9911796707
TMI Blog2017 (10) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in law and on facts in admitting additional evidence in the form of agreement between the assessee company and DTC in contravention of Rule 46A of I.T. Rules 1962 as it was never produced before A.O. 2. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance u/s 40(a)(ia) made by the A.O. in respect of payment made to DTC on account of non deduction of TDS. 3. The appellant craves leave to amend, modify, alter or forgo any ground(s) of appeal at any time before or during the hearing of this appeal." 2. Brief facts of the case are that Assesse Company is engaged in the business of display of advertisement and was awarded contract for display of such advertisement on DTC bus queue shelters and time kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the crucial submissions made was that no tax was deductable u/s 194I in respect of 50% of payment of licence fee, because the same was paid to Municipal Corporation of Delhi (MCD) and MCD's income is exempt u/s 10(20), therefore, there was no liability to deduct TDS on payment made to MCD. It was brought on record from the terms of tender for award of contract for display of advertisement on DTC bus queue shelter/ time keeping booths, that 50% of the lease fee is payable to MCD and a separate cheque in favour of MCD has been presented to DTC and balance 50% is a lease fee cheque issued in favour of DTC. Hence both the authorities share the revenue in ratio of 50:50. In support copies of monthly bills raised by DTC as well as the forwardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has made application under Rule 46A of the Income Tax Rules, 1962 in respect of this issue, however, the contents of agreement between the appellant and DTC shows that 50% of license fee was to be paid to MCD. Further, the, payments to 'MCD have, been, directly made through appellant's bank account without routing the same from the account of DTC. It seems the AO could not examine this issue at the time of assessment. The fact being so, it is not a case of additional evidence but just a case of highlighting the already existing facts. On examining the agreement signed by the appellant with DTC, it is evident that the appellant was bound to make payment of 50% of license fee to MCD. The appellant has produced all the evidences in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that second proviso to section 40(a)(ia) is curative and remedial in nature and for making the provision workable giving it a reasonable interpretation, therefore, such amendment must be construed retrospectively in operation. As held by the Hon'ble Court on the basis of rule of reasonable consideration in holding the retrospective effect of this proviso, the AO is not justified in invoking section 40(a)(ia) of the Act in making disallowance. Ne fruitful purpose is served if the appellant is made liable to make TDS on such payments which have already been shown as income in payee's account. In a recent judgment, the Hon'ble ITAT, Delhi, Bench-D, New Delhi in ITA No. 3893/De1/2010 and 5696/De1/2011 in the case of ITO, 37(2), N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o MCD and therefore, to the extent of 50% no TDS was deductible. Ld. CIT (A) has given due opportunity to the AO to verify this aspect who has simply failed to examine and has objected to admissibility without going into the fact it goes to the very root of the matter of disallowance u/s 40(a)(ia). Regarding second contention raised by the Ld. CIT (DR), he submitted that such a huge payment made to DTC towards advertisement fee is part of the receipt of DTC and once the assessment has been completed u/s 143(3) in the case of DTC at a huge loss, then there was no requirement for the assessee to deduct TDS on such payment. Therefore, Ld. CIT (A) has rightly accepted the assessee's contention on this score. In any case, now it is a settled law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cheque duly reflected in the bank account of DTC which is already part of the original record, which AO has not even bother to examine this issue at the time of assessment. Thus, there was a complete failure on part of the AO himself while making such a disallowance u/s 40(a)(ia). The finding and observation of Ld. CIT (A) in this regard as incorporated above is therefore, confirmed as it is based on appraisal of facts and provisions of law. 9. So far as the second issue is concerned that, since regular assessment of DTC, i.e., payee has been completed u/s 143(3) at a huge loss, wherein all the receipts of licence fee paid by the assessee has been reflected in its income, therefore, no disallowance is called for, we find that this fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
