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2018 (12) TMI 460

TDS u/s 194A - addition under section 40(a)(ia) - TDS on lease rent - Held that:- Respectfully following Hon’ble Delhi High Court in case of Rajesh Projects (India) Pvt. Ltd vs. CIT [2017 (2) TMI 1109 - DELHI HIGH COURT], we hold that, TDS needs to be deducted on lease rent. - TDS liability on Interest paid to Yamuna Expressway Development Authority (YIEDA) - Held that:- Insofar as definition of, who would constitute an “Authority”, in our considered opinion decision of CANARA BANK [2016 (5) TMI 570 - ALLAHABAD HIGH COURT] cannot be applied wherein held that assessee is entitled to exemption of payment of tax at source under section 194A, due to ratio laid down by Hon’ble Supreme Court in case of New Okhla Industrial Development Authority vs CIT (supra). - Accordingly, respectfully following ratio laid down in case of New Okhla Industrial Development Authority vs CIT [2018 (8) TMI 1374 - SUPREME COURT OF INDIA] we hold that TDS needs to be deducted on interest paid to YEIDA. - TDS liability on Bank guarantee commission u/s 194A - Held that:- Assessee in present case paid commission to bank not as an agent. Accordingly, we hold that there was no need to deduct TDS on the .....

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be claimed as a deduction in the year when the corresponding income is recognized. iv) There is nothing in the provision which suggests that the provision is applicable only where the expenditure in question has been charged to the P&L account of a particular year. The expenditure which is capitalized in any year under work-in- progress etc. is ultimately charged to the P&L account when the corresponding income is recognized in a subsequent year. Therefore, such outgo/expenditure, if not out rightly disallowed or added to the P&L account, is liable to be reduced from work-in-progress or the capital account, which would be a mode of giving effect to the provisions of section 40(a)(ia). v) All outgoings, regardless of whether capital or revenue in nature, are meant to be covered by the word expenditure for the purpose of this section, only the mode of giving effect to the provision of section 40 (a)(ia) shall be different. 2) Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in holding that the amount of ₹ 2,51,17,344/- received by the assessee from M/s Formula One Management Limited was not liable to be treated as business income .....

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e Act without considering the fact that, these payments has not yet been charged to the profit and loss account as taxable income of assessee. 6. We have perused the submissions advanced by both sides in light of records placed before us. We have also perused order passed by this Tribunal dated 31/08/17 passed by Coordinate bench (supra), in assessee s own case placed at page 32-51 of paper book. 7. It is observed that this Tribunal considered demand raised by Ld.AO under section 201(1) and section 201 (1A) of the Act, for assessment year 2011-12 in case of assessee. 7.1 We do not agree with the argument advanced by Ld. AR that, as expenses were not charged to Profit and Loss Account due to no revenue recognition, no disallowance could be made. Income tax Act is very clear/specific regarding the time when TDS needs to be deducted. The statute requires TDS to be deducted at the time of credit of such income to the account of payee or at the time of payment thereof whichever is earlier. 7.2 We are, therefore, of the considered opinion that TDS should have been deducted as the case may be. We, therefore, give following analysis regarding applicability of TDS provisions on each of the .....

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ll, to the extent of TDS liability only be appropriated for such purpose. It is clarified that GNOIDA shall ensure that reimbursement is made to compensate the petitioners' excess payments; the income tax authorities shall not pursue any coercive methods for recovery of the amounts, or penalty, once the basic liability (with interest, to be paid by GNOIDA) is satisfied. The impugned orders are quashed; the Revenue shall make consequential orders, to give effect to this judgment, after duly hearing the petitioners and those likely to be affected, within 12 weeks from today. 7.3 The afore stated view by Hon ble Delhi High Court has been affirmed by Hon ble Supreme Court in case of New Okhla Industrial Development Authority vs CIT reported in (2018) 95 Taxman 80. 8. It is observed that co-ordinate bench of this Tribunal in assessee s own case (supra), held TDS ought to be deducted on lease rent, by following decision of Hon ble Delhi High Court in case of Rajesh Projects (India) Pvt. Ltd vs. CIT (supra). 8.1 Accordingly, respectfully following Hon ble Delhi High Court in case of Rajesh Projects (India) Pvt. Ltd vs. CIT (supra), we hold that, TDS needs to be deducted on lease rent. .....

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e of Technology, AIR 1995 SC 1395 (para 19). It is also not possible to refer to the definitions in other Acts, as the IT Act now specifically defines 'local authority'. It is well settled that in tax matters the literal rule of interpretation applies and it is not open to the Court to extend the language of a provision in the Act by relying on equity, inference, etc. It is the first principle of interpretation that a statute should be read in its ordinary, natural and grammatical sense as observed by the Supreme Court of India: "In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the Court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the Court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear" vide Hiralal Ratanlal v. STO, AIR 1973 SC 1034;' 53. A Division Bench of the Delhi High Court also in Agricultural Produce Market Committee v. CIT [2006] 156 ITR 286/[2007] 294 ITR 54 .....

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fairly at the language used."' 54. We fully endorse the views taken by the High Court in the above two judgments. 55. Now, reverting back to Explanation to Section 10(20), these are entities which mean the local authority. The submission of the appellant is that the appellant is covered by Clause (ii) of the Explanation i.e. "Municipality as referred to in clause (e) of Article 243P of the Constitution". We, while discussing above provisions, have already held that the appellant is not covered by the word/expression of "Municipality" in clause (e) of Article 243P. Thus, the appellant is not clearly included in sub-clause (ii) of Explanation. It is not even the case of the appellant that the appellant is covered by Section 10(20) except clause (ii). 10. Considering present legal position, insofar as definition of, who would constitute an Authority , in our considered opinion decision of Hon ble Allahabad High Court cannot be applied, due to ratio laid down by Hon ble Supreme Court in case of New Okhla Industrial Development Authority vs CIT (supra). 11. Accordingly, respectfully following ratio laid down by Hon ble Supreme Court in case of New Okhla Indu .....

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anced by both sides in light of records placed before us. 19. On verification of facts, it reveals that assessee received ₹ 2,51,17,344/-, on which TDS of ₹ 25,11,900/- has been deducted. Ld. CIT(A) without verifying any details deleted addition, by holding that no income against advance accrued to assessee. Ld.CIT(A) also failed to note that advance has been received for services which are to be rendered in next year. It is the fact that assessee received money and did not offer to tax during the year under consideration, stating that, it is advance received. However, Ld.CIT(A) failed to observe that advance received, must have culminated in subsequent year as income of assessee. Therefore, in our considered opinion, it is required to be verified, in which year, the same income as been offered by assessee for income tax purposes. 20. We, therefore, set aside whole issue to Ld.AO, with a direction to assessee to prove before Ld.AO to verify whether the same income as been offered for taxation in subsequent year. Accordingly, this ground raised by revenue stands allowed for statistical proposes. In the result appeal filed by revenue stands partly allowed for statistical .....

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