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Smt. Mahua Palit Versus Pr. C.I.T., Circle-17, Kolkata

2017 (10) TMI 244 - ITAT KOLKATA

TDS u/s 194C not deducted - Revision u/s 263 - AO erroneously omitted to make addition in respect of payment as venue charges, payment to principals of schools and colleges and payment to examiners - non deduction of tds - Held that:- AO has chosen to make addition of TDS on foreign remittance but has not chosen to make any addition in respect of the payments made to resident in India because he was satisfied that each of the payments were less than the limits for which TDS has to be made in ter .....

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e payments by invoking the provisions of Section 40(a)(ia) of the Act. - At best it can be said that 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 Cou .....

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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 like conducting examinations, interviews etc. The services are provided at Kolkata and other cities and locations. The AO while concluding the assessment noticed that as a service provider the assessee would get the work done throug .....

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s as specified by Merit Trac and also ensure that eh facilities for conducting recruitment activities are proper. The consideration payable for the services rendered by the assessee is reimbursement of all charges incurred by the assessee on behalf of Merit Trac for arranging venues etc and 5% service charges to the assessee. Thus all the expenses are reimbursed by Merit Trac and the assessee s income is only 5% of the total expenses incurred by it for providing services to Merit Trac. 3. In the .....

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assessee before AO was that each of the payments made by the assessee for meeting the expenses like rent for the venues, fees for examiners, guards etc., were less than the limits for which the tax deduction at source (TDS) is mandatory as per section 194C of the Act. The assessee had given all these information in the form of CD. The contents of the CD have been given in the form of print out and it contains details of each of payment made and the purpose of making such payments etc. These deta .....

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he 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 confin .....

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Principal simply granted a license to use the premises for few hours/days only and also provided certain other facilities necessary for smooth conduct of the event. Reliance is placed on DCIT -vs- Japan Airlines 93 ITD 163 (Delhi) and DClT -vs- Singapore Airlines 7 SOT 84 (Chennai) both cases uncontested in higher courts. 5.5. TDS on Foreign Remittance: Save what is contended at Para 5.4. above, the AR is completely silent in the case of payments made to following Principal and his college in Ne .....

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de Naxal Police Hqrs) Naxal 26 31000 20000 Campion Academy Lagankhel, (Beside Patan Hospital),Lalitpur 26 52000 86000 Campion College Kupondole (Near Room to Read), lalipur 27 35000 20000 All the case laws put forward by AR in his reply deal with domestic payments and in no means is self interpretation of 194C(1) "Any person responsible for paying any sum to any resident .... " and stretch the meaning for payments made to person(s) of Nepal. Hence, a total amount of Rs.l,18,,000/- on v .....

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yments 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 .....

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CIT however did not agree with the contentions put forth on behalf of the assessee. In the reply to the show cause notice the assessee also took a plea that the provisions of section 194C of the Act are not attracted to the payments in question as what the Assessee paid was on behalf of Merit Trac which was reimbursed by them to the Assessee. 6. The CIT however was not satisfied with the reply and he set aside the order of AO in so far as it relates to the payment of ₹ 52,79,366/- as venue .....

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r of the AO passed u./s 143(3) of the Act dated 23.03.2015 that the AO was fully conscious of the TDS obligation u/s 194C of the Act. It is seen that even in the impugned order, the Assessee has specifically contended that the details of payments made by the assessee were furnished to the AO in the form of CD at the time when the Assessment u/s.143(3) of the Act was made. Further, the AO in the course of assessment u/s.143(3) of the Act has specifically raised the following query :- 5.2. TDS Vio .....

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- on venue charges at Nepal and ₹ 86000/- paid to Principal of an institution situated 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, ex .....

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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 limit prescribed by those provisions for deduction of tax at source. These details were available before the AO. The AO though he has not made any specific discussion in the order of assessment was conscious of the .....

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referred to in the show cause notice required compliance of Sec.194C of the Act, but were omitted to be disallowed u/s.40(a)(ia) of the Act. There is no basis on which the CIT has drawn such inference. Therefore we agree with the submissions of the ld. Counsel for the assessee that it was a conscious decision of the AO not to make any disallowance in respect of these payments by invoking the provisions of Section 40(a)(ia) of the Act. In fact in reply by the assessee to the show cause notice u/ .....

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