TMI Blog2022 (3) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... AT, it did not file appeal before Ld CIT(A). Accordingly, we direct the Ld CIT(A) to take a lenient view on the matter of condonation of delay, if the assessee prefers appeal before him on DDT liability of the year under consideration - we reject the additional ground raised by the assessee on DDT liability. Disallowance of information technology support services - A.O. has disallowed the claim of the assessee treating it as capital in nature - HELD THAT:- We notice that an identical issue came to be considered by the coordinate bench in the assessee s own case in assessment year 2008-09 [ 2020 (3) TMI 1195 - ITAT BANGALORE] and the addition made in that year was deleted as held that Assessee had acquired no right or interest whatsoever in the EDA tools and had only a right to use the software. It is not the case of the revenue that the EDA tools was not connected to the business of the Assessee. In such circumstances, we are of the view that the deduction was rightly allowed by the CIT(A) as revenue expenditure. Addition u/s 40(a)(ia) - Disallowance of lease rentals paid on car taken under financial lease - HELD THAT:- We notice that an identical issue has been deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in terms of section 115-O of the Income tax Act, 1961. 4.1 In this additional ground, the assessee has raised a legal issue contending that the dividend distribution tax payable on the dividend amount paid to its A.E. in USA should be restricted to the rate prescribed under DTAA. It is submitted that this is a purely legal issue and no new facts are necessary. Relying on the decision rendered by Hon ble Supreme Court in the case of National Thermal Power Corporation Ltd (229 ITR 283), the assessee has prayed for admission of this additional ground. 4.2. The Ld A.R submitted that this issue is covered in favour of the assessee by the decision rendered by the co-ordinate benches of Tribunal in the following cases:- (a) Giesecke Devrient (India) (P) Ltd vs. ACIT (2020)(120 taxmann.com 338)(Delhi-Trib) (b) DCIT vs Indian Oil Petronas (P) Ltd (2021)(127 taxmann.com 389)(Kolkatta Trib). (c) Maruti Suzuki India Ltd vs. DCIT (2019)(ITA No.961/Del/2015)(Delhi) (d) PCIT vs. Maruti Suzuki India Ltd (2019)(W.P. (C) 13241/2019) The Ld A.R has also placed reliance on the interim order passed by the Delhi bench of Tribunal in the case of Maruti Suzuki India Ltd vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed in the assessment order, especially when there is no other section in the Act dealing with the assessment of DDT liability like the case of Fringe Benefit Tax assessment. He further submitted that the Hon ble Madras High Court in the case of CIT vs. Indian Express (Madurai) (1983)(13 Taxman 441)(Mad) has held that any point which goes into the adjustment of tax liability can be looked into by ITAT. 4.6 He submitted that in the case of Maruti Suzuki vs. DCIT (2019)(ITA No.961/Del/2015), the revenue has stated that the DDT was not part of tax liability of the assessee nor it is part of assessment record and accordingly contended that the ground on DDT cannot be admitted. However, the Delhi Tribunal has admitted additional ground on DDT liability. 4.7 Without prejudice to the above arguments that the Tribunal should admit additional ground, the Ld A.R submitted that if the ITAT were to hold that the appellant had to first file appeal on this ground before Ld CIT(A) u/s 246A, then the ITAT may direct Ld CIT(A) to admit the appeal of the appellant condoning the delay in filing the appeal. 4.8 We heard Ld D.R on this issue and perused the record. The DDT is paid as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of assessment order, the Hon ble Delhi High Court answered the same as under:- 16 . At the outset, the Court would first like to deal with the submissions of Mr Ganesh that the impugned demand raised under Section 115-QA of the Act should not be construed as forming part of the impugned assessment order and that it is something separate from it. While it is true that the demand under Section 115-QA of the Act would be in addition to the total income, the fact of the matter is that in the present case it forms an integral part of the impugned assessment order under Section 143 (3) of the Act. Reading the assessment order as a whole, it is plain to the Court that this demand under Section 115-QA of the Act is in addition to demands under other issues, all of which form part of the impugned assessment order. In fact, Paragraph 11 of the impugned assessment order, which gives the computation of the total taxable income, includes the demands raised under all heads and it includes the demand under Section 115-QA of the Act. Therefore, it is not possible for this Court to read this part of the order separate from the rest of the assessment order. 4.10 It is pertinent to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Ld CIT(A) had disposed of the appeal filed by the assessee and further the revenue had challenged his order by filing appeal before ITAT. However, the assessee was directed by Hon ble Delhi High Court to agitate the issue of tax liability u/s 115QA by filing appeal before Ld CIT(A) only. 4.13 In the instant case, first of all, the DDT liability is not forming part of assessment order passed u/s 143(3) of the Act. Further, the liability u/s 115-O can be challenged under the clause an order against the assessee where the assessee denies his liability to be assessed under this Act mentioned in sec.246A(1)(a) as held by Hon ble Supreme Court. The above said clause is a separate clause unconnected with the clause any order of assessment under sub-section (3) of section 143 . 4.14 Accordingly, we are of the view that the assessee cannot raise the additional ground relating to DDT liability in the present appeal. The assessee, if so advised, may prefer appeal in that regard before Ld CIT(A). Since the assessee had entertained bonafide belief that its grievance on DDT liability can be raised as additional ground before ITAT, it did not file appeal before Ld CIT(A). Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, he pleaded that this issue may be restored to the file of the A.O. for examining applicability of TDS provisions for the impugned payments, since there was no occasion for the A.O. to examine it. 6.3 We heard the parties on this issue and perused the record. We notice that the A.O. has disallowed the claim of the assessee treating it as capital in nature. Hence, we restrict ourselves to the reasoning given by A.O. We notice that an identical issue came to be considered by the coordinate bench in the assessee s own case in assessment year 2008-09 referred (supra) and the addition made in that year was deleted with the following observations:- 30. We have heard the rival submissions. A copy of the group cost allocation Agreement dated 24.3-2006 is at page 406 of Assessee s paper book. The agreement is between Texas Instruments Inc., USA and the Assessee. The Agreement refers to the US parent company of the Assessee having acquired license to use EDA tools from the vendors and the right of the Assessee to use the same and the fact that billing will be done on the Assessee on the basis of actual use of the software by the Assessee. It is thus clear that the Assessee had acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that mentioning of wrong provision of law does not invalidate disallowance if the order passed in sum and substance meets the legal requirements then it is said to be a valid order and appellate authorities has power to either enhance or reduce tax liability? . 17.1. Both the quest ions being inter-related to each other are answered together. These quest ions arise specifically out of ITA No.151/2020 and are not germane to ITA No.141/2020. As stated supra, the Assessee had taken on lease financing various motor vehicles, which are given to the employees of the Assessee. The Assessing Officer had disallowed the deduction sought for by the Assessee towards the payment made to the lease financing company on the ground that there had been no tax deduction at source by the Assessee under Section 194-C or under Section 194-I of the Act. On a challenge being made by the Assessee, the CIT(A) accepted the contentions of the Assessee and held that Section 194-C was inapplicable to such a transaction and on an appeal the Revenue to the Tribunal, the Tribunal upheld the order of the CIT(A), and it is aggrieved by the said order, the present appeals have been filed. 17.2. The cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and Smt. J.Rama scase (supra) are not applicable to the present facts and circumstances since, in these cases, the vehicles were used for transport of goods and or passengers, and the applicability of Section 194-I of the Act was in the context of the vehicles being used for transport purposes under the transport contract. The same not being the situation in the present case, those would not be of any help to the Revenue. 17.7. In view thereof, the substantial question Nos.2 and 3 are answered accordingly. Neither Section 194-C nor 194-I of the Act would be applicable to the lease financing of motor vehicles; thus there could have been no disallowance on the ground that there is no tax deduction at source made by the Assessee. 17.8. The orders passed by the Tribunal are proper and correct and do not require to be interfered with. 17.9. Accordingly, we answer Question No.2 by holding that there is no deduction required to be made either under Section 194-C or under Section 194-I of the Act in respect of the payments made to the lease financial company on the lease financial amounts paid to such company by the assessee. Therefore, there is no violation of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nducting road shows, presentation and the like, the working also includes educating potential users of the benefit and features of the AEs range of products. However, products for which the assessee is providing sales and marketing services is only software/information technology products. Therefore, Asian Business Exhibition Conference Ltd. which is mainly engaged in the organization of exhibitions and events as well as conducting conferences on behalf of the various clients for their various products and businesses. The functions of this company are entirely different from the assessee who is providing sales and marketing support services to its AE for software/IT products. The Mumbai Bench of the Tribunal in the case of RGA Services India (P.) Ltd. (supra) while considering the functional comparability of this company has held at paras 11 and 12 as under:- '11. We have considered the submission of the parties and perused the relevant material on record. On perusal of the order passed by the TPO it is noticed that the TPO while dealing with assessee's objection with regard to selection of Asian Business Exhibition and Conferences Limited as a comparable has admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said, we do not find any infirmity in the directions of DRP in excluding Asian Business Exhibition and Conferences Limited as a comparable. The ground raised is therefore dismissed. 54. In view of the above facts as well as decision of the Mumbai Bench of the Tribunal, this company cannot be considered as a good comparable with the assessee.' Thus when there is no change in the business activity of assessee for the year under consideration as well as in the functions of the said company then in view of the earlier order of this Tribunal in assessee's own case we hold that this company cannot be considered as a good comparable of the assessee and accordingly, the TPO/AO is directed to exclude the same from the set of comparables. ICC International Agencies Limited 14. We have heard the learned D.R. as well as learned A.R. and considered the relevant material on record. The learned Authorised Representative has submitted that this company is engaged in the trading activity and therefore functionally different from the assessee. He has relied upon the decision of the co-ordinate bench of this Tribunal in the case of ITO v. Interwoven Software Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee that annual report of this company available on pages 1100 1104 of the paper book. As per the same, we find that this company is deriving income from trading activity and also maintaining inventories. Both these arguments are supported by annual report of this company available on pages 1100 1104 of the paper book. Since the assessee is not engaged in trading activity, in our considered opinion, this company cannot be considered as good comparable in the present case and hence, we direct the AO/TPO to exclude his company from the list of final comparable. 30. In the combined result, the appeal of the assessee and revenue are partly allowed. We heard the rival submissions and gone through relevant material. Following the above decision, the assessee's plea and the DRP's directions are upheld and the Revenue's appeal is dismissed.' Thus it is clear that the Tribunal after considering the nature of functions has followed the earlier order of this Tribunal in the case of Interwoven Software Services India (P.) Ltd. (supra) and taken a similar view. Accordingly, in view of the above decisions of the Tribunal, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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