TaxTMI 
TaxTMI 
2021 (1) TMI 681
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....ed by the Assessing Officer to verify the compliance to TDS provisions. During the course of verification, it was observed that the assessee had been making payments, which as per the Assessing Officer (AO), attracted deduction of tax at source (TDS). The Assessing Officer also noted that the assessee had deducted tax at source while making payments to Television Channels in India and also abroad and had deducted TDS u/s 194 and 195 of the Income Tax Act, 1961 (hereinafter called 'the Act'). The Assessing Officer also noted that there were some irregularities with respect to some of the deductees vis. M/s Conax Access Systems (Pvt.) Ltd., Tata Tele Services Ltd., Proactive Data Systems (Pvt.) Ltd., Tulip Telecom and Integrated Subscriber Management Services Ltd. The Assessing Officer computed short deduction of tax at Rs. 4,30,431/- and computed interest at Rs. 53,48,144/- thereby creating a total demand of Rs. 57,78,575/- u/s 201(1)/201(1A) of the Act for Assessment Year 2012-13. 2.1 In Assessment Year 2013-14 also a letter was issued by the Assessing Officer to verify the compliance of the TDS provisions and during the course of such verification, the Assessing officer noted tha....
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....st of Rs. 4,85,643/- on the alleged short deduction is liable to be cancelled. 6. That without prejudice to the above, the authorities below had erred in law as well as on facts in holding that payments made to Tata Teleservices ("TTL") were technical in the nature and will attract provisions of section 194J of the Act for tax deduction at source thereby ignoring the fact that the Appellant had purchased airtime from TTL and the same did not fall within the ambit of tax deduction at source and consequently, the alleged short deduction/non deduction of Rs. 4,03,616/- and interest u/s 201(1A) of Rs. 1,85,474/- deserves to be deleted. 7. That the authorities below had also erred in holding that various payments made to Cyquator Media Services Private Limited (CMSPL) (formerly known as Essel Business Processes Limited/Integrated Subscriber Management Services Limited (EBPL/ISMSL), subsequently merged with CMSPL) ("CMSPL" or "ISMSL" or "EBPL") will attract provisions of section 194J and not section 194C for deduction of tax at source and therefore, interest charged of Rs. 46,64,641/- u/s 201(1 A) on alleged short deduction of tax and interest deserves to be deleted. 8. That the au....
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....ments filed by the Appellant showing that deductees had already filed the returns and paid tax on their respective income thereby ignoring CBDT Circular and Hon'ble Supreme Court judgment in the case of Hindustan Coco Cola Beverages (P) Ltd. which were binding on the authorities below and therefore the orders passed by the authorities below are liable to be cancelled. 5. That without prejudice to the above, the authorities below had erred in law as well as on facts in holding that payments made to Tata Teleservices ("TTL") were technical in the nature and will attract provisions of section 194J of the Act for tax deduction at source thereby ignoring the fact that the Appellant had purchased airtime from TTL and the same did not fall within the ambit of tax deduction at source and consequently, the alleged short deduction/non deduction of Rs. 48,363/- and interest u/s 201(1 A) of Rs. 13,299/- deserves to be deleted. 6. That the authorities below had also erred in holding that various payments made to Cyquator Media Services Private Limited (CMSPL) (formerly known as Essel Business Processes Limited/Integrated Subscriber Management Services Limited (EBPL/ISMSL), subsequently merg....
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....)/201(1A) dated 30/03/2015 on payments to Tata Teleservices Ltd deserves to be deleted as such order was passed beyond the prescribed limitation period which ended on 31/03/2014." 3.1 The Ld. Authorized Representative pleaded that these additional grounds were purely legal grounds and that they deserved to be admitted and adjudicated upon in view of the judgment of the Hon'ble Apex Court in the case of NTPC Ltd. vs. CIT as reported in 229 ITR 383. 4.0 Per contra, the Ld. Sr. Departmental Representative (DR) opposed the assessee's prayer for admitting additional grounds. 5.0 Having heard both the parties and after having gone through the additional grounds sought to be raised by the assessee, we are of the considered opinion that these grounds are purely legal grounds going into the very root of the issue and, therefore, in the interest of substantial justice, they are admitted. 6.0 The Ld. Authorized Representative (AR) submitted that in terms of section 201(3) of the Act, which was amended by Finance Act, 2012 with retrospective effect from 01.04.2010 and which was applicable during the Assessment Year 2012-13 (Financial Year 2011-12), the limitation period for passing the ord....
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....vice provider (placed in the Paper Book) it would be evident that the services provider was owning the conditional access system platform and was providing such system based services of activating and maintaining the use of smart cards by the assessee which was standard service in nature and not exclusive. It was also submitted that no technical knowledge was being provided to or being made available to the assessee. The Ld. Authorized Representative submitted that since the services were purely pertaining to maintenance, provisions of Section 194C of the Act were applicable. The Ld. Authorized Representative submitted that the assessee had deducted TDS correctly @ 2%. Our attention was also drawn to CBDT Circular No.715 dated 08.08.1995 wherein it had been clarified that routine, normal maintenance contracts which includes supply of spares will be covered under section 194C of the Act. 6.2 With respect to Ground No. 6, the Ld. Authorized Representative submitted that the authorities below had erred in holding that payments made to Tata Teleservices Limited were technical in nature and would attract the provisions of Section 194J ignoring the fact that the assessee had purchased a....
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....epresentative also submitted that if assessee's additional grounds are accepted then the interest under challenge will be limited only to the last quarter. 6.4 Alternatively, without prejudice, the Ld. Authorized Representative also submitted that the Assessing Officer has not given any reasons for considering the contractual payments to be liable for deduction of tax at source in terms of section 194J as against 194C and further that the Ld. CIT (A) also had made only general observations without bringing on record or pinpointing any adverse material to hold that the vendors were rendering technical services. It was also submitted that the tax liability was fully discharged by the payee Conax Access System Pvt. Ltd. as was evident from the certificate issued by the Chartered Accountant and, therefore, the payer cannot be deemed to be assessee in default for non/short deduction of tax at source as held by Hon'ble Apex Court in the case Hindustan Coco Cola Beverage (Pvt.) Ltd. vs. CIT reported in 293 ITR 296 (SC). 6.5 The Ld. Authorized Representative also submitted that with effect from 01. 04.2020, the rate of tax for the purposes of deduction with respect to fee for technical s....
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....been provided specifying that such order was to be passed within two years from the end of the financial year in which statements of TDS are filed. If no statement is filed, the order could be passed up to four years from the end of the financial year in which the amount is credited or paid. This judgment of the Hon'ble Gujarat High Court has been followed by the Co-ordinate Benches of this Tribunal in Delhi and Mumbai. Therefore, respectfully applying the ratio of the judgment in the case of Tata Teleservices Ltd. (supra) we hold that the order u/s 201 (1)/201 (1A) for the first three quarters for Financial Year 2011-12 was passed beyond the limitation period and, therefore, the same is not a valid order in the eyes of law. Accordingly, the same is quashed. 9.2 The only issue remaining in Financial Year 2011- 12 is the issue of short deduction of tax at source and interest thereon for quarter four. The Assessing Officer has computed short deduction of tax at source and interest thereon in respect of Conax Access Systems Pvt. Ltd. and Tata Teleservices in the 4th Quarter. With respect to both these parties, it is the assessee's contention that payments to this company were made u....