TMI Blog2018 (5) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... le from the retrospective effect. We are of the considered view that the Ld. CIT(A) has correctly allowed the appeal of the assessee and accordingly we uphold the same by dismissing the ground Nos.1 & 2. Addition on the basis of AIR information - Held that:- In this case TDS has been deducted by the customer on the provisions created in the books of accounts whereas the assessee invoiced and recorded the sale in the next financial year. We observe that the CIT(A) has taken a very balanced and correct view of the matter and also recorded the finding of the fact that there is no escapement of tax as the income stands offered to tax in the next financial year when the assessee invoiced the customer and it is irrelevant that the customer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO the TDS should have been deducted on the said payment failing which the same could not be allowed under section 40(a)(ia) of the Act. 4. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee after considering the detailed submissions which have been incorporated in para 3.1 by observing and holding as under: 3.2. I have gone through the assessment order as well the submissions m by the AR of the appellant company. The AO is of the opinion that appellant company should have deducted the TDS for the software charges paid of ₹ 24,00,000/-. Whereas the AR of the appellant argues that the software charges paid of ₹ 24,00,000/- is not covered by the definition of Royalty for which he is highly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serted to section 9 by Finance Act, 2012 w.e.f. 01.06.1976 but the fact of the matter is that as on the date of payment even this amendment was not on the statute books bringing it within the definition of royalty. While countering the arguments of the Ld. D.R. the Ld. A.R. submitted that though the circular was effective w.e.f. 01.07.12 on which the Ld. CIT(A) placed reliance but even otherwise the provision of tax deduction at source could not be applicable as the assessee could not have foreseen the amendment in the subsequent year which took place by way of insertion of explanations 4, 5 6 to section 9 by the Finance Act, 2012. Finally, the Ld. A.R. submitted that in view of the above, the appeal of the Revenue on this ground should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed that no such invoice was issued by the assessee. Thereafter, the AO sent notice under section 133(6) of the Act to the parties as per the addresses appearing in form 26AS but no response was received. Finally the AO observed that unreconciled amount of ₹ 1,03,22,354/- was not explained by the assessee and accordingly the same was added to the income of the assessee. 11. In the appellate proceedings, the Ld. CIT(A) deleted the addition after considering the submission of the assessee by observing and holding as under: 4.3 I have carefully gone through the submissions of the appellant and the documents attached to them. It is clear that the customers of the appellant deducted TDS on provisions made in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in that year and the payment was also received in the next year. The Ld. A.R. also submitted that no TDS was claimed in the next year. Finally, the Ld. A.R. argued that no loss of revenue is caused to the department as the income has been offered to tax and therefore the appeal of the department should be dismissed as the order of Ld. CIT(A) is correctly passed considering all the facts of the case. 14. Having heard both the parties and carefully perusing the relevant material placed before us, we find that in this case TDS has been deducted by the customer on the provisions created in the books of accounts whereas the assessee invoiced and recorded the sale in the next financial year. We observe that the Ld. CIT(A) has taken a very ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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