TMI Blog2019 (12) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... licability of the provision of Sec. 194C or Sec. 194J to such nature of payments. It is also a fact that Sec. 40(a)(ia) after its amendment brought in by Finance (No. 2) Act, 2014 given a specific relief to the assessee that in case of non-deduction of tax at source or non payment of tax though was deducted on payments made to residents as specified in Sec. 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the expenditure so claimed by the assessee. If that be so, the disallowance of entire expenditure of ₹ 7,65,700/- for drawing charges and ₹ 2,84,050/- towards PLC Programming Charges ought not to have been made by the authorities below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee s appeal are partly allowed. - I.T.A. No.2837/Ahd/2014 And I.T.A. Nos.3055 & 3056/Ahd/2013 - - - Dated:- 14-10-2019 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Parin Shah, A.R. For the Respondent : Shri S. K. Dev, Sr.D.R. ORDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rendered this supervision work. Some of the parties are not paying separately but including this supervision work in the price of the panel purchase order while some of the parties are paying separately for the supervision work. The income shown under supervision work is for separately charged for this work. In addition to supervision charges received against our sales we have also done supervision work for other client who place order because we are having speciliasion on account of in this line of business hence this income also treated as income-from manufacturing business. Moreover, the company has to depute representative for supervision work. In view of what we have stated above this income is derived from the manufacturing business of the company and our claim of deduction under section 80-IB on this income is proper and lawful. Therefore there is no question of any disallowance of claim of deduction under section 80-IB on account of supervision income. However, such argument advanced by the assessee was not found acceptable by the Learned Assessing Officer. The Learned AO, thus, following the disallowances made by his predecessor in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part and parcel of the trading and supply to the electric panels has been proved beyond doubts. In that view of the matter the assessee is entitled to supervision charges raised by it. We also get the inspiration from the judgment passed by the jurisdictional High Court in the matter of Miles India Ltd. vs. DCIT in Tax Appeal No. 27/2003 on this aspect where it has been clarified that the income for rendering services and maintenance facility to the clients of the assessee is allowable since it relates to the goods manufacturing and supplied to the industrial undertaking. Thus the assessee is eligible for deduction u/s.80IA of the Act as claimed before the Revenue; the relevant portion of the said order is reproduced herein below: 3. While admitting this appeal on 17.02.2003, the Court had formulated the following substantial question of law:- Does the Income derived from an industrial undertaking include income from Service/maintenance contracts in respect of the goods manufactured and supplied by the industrial undertaking soas to be eligible for deduction under section 80I of the Income Tax Act ? 4. Mr.Shah, learned adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was taken up in appeal before the High Court. The Department could not be allowed to flip flop on the issue and it ought let the matter rest rather than pursue litigation. 8. The Bombay High Court in the case of International Data Management Ltd. (supra) held that the assessee derived income as it rendered services and maintenance facility to its clients for which it charged for maintenance and services. Therefore, there was a direct nexus between the receipts from rendering services and maintenance facility to its clients and lease rent and the main business activity of the assessee. There was also recorded as a finding offact by the Tribunal. The assessee was entitleto deduction under Section 801 in respect of that income. 9. Considering the facts of the case and also considering the principle laid, down in the case of Excel Industries Ltd. (supra) and International Date Management Ltd. (supra), we are of the considered opinion that the Tribunal ought to have granted the benefit to the assessee under Section 801 of the Income Tax Act for the assessment Year 1992-92 also. 10. In view of the above, the present appeal-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do with any kind of technical or professional services; thus applicability of Sec. 119J of the Act as made by the authorities below for non-deduction of tax at source is not permissible in the eye of law as the case made out by the assessee. Similarly ₹ 2,84,050/- incurred for PCL Programming Charges paid to the contractors only for the purpose for carrying out the work given to them with their semi-skilled labour as per specifications and drawings provided to them by the technical engineers of the company as the case of the assessee. Therefore, no technical work is involved on the part of the contractors. It is the further case of the assessee that in both the counts neither any single payment to the contractor exceeds ₹ 20,000 nor aggregate payments to only single contractor exceeds ₹ 50,000/-. Hence, question of deduction of tax even under section 194C is not justifiable. Such stand of the assessee was also reiterated before us by the Ld. AR at the time of hearing of the instant appeal. He has also relied upon the Circular No. 715 dated 08.08.1995 regarding TDS payment to electrician. Apart from that, it was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below. We, therefore, taking into consideration the amended provision of Sec. 40(a)(ia) of the Act, restrict 30% of such disallowance. In the result, these grounds of assessee s appeal are partly allowed. 11. Ground No. 4:- This ground of appeal is identical to that of the issue already been dealt with by us in ITA No. 2837/Ahd/2014 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply Mutatis Mutandis. Hence, this ground of assesse s appeal is allowed. ITA No.3056/Ahd/2013 for A.Y. 2010-11: 12. Ground No. 1 is general in nature needs no separate adjudication and hence dismissed. 13. Ground Nos. 2 to 3 are identical to that of the issue already been dealt with by us in ITA No. 3055/Ahd/2013 for A.Y. 2009-10 and in the absence of any changed circumstances, the same shall apply Mutatis Mutandis. Hence, both the ground of assesse s appeal are partly allowed. 14. Ground No. 4 is identical to that of the issue already been dealt with by us in ITA No. 2837/Ahd/2014 for A.Y. 2011-12 and in the absence of any changed circumstances the same shall apply Mutatis Mutandis. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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