TMI Blog2019 (8) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pointed out any distinguishing feature in the facts of the present case and in the case of assessee s own case in earlier years - the assessee has not defaulted in deduction of TDS on the impugned payments made. The order of AO passed u/s 201(1) / 201(1A) of the Act is set aside - appeal of the assessee allowed. - ITA No.626/PUN/2017 - - - Dated:- 1-8-2019 - Shri Anil Chaturvedi, AM And Shri Vikas Awasthy, JM Assessee by: Shri Nikhil Pathak. Revenue by: Shri Pankaj Garg. ORDER Anil Chaturvedi, AM : 1. This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (Appeal) 13, Pune dated 30.12.2016 for A.Y. 2009-10. 2. The relevant facts as culled out from the material on record are as under :- Assessee is a company stated to be engaged in the business of provisions of IT (Information Technology) and IT enabled services in the field of Engineering, Design, Development and Valuation etc. AO noticed that during F.Y. 2008-09 assessee had made payments to foreign company i.e., Deere Co., USA for SAP License, email facility, Disk storage and other system but had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no income earned by the said entity, no TDS was required to be deducted on such reimbursement of expenditure. 4. The learned CIT(A) erred holding that payment for leaseline charges to Deere Co. USA is taxable as Royalty under the DT AA as well as per Regular provisions of the Income Tax Act, 1961. 5. The learned CIT(A) erred in not appreciating that -- (a) the payment of lease line charges to Deere Co. USA was not covered under clause Royalty and / or Fees for Technical services of the DT AA between India and USA and hence the Appellant Company was not required to withhold tax u/s. 195 on above amounts; (b) the payment of lease line charges to Deere Co. USA were not covered under the definition of 'royalty' in Section 9(1)(vi) of the Act and hence, the assessee company was not required to deduct any TDS on the said payments. (c) the payment of lease line charges to Deere Co. USA was in the nature of reimbursement of expenses and no tax was deductible at source. 6. The learned CIT(A) erred in making an enhancement by holding that the appellant company ought to have deducted TDS on the charges on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Without prejudice to the above grounds, the learned CIT(A) erred in not appreciating that the A.O. had grossed up the amounts chargeable to TDS u/s 195A for the purposes of computing tax and interest, without appreciating that the said section was not applicable while determining the tax and interest u/s. 201 and 201(1A) and hence, the grossing up of the amounts was not justified at all. 3. Before us, at the outset, Ld.A.R. submitted that the issue is covered by the decision of the Tribunal in assessee s own case for A.Ys. 2007-08 and 2008-09 (in ITA Nos.905 to 908/PUN/2015 order dt.23.01.2019). He placed on record the copy of the aforesaid order and pointed to the similarities between the grounds raised in those years and the impugned year. He thereafter pointed to Para 90 at Page 78 of the order wherein the Tribunal has held that purchase of software by the assessee being copyrighted article was not covered by royalty and assessee cannot be held to be in default. 4. With respect to the payment made with regard to provisions of IT support charges i.e., internet charges, use of e-mail charges, backup support services etc., he pointed to the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was not liable to deduct tax for payments made for purchase of software. In such scenario, the assessee cannot be held to be in default and the demand created under section 201(1) and interest charged under section 201(1A) of the Act is thus, cancelled. .. 93. The assessee has filed breakup of expenses at pages 164 and 165 of factual Paper Book. Accordingly, we hold that internet charges paid of ₹ 27,09,701/-, line charges of ₹ 39,87,960/-, service charges of ₹ 6,63,652/- and other charges i.e. VPN charges, online meeting charges, etc. of ₹ 22,94,256/- are not payment of royalty and are not even for make available of any technical services and hence, there was no requirement to deduct tax at source out of such payments. In the said breakup, the assessee has also pointed out that software charges paid were to the tune of ₹ 4,22,73,399/-, which we have already held in the paras hereinabove, not liable for deduction of tax at source. 101. Applying the said propositions to the facts of present case, we hold that the assessee has not defaulted in non deduction of tax at source out of payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, we hold that where the Hon'ble Supreme Court has only dismissed SLP, then no ruling on principle being laid down by the Apex Court, the proposition laid down by the jurisdictional High Court of Bombay in DIT Vs. M/s. Mark Spencer Reliance India P. Ltd. (supra) would rule. Accordingly, we further hold that the assessee having deducted tax at source out of salary paid to employees deputed, has not defaulted under section 201(1) / 201(1A) of the Act. The grounds of appeal No.9 to 12 are thus, allowed. 6. Before us, no material has been placed by Revenue to demonstrate that the order of Tribunal in assessee s own case for A.Ys. 2007-08 and 2008-09 (supra) has been set aside / stayed by higher Judicial Forum. Revenue has also not pointed out any distinguishing feature in the facts of the present case and in the case of assessee s own case in earlier years. We therefore, relying on the decision of the Tribunal in assessee s own case in earlier years (supra) and for similar reasons hold that assessee has not defaulted in deduction of TDS on the impugned payments made. We therefore set aside the order of AO passed u/s 201(1) / 201(1A) of the Act. Thus, the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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