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TMI Blog2018 (10) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in ITA No.1017/Chd/2016 dated 28.02.2017, dismissing the appeal of the revenue. 2. Appellant claims following substantial questions of law arise for consideration in the present appeal:- 1)Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in treating the 'copyright expense' as a revenue expense when the Income Tax Act, 1961 alongwith the Income Tax Rules, explicitly mention copyrights as an intangible asset? 2)Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was right in treating the 'copyright expense' as a revenue expense relying on the decisions of Hon'ble Supreme Court in the case of CIT vs. IAEC (pumps) Ltd. 232 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of depreciation allowed on Computer Kiosk @ 10% against 60% as claimed by the assessee. iii) Addition of Rs. 41,62,580/- on account of disallowance of interest paid to NBFCs without deduction of TDS u/s 40(a)(ia). 5. Aggrieved of the assessment order, the assessee preferred an appeal. Vide order dated 29.07.2016, Commissioner of Income Tax (Appeals), Chandigarh (for brevity, 'CIT(A)') allowed the appeal of the assessee. 6. Not satisfied with the order passed by CIT(A), revenue preferred an appeal before the ITAT. In appeal, the contention raised was that the "copyright expenses" were wrongly treated as revenue in nature. Further challenge was made to allowing of interest paid to NBFCs (Non Banking Financial Company). The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to subsection( 1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso." 10. By introduction of second proviso to Section 40(a)(ia) of the Act fiction has been created that the assessee who had failed to deduct TDS but is not deemed to be an assessee in default in term of first proviso to Section 201(1) of the Act, in that case it shall be deemed that assessee had deducted and paid tax on such sum on the date of furnishing of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der certain eventualities and in case of failure to do so, consequences have also been mentioned under Section 201. With the insertion of second proviso to Section 40(a)(ia) and first proviso to Section 201(1) of the Act, an exception has been carved that subject to the fulfilment of condition as stipulated in first proviso to Section 201 of the Act, the assessee shall not be treated as assessee in default and the expenses so claimed will be allowed. 14. This Court in Pr. Commissioner of Income Tax-2, Chandigarh Vs. Shivpal Singh Chaudhary (ITA No. 558 of 2017) on 05.07.2018, agreeing with the view of Delhi High Court in CIT vs. Ansal Land Mark Township Private Limited, (2015) 377 ITR 635 (Delhi) held that the second proviso to Section 40( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in the form No.26A as also report of Chartered Accountant was filed. The Revenue has not challenged this fact before us. Thus the assessee had duly demonstrated compliance with the conditions stated in the second proviso to Section 40(a)(ia), which briefly put, states that no disallowance is to be made in cases where the recipient of the income reflects the same in its return of income and pays taxes on the same. The Assessing Officer also, we find, has in her Remand Report after examining the evidences produced by the assessee, admitted that the said expenses were allowable in view of the provisions of Section 40(a)(ia) r.w.s. 201(1) of the Act. In such circumstances, since the Assessing Officer has herself admitted that the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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