TMI Blog2017 (10) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... two views were possible on the question whether TDS provisions were attracted to 3 payments as mentioned above to examiners by the Assessee. The AO has adopted one view which is permissible in law. The jurisdiction u/s 263 of the Act cannot be invoked in a case where two views are possible and the AO has taken one view with which the CIT does not agree. The decision of the Hon’ble Supreme Court in the case of Malabar Industries Ltd. (2000 (2) TMI 10 - SUPREME Court) clearly supports the plea of the assessee in this regard. - Decided in favour of assessee. - I.T.A No. 1872/Kol/2016 - - - Dated:- 4-10-2017 - Sri N. V. Vasudevan, JM And Shri M. Balagnesh, AM For the Appellant : Shri Miraj D.Shah, AR For the Respondent : Shri Goulean Hangshing, CIT(DR) ORDER Per N. V. Vasudevan, JM This is an appeal by the Assessee against the order dated 20.06.2016 of CIT-17, Kolkata passed u/s 263 of the Income Tax Act, 1961 (Act.) 2. The Assessee is an individual. She carries on the business under the name and style of M/s Mahua Enterprise. The assessee acts as service provider for organizing various events like booking venues for pre recruitment processing services lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of ₹ 1,18,000/- in respect of payment made for a venue at Nepal and ₹ 86,000/- paid to the principal of an institution at Nepal. Thereafter after getting the reply from the assessee, the AO disallowed the payments of ₹ 1,18,000 for venue charges at Nepal and ₹ 86,000/- paid to the principal of the institution at Nepal because there is violation of section 195 of the Act. In the order of assessment however this has been referred to disallowance u/s 40(a)(ia) of the Act. The following are the conclusions of the AO in the order of assessment :- 5.4. Conclusion Reliance placed: On perusal of submission dated 12-03-2015 the following conclusions are arrived at considering all circumstantial evidence and factual position of the case:- (i) Any Work means any work and is not confined to or restricted to works contract only. Reliance is placed on Associated Cements Co Ltd.-vs- CIT 2011TR 435 (Se) (1993). (ii) Venue charges paid to organizations/institutions fall under the purview of 194C instead of 194I because the authorities of the selected venue simply granted permission to conduct examination/event/interview/placement etc. They d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue charges and ₹ 86000/- paid to Principal of an institution situated at Nepal is disallowed in the hands of the assessee and added to the business income. 4. The CIT in exercise of his powers u/s 263 of the Act was of the view that the aforesaid of the AO was erroneous and prejudicial to the interest of the revenue because of the action of the AO in not making the disallowance of ₹ 52,79,866/- which was payments made towards hire of various venues, ₹ 32,64,500/- which was payments to principals to various colleges and another sum of ₹ 28,07,393/- which was the payment made to examiners. According to the CIT the AO having consciously come to a conclusion that there was TDS obligation when the payments are made by the assessee to third parties who are non-residents for and on behalf of Merit Trac ought to have applied the same logic to other payments made to residents and made disallowances u/s 40(a)(ia) of the Act. A show cause notice u/s 263 dated 10.03.2016 was accordingly issued by CIT calling upon the assessee to explain why the order passed u/s 143(3) of the Act dated 23.03.2015, not making the disallowance u/s 40(a)(ia) of the Act should not be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at Nepal were detected. 5.3. Show cause and Reply of AR: The assessee vide letter dated 08/03/2015 was requested to explain as to why she failed to deduct TDS u/s 194C of the Act on the above mentioned cases (stated at Para-5.2 above). In response, The AR instead of explaining the factual position, submitted an elaborative reply consisting of 9{nine) pages misplacing the interpretation of the statute, exemplifying a Barber's hair cutting with provisions of Section 194C and relying on various court cases his own contention about of the applicability of section 194C read with section 40(a)(ia) of the Act. The reply of AR dated 12-03-2015 is annexed herewith as Annexure- A to this order . 9. The conclusion of the AO after extracting the reply of the Assessee to the show cause notice have already been set out in paragraph-3 of this order and hence not being repeated. It is clear that the details of each of the payments made by the assessee which are given in pages 24 to 78 of the assessee s paper book clearly demonstrates that each of the payments made did not attract deduction of tax at source in terms of section 194C of the Act as they were below the threshold li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition in respect of three payments viz., payment of ₹ 52,79,366/- as venue charges, payment of ₹ 32,64,500/- to principals of schools and colleges and payment of ₹ 28,07,393/- to examiners. At best it can be said that two views were possible on the question whether TDS provisions were attracted to the payment of ₹ 52,79,366/- as venue charges, payment of ₹ 32,64,500/- to principals of schools and colleges and payment of ₹ 28,07,393/- to examiners by the Assessee. The AO has adopted one view which is permissible in law. The jurisdiction u/s 263 of the Act cannot be invoked in a case where two views are possible and the AO has taken one view with which the CIT does not agree. The decision of the Hon ble Supreme Court in the case of Malabar Industries Ltd. 243 ITR 83 (SC) clearly supports the plea of the assessee in this regard. We are therefore of the view that in the facts and circumstances of the present case, the CIT ought not to have exercised his jurisdiction u/s 263 of the Act. His Order u/s 263 of the Act is accordingly quashed and the appeal of the assessee is allowed. 11. In the result the appeal of the assessee is allowed. Order p ..... 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