9911796707
TMI Blog2024 (8) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the issue in favour of the Appellant; Disallowance under section 40(a)(i) of the Act amounting to Rs. 41,34,292/- 3. erred in upholding the action of the learned AO and holding that payment made for leased line charges is covered under section 194J of the Act and disallowing an amount of Rs. 41,34,292/- under section 40(a)(i) of the Act; 4. erred in holding that leased line services providing high bandwidth cannot be maintained without human interference; Initiating penalty proceedings under section 271(1)(c) of the Act 5. erred in initiating penalty proceedings under section 271(1)(c) of the Act. The Appellant craves leave to add, alter, modify or delete such other objection before or during the course of hearing." 3. The facts of the case, in brief, are that the assessee is a domestic company in which public is not substantially interested. The assessee company is engaged in the business of shipping agents. The return of income was filed on 27.11.2013 declaring an income of Rs. 71,76,93,230/-. The case was selected for scrutiny and notice was issued u/s 143(2) of the IT Act on 02.08.2014. During the course of assessment proceedings, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the category of fees for technical services i.e. FTS and, therefore, no TDS was required to be made by the assessee. Regarding the second addition of Rs. 41,34,292/-, it was submitted that the Co-ordinate Bench of the Tribunal for the assessment years 2015-16 and 2017-18 in the case of the assessee itself has held that no TDS is required to be made on the payment towards leased line/ data link charges. It was therefore prayed before the Bench to delete both the impugned additions made by the Assessing Officer and sustained by the ld. CIT(A)/NFAC. 7. On the other hand, ld. DR could not bring any adverse order in this regard but supported the order passed by the ld. CIT(A)/NFAC. 8. We have heard ld. Counsels from both the sides and perused the material available on record. We find that similar additions were made in the case of the assessee itself for assessment years 2012-13, 2015-16 and 2017-18 and the Co-ordinate Bench of the Tribunal was pleased to delete the additions. As regards to the disallowance of software maintenance charges of Rs. 4,86,77,518/-, the Co-ordinate Bench of the Tribunal in the case of assessee itself for the assessment year 2012-13 decided ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. As regards to the disallowance of leased line/data link charges of Rs. 41,34,292/-, the Co-ordinate Bench of the Tribunal in the case of assessee itself for the assessment years 2015-16 and 2017-18 decided appeal in favour of the assessee by observing as under :- "6. We heard the rival submissions and perused the relevant material on record. The issue that arises for our consideration, in the facts of the present case, is whether or not the lower authorities were justified in disallowing the payment of leased line /data link charges paid by the assessee for non deduction of tax at source by invoking the provisions of section 40(a)(ia) of the Act. This issue is no more res integra as the same is settled in favour of the assessee by the Hon'ble Supreme Court in the case of CIT Vs. Kotak Securities Ltd. 383 ITR 1 (SC) wherein it was held that the charges paid towards leased line are not in the nature of Technical services within the meaning of section 9(1)(vii) of the Act. The relevant paragraphs of the judgment of Hon'ble Apex court read as under : "5. The relevant provisions of the Act which have a material bearing to the issues arising for determination in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year in which such tax has been paid. Explanation.- ......... 9. Income deemed to accrue or arise in India (1) The following incomes shall be deemed to accrue or arise in India:- (i)..................... ......................... ......................... (vii) income by way of fees for technical services payable by- (a) ............... (b) ............... (c) ............... .......................... Explanation 2.-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". 6. What meaning should be ascribed to the word "technical services" appearing in Explanation 2 to clause (vii) to Section 9(1) of the Act is the moot question. In Commissioner of Income Tax Vs. Bharti Cellular Ltd.[1] this Court has observed as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression "technical services" appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would not be covered by the aforesaid provision of the Act." 7. Following the above binding precedent, we hold that no TDS is required to be made on the payment towards leased line/data link charges. Therefore, the order of NFAC is hereby reversed. The grounds of appeal raised by the assessee stands allowed." 10. Therefore, respectfully following both the above decisions of the Co-ordinate Bench of the Tribunal passed in the case of assessee itself for the assessment years 2012-13, 2015-16 and 2017-18 respectively and in the absence of any change in facts and circumstances of present case/disallowance, we delete the additions made by the Assessing Officer and sustained by the ld. CIT(A)/NFAC. Thus, the ground nos.1 to 4 are allowed. 11. In the ground no.5, the assessee has also challenged the initiation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
