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2017 (1) TMI 955 - ITAT MUMBAI

2017 (1) TMI 955 - ITAT MUMBAI - TMI - TDS u/s 194C OR 194J - short deduction of tds - Held that:- Where TDS has been deducted by the deductor in most bona file manner as applicable and no revenue leakage has been pointed out, then the deductor should not be penalized for any unintended short fall in deduction of TDS so long as the payees are income tax assessee and they have included the impugned payments as part of their income offered to tax. In the case before us, the admitted case of the as .....

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tax department and has filed its income tax return, then liability on account of short deduction of TDS would not be recovered from the assessee. The assessee shall extend requisite cooperation to the AO by submitting complete particulars of the payees containing name, address, PAN No. and copies of invoices. - Decided in favour of assessee for statistical purposes. - Payment for utilizing services of production houses - Held that:- Payments made to the production houses towards cost of pro .....

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to interfere in the finding of Ld. CIT(A). - Treating payments made towards car parking charges as rent under Section 194I instead of contract payment covered under Section 194C - Held that:- During the course of hearing before us, detailed arguments have been made by the Ld. Counsel. It has also been submitted that AO had not worked out the liability after verifying the facts from the payees. Under these circumstances, we send these issues back to the file of the AO to make direct verifica .....

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dent by : Shri Paras Savla & Ms. Keerthiga Sharma ORDER Per Ashwani Taneja (Accountant Member) The aforesaid appeal filed by the Revenue and Cross Objection filed by the assessee is against the order of Ld. CIT(A) dated 18.07.2014 passed against the order of the AO u/s 201(1) & 201(ii) of the Act, dated 26.03.2012 for A.Y. 2010-11 (F.Y. 2009-10). 2. During the course of hearing, arguments were made by Mr. Paras Savla & Ms. Keerthiga Sharma, Authorised Representatives (ARs) on behalf .....

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iating the factual and technical issues of the case, as clearly brought out by the AO in his order u/s.201(1)1201(1A) of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in not appreciating the fact that production of TV commercials require highly technical job of professionals such as director and cameramen, and payments for this purpose should fall within the ambit of section 194J of the IT Act. 3. On the facts and in the circumstances .....

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15 dated 08.08.1995, which clearly states that the payments made by advertising agency to even in a situation where such services are sub contracted, are liable for TDS u/s 194J of the I T Act, and where technical services are rendered, provision of section 194J is applicable even to normal maintenance contracts. 5. The appellant craves to leave to amend or alter any ground or add a new ground which may be necessary at the time of hearing of the case or thereafter. 6. The order of CIT(A), being .....

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treating assessee as assessee in default under Section 201(1) and levying interest under Section 201(l A). 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in confirming the action of AO by treating the payment made towards car parking charges of ₹ 9,87,277/- as rent under Section 1941 instead of as a contractual payment attracting the provisions of Section 194C of the Act, thereby treating assessee as assessee in default under Section 201(1) and le .....

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ade by the AO on account of short deduction of TDS and interest upon payments of production charges and AMC charges. Whereas, the assessee is aggrieved with the part disallowance sustained by Ld. CIT(A) by holding that payments made towards dubbing, editing and royalty as fee for technical services liable for deduction u/s 194J as against TDS deducted u/s 194C by the assessee. 5.1. The brief background is that the assessee is engaged in the business of communication services; including advertisi .....

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part relief was allowed to the assessee. Ld. CIT(A) held that TDS on payment of production charges and annual maintenance charges was to be deducted u/s 194C of the Act. However, payments relating to dubbing charges warranted deduction of tax u/s 194J of the Act. Further, it was also held that tax was to be deducted u/s 194I of the Act on payment of parking charges. Lastly, the Ld. CIT(A) held that the assessee would not be considered as an assessee in default u/s 201 of the Act in case the paye .....

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act; therefore, TDS has rightly been deducted u/s 194C. Thus, Ld. CIT(A) has erred in bifurcating the payments in the two parts. All the payments should be put into the category of u/s 194C. (ii) The Ld. CIT(A) has held that assessee should not be considered as assessee in default u/s 201 of the Act in case payees have paid tax on the payments made to them. All the payees of the assessee are income tax assessee s. This fact may be verified by the AO by exercising powers conferred upon him under .....

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d that in absence of any leakage of revenue, no tax should be recovered from the assessee. (iii) It was lastly submitted that tax effect involved in Revenue s appeal less than ₹ 10 lakhs. Therefore, Revenue s appeal should be dismissed in view of his Board s circular no. 21 of 2015 dated 10.12.2015. It was also submitted that Cross Objection can be adjudicated independently, in view of the judgment of Delhi Bench of Tribunal in the case of ACIT v. Ajay Kalia 157 ITD 187 (Del). 5.3. We have .....

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ecision in the case of Hindustan Coca Cola Beverages Private Limited Accordingly, the A.O. is hereby directed to allow relief on this count in respect of the invoices specifically mentioned in the preceding paragraph after due verification as to whether the payees have actually offered the corresponding income to tax in their respective returns of income for the year. Notwithstanding the above, the appellant shall be liable for the liability of interest u/s 201(1A) of the Act as per the decision .....

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n accordance with the provision of this chapter, income tax shall be payable by the Assessee direct. Thus, both the conditions i.e. (i) in the case of income in respect of which provision is not made under chapter XVII for deducting income tax at the time of payment and ('ii) in case where income tax has not been deducted in accordance with the provisions of Chapter XVII the Income tax is payable by the Assessee direct. Section 191 thus re-enforces that primarily the liability of payment of .....

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1) of Section 201 in respect of such tax. The explanation to section 191 thus has to be read into section 201 (1). Sub-section (1) of Section 201 provides that where deductor does not deduct or does not pay after deduction such person shall without prejudice to any other consequences which he may incur, be deemed to be an Assessee in default in respect of such tax. The language of the explanation to Section 191 and sub-section (1) of Section 201 is almost similar except with one difference. In E .....

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ellip;.be deemed to be an Assessee in default within the meaning of sub-section (1) of section 201 in respect of such tax. The above meaning thus has to be read in sub-section (1) of section 201, which has been specifically provided for Not repeating the said condition again in section 201 (1) is inconsequential. Thus, deductor who fails to deduct income tax at source shall be deemed to be an Assessee in default only when the Assessee has also failed to pay such tax directly. Thus, it flows that .....

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the deductor should not be penalized for any unintended short fall in deduction of TDS so long as the payees are income tax assessee and they have included the impugned payments as part of their income offered to tax. In the case before us, the admitted case of the assessee is that all the payees are properly identified and duly assessed with the income tax department. Ld. CIT(A) has already followed this view and accordingly directed the AO to verify these facts and exonerated the assessee fro .....

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ration to the AO by submitting complete particulars of the payees containing name, address, PAN No. and copies of invoices. Further, if the need arises, the assessee shall be free to demonstrate that the assessee had made the payments to production houses and not to the persons directly for availing technical services and shall also be free to raise all legal and factual issues to establish that TDS was deducted in accordance with law only. The AO shall also take into account all the facts of th .....

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to these persons were covered u/s 194J. Ld. CIT(A) analysed the provisions of section 194C as well as circular of the Board No.714 of 1995 dated 03.08.1995 and circular no.715 of 1995 dated 8th August 1995 and held that all the payments made to the production houses (other than the payments which have been contested by the assessee in its C.O.) were covered u/s 194C, since payments made for production of broadcasting and telecasting programme are covered within the definition of work as containe .....

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the purchase orders, and therefore, these would fall within the purview of provisions of section 194C and not u/s 194J of the Act. 5.8. Similarly, with regard to AMC services, Ld. CIT(A) analysed all the facts of the case as well as aforesaid circulars of the Board and held that these payments are within the purview of provisions of section 194C of the Act. We find that order of the Ld. CIT(A) is based upon proper reasoning and analysis of facts. Therefore we do not find any justification to in .....

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