TMI Blog2022 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... of commission, which is nothing but income to tax. In order to verify this factual aspect, the matter has been restored to the file of the assessing officer, which cannot be faulted with. Hence, the common substantial question of law No.1 is answered in favour of the Revenue and against the assessee. Addition u/s 14A r.w.r. 8D - HELD THAT:- As assessee do not have exempt income and as such no disallowance can be made under section 14A read with rule 8D The issue involved herein is squarely covered by the decision of the Coordinate Bench of this Court in the case of Commissioner of Income Tax v. M/s Quest Global Engineering Services Pvt. Ltd. [ 2021 (3) TMI 434 - KARNATAKA HIGH COURT] Recognised method of accounting - whether Tribunal is right in law in deleting addition of income by directing the assessing authority to allow it on cash basis which was made by assessing authority on accrual basis thereby recognizing mixed system of accounting for assessee-company which is not permissible as per the provisions of section 145 - HELD THAT:- It is clear that the assessee being a company has adopted the mercantile system of accounting only for the expenses relating to M/s NACI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the airlines on collection of passenger service fees amongst other disallowance. Being aggrieved, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-11, Bengaluru, wherein the order of the assessing officer came to be confirmed. On further appeal before the Tribunal on the issue of disallowance of collection charges under Section 40(a)(ia) of the Act, the Tribunal restored the matter to the assessing officer to read judicate the issue in the light of the proviso to Section 40(a)(iv) of the Act and if it is established that the recipient has paid the tax and filed the return thereon, the assessee should not be held in default. Being aggrieved, the assessee has preferred this appeal. 4. These appeals have been admitted to consider the following substantial common questions of law; Common substantial questions of law in all the appeals; [i] Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in restoring the issue of addition on account of disallowance of collection charges retained by the airlines under Section 40(a)(ia) with respect to PSF(SC) when the said amount was not claimed by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Airport is inclusive of the cost of the security expenditure on the designated security agency (65%) of the PSF per embarking passenger (Security Component) (PSF-(SC)) and the facilitation component payable to the assessee company being 35% of the PSF per embarking passenger (Facilitation Component)(PSF-(FC)). The assessee is maintaining the PSF-(FC) account separately in accordance with the procedure prescribed in SOP issued by the Ministry of Civil Aviation (MoCA), dated 19.1.2009. In terms of the said SOP, clause 1.4 would stipulate that PSF is subject to applicable Service Tax and airlines have been authorized, presently, to deduct collection charges at 2.5% from PSF. 10. As per clause 2, nature of security component of PSF, is described as under; 2. Nature of security component of PSF: 2.1. Aviation security is an activity reserved for the Government of India. Force deployment at the airports, security requirements including the requirement of capital items and specifications thereof are laid down by the Government/Bureau of Civil Aviation Security (BCAS). As stated above, PSF is levied under Rule 88 of the Aircraft Rules, 1937 and covers security compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to a resident, or amounts payable to a contractor or subcontractor, being resident, for carrying out any work (including supply of labour for carrying out any work). The second proviso to Section 40(a)(ia) of the Act reads thus; Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance 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 payee referred to in the said proviso. 14. Considering these provisions in the light of the judgment of the Hon ble Delhi High Court in the case of CIT v. Ansal Landmark Township (P) Ltd. Reported in (2015) (61 taxmann.com 45) (Del), the Tribunal has set aside the order of the Commissioner of Income Tax (Appeals) and restored the matter on the file of the assessing officer to re-adjudicate the issue in the light of Section 40(a)(ia) of the Act, after providing an opportunity of hearing to the assessee and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4H. This Section deals with the payment of commission or brokerage . 27. It provides that any person other than individual or HUF, responsible for paying any income by way of commission (not being insurance commission as specified in Section 194D) or brokerage to any person shall at the time of credit of such income to the account of payee or at the time of payment of such income in cash or by cheque or draft or any other mode will deduct income tax thereon at the rate of five percent. The first proviso specifies the limit. The second proviso makes the individual or HUF liable to deduct the income tax, if they exceed the limit specified therein. The third proviso exempts payment of commission or brokerage when made to BSNL and MTNL to their public call office franchisees. 17. The explanation appended to Section 194H of the Act which defines the expression commission or brokerage , was declared to be an inclusive definition in view of the payment receivable, directly or indirectly by a person acting on behalf of another person for services rendered not being professional services or for any services in the course of buying or selling of goods or in relation to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Common substantial question of law No.2 and additional substantial question of law in ITA No.513/2018 are not pressed. 22. Resultantly, the appeals filed by the assessee stand disposed of. 23. The appeals in ITA Nos.701 to 703/2018 are filed by the Revenue under Section 260A of the Act challenging the common order dated 19.04.2018 passed by the Tribunal, in ITA NOs.596, 622 and 636/Bang/2017 relating to the Assessment Years 2013- 2014, 2012-13 and 2011-12, respectively. 24. These appeals have been admitted to consider the following substantial questions of law; Common substantial question of law in all the appeals filed by the Revenue; 1. Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in law in remanding back the issue to assessing authority with a direction to allow the relief as the assessee do not have exempt income and as such no disallowance can be made under section 14A read with rule 8D of the Act contrary to provisions of section 14A and Rule 8D and Circular No.5 of 2014 dated 11.02.2014 which has clarified that Rule 8D read with section 14A provides for disallowance of the expenditure even when the taxpayer in a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade; and the probability or improbability of realization of the benefits by the assessee considered from a realistic and practical point of view, coupled with the consistent view taken in favour of the assessee and the questions raised for several years, held that there was no reason to take a different view suddenly by the Revenue without there being any convincing reasons. This judgment relied upon by the learned counsel for the assessee would be of little assistance in the facts and circumstances of the case. 27. The assessee has recognized only the expenditure on mercantile method. The assessing officer has held that the assessee has to follow consistent method of accounting as per the accounting standards and the expenditure has to be brought to tax. As per the Accounting Standard of Accountancy, expenditure has to be matched with the income offered. The assessee has claimed the expenditure for offering services to M/s National Aviation Company of India Limited (NACIL) but failed to offer the corresponding income for the period from October 2011 to March 2012 amounting to ₹ 69.04 crores and accordingly, the said amount has been brought to tax as income from business. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
