction under the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t. In support of his arguments relied upon the decision of ITAT Hyderabad bench in the case of Teja Constructions Vs. ACIT (2010) 36 DTR 220 and also ITAT Delhi bench decision in the case of ITO Vs. Aahar Consumer Products Pvt. Ltd. in ITA No.2910/Del/2010. The CIT(A) after considering the explanations furnished by the assessee held that the expenditure incurred by the assessee is in the nature of direct expenditure referred to in section 28 of the Act, which is incurred to earn the revenue from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

)(ia) would imply that the disallowance under that section comes into play for nondeduction of TDS only on the expenses referred to in Sections 30 to 38 of the Income Tax Act. 3. The CIT(A) erred in treating the payments made to pay channels as direct expenses for determining profits u/s 28 of the l.T. Act, but do not fall under the provisions of sections 30 to 38 of the Act. 4. The CIT(A) ignored the fact that the assessee itself deducted tax at source on some of the payments made to the channe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 28(1) of the Act and hence cannot be disallowed u/s 40(a)(ia) of the Act for non deduction of tax at source. The Ld. D.R. further submitted that a literal reading of the provisions contained in section 40(a)(ia) of the Act would imply that the disallowance under that section comes into play for non deduction of TDS only on the expenses referred to in section 30 to 38 of the Act. The CIT(A) ignoring the fact that the assessee itself has deducted tax at source on some of the payments made to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd his order should be upheld. 5. On the other hand, the Ld. A.R. for the assessee strongly supported the order passed by the Ld. CIT(A). The A.R. further submitted that the provisions of section 40(a)(ia) of the Act starts with notwithstanding anything to the contrary in section 30 to 38 of the Act the following amount shall not be deducted. On a close reading of the provisions of section 40(a)(ia) of the Act, it would apply with regard to the payments made related to section 30 to 38 of the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t before allowing any deductions towards expenditure/deductions envisaged under the provisions of section 30 to 43D of the Act. Since, the expenditure incurred by the assessee is in the nature of direct expenditure, the provisions of section 40(a)(ia) of the Act for non deduction of TDS is not applicable. The CIT(A) has rightly deleted the additions therefore, his order should be upheld. 6. We have heard both the parties and perused the materials available on record. The factual matrix of the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

further was of the opinion that the assessee itself has deducted TDS on part payment made to the pay channels, however failed to offer any reasons for non deduction of tax at source on remaining amount to the same pay channels. It is the contention of the assessee that the expenditure incurred under the head subscription charges paid to pay channels is in the nature of direct expenditure which is incurred to earn the revenue from the business coming under the provisions of section 28(1) of the A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

expenditure to earn the income. The expenditure incurred is in the nature of direct expenditure, therefore, not coming under any of the provisions of section 30 to 38 of the Act, therefore, no disallowance can be made for want of non deduction of tax at source. We find that the Ld. CIT(A) after considering the explanations furnished by the assessee categorically held that the expenditure incurred by the assessee is in the nature of direct expenses, adjustable against the revenue for determinati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad "Profits and gains of business or profession". (a) In the case of any assessee (ia) any interest, commission or brokerage, [rent, royalty] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deductio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

venue is earned from the subscribers through the cable operators. Thus, the payment of subscription to channel companies is a direct cost for earning the subscription revenue. I have also carefully examined to note that the payment made to the channel companies is not an expense covered in sections 30 to 38 of the I.T. Act. It cannot be considered as a general expense falling u/s.37 of the I.T. Act. 9.6 The scope of section 28 and the expenses embedded in ascertaining profit u/s 28 is discussed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e profits and gains which are the gross profits or the commercial profits arrived at in the trading and manufacturing account after allowing the necessary trading, construction and manufacturing costs, but before adjustment for allowance of expenses or deduction and also disallowances envisaged under sections 30 to 38. Such commercial profits or the gross profits are those which are arrived at after deducting the manufacturing or trading or construction cost. Such trading or manufacturing or con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version