2018 (2) TMI 250 - AT - Income Tax

Tribunal upholds Assessee's claims, dismissing Revenue's appeal on various grounds. Consistency and High Court rulings emphasized.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The disallowance of expenses related to purchases, ... Disallowance on account of purchases - party has denied any transaction with the assessee company - CIT-A deleted the addition - Held that:- Since the impugned disallowance is based only on the findings in the order of assessment for A.Y.2009-10 and since the said disallowance has now been deleted we are of the view that CIT(A) was fully justified in deleting similar addition made in A.Y.2010-11. We find no ground to interfere with the order of CIT(A). Disallowance u/s 14A r.w.s. 8D - Held that:- AO has not brought any material on record to show that the claim made by the assessee regarding disallowance u/s 14A of the Act was incorrect. It is mandatory on the part of the AO to first reject on an objective basis the claim of the assessee with regard to expenses incurred to earn exempt income before resorting to his own basis of expenses to be disallowed u/s 14A of the Act. Without doing so the AO is not entitled to apply the provision of Rule 8D to make disallowance of expenses u/s 14A Depreciation on advertisement hoardings - as per AO hoardings have to be regarded as plant and machinery on which allowable depreciation as per Rules was only 15% - CIT(A) directed the AO to allow the claim of the assessee for depreciation at 100% on hoardings - Held that:- Tribunal has already taken a view in favour of the assessee in the past assessment referred to in the earlier part of this order. It cannot be argued by the ld. DR at this stage that in none of these decisions the question whether the hoardings were temporary or permanent structure was considered by the Tribunal. Going by the principle of consistency we are of the view that it would be just and proper not to take a view different from the view which has already been taken in assessee’s own case in the past. Disallowance of the claim of deduction u/s.80IA - Whether Foot Over-bridges as well as Bus Shelters are not 'Road' the revenue from which is eligible for deduction u/s. 80IA - Held that:- We find that identical issue has been considered and decided in assessee’s own case [2015 (6) TMI 593 - ITAT KOLKATA ] wherein confirmed the assessee’s entitlement for deduction u/s 80IA for foot over bridges and bus shelters TDS u/s 194I OR 194C - addition u/s 40(a)(ia)- payment for renting of hoarding space - tds liability - Held that:- Section 40(a)(ia) of the Act cannot be invoked where there is a short deduction and can be invoked only when there is non-deduction. - Revenue appeal dismissed. Issues Involved:1. Disallowance of Rs. 15,55,200 on account of purchase from M/s. B.M. Sales Corporation.2. Disallowance of Rs. 2,64,548 computed under Section 14A read with Rule 8D.3. Depreciation on advertisement hoardings treated as temporary structures.4. Deduction under Section 80IA for revenue from Foot Over-bridges and Bus Shelters.5. TDS deduction under Section 194C vs. 194I for renting hoarding space.Issue-wise Detailed Analysis:1. Disallowance of Rs. 15,55,200 on account of purchase from M/s. B.M. Sales Corporation:The Assessee, engaged in outdoor and media advertising, claimed to have purchased angles and channels worth Rs. 15,55,200 from M/s. B.M. Sales Corporation. The AO disallowed this expenditure, citing a previous assessment year (2009-10) where the purchase was deemed non-genuine based on M/s. B.M. Sales Corporation's denial of any transaction with the Assessee. The CIT(A) deleted the disallowance for the assessment year 2010-11, noting that no new facts were presented by the AO and the disallowance for 2009-10 was already deleted. The Tribunal upheld the CIT(A)'s decision, stating that the disallowance was based solely on the findings from the previous year, which had been overturned.2. Disallowance of Rs. 2,64,548 computed under Section 14A read with Rule 8D:The Assessee earned dividend income of Rs. 2,10,56,437, which is exempt from tax. The AO disallowed Rs. 11,31,387 under Rule 8D for expenses incurred in earning this exempt income, beyond the Rs. 8,66,839 already disallowed by the Assessee. The CIT(A) deleted the additional disallowance, noting the AO failed to provide material evidence that the Assessee's claim was incorrect. The Tribunal agreed, emphasizing that the AO must objectively reject the Assessee's claim before applying Rule 8D.3. Depreciation on advertisement hoardings treated as temporary structures:The Assessee claimed 100% depreciation on hoardings, which the AO disallowed, treating them as permanent structures eligible for only 15% depreciation. The CIT(A) allowed the Assessee's claim, referencing previous Tribunal decisions in favor of the Assessee. The Tribunal upheld this decision, citing consistency and lack of new evidence from the AO to substantiate a different view.4. Deduction under Section 80IA for revenue from Foot Over-bridges and Bus Shelters:The Assessee claimed a deduction of Rs. 1,74,42,469 under Section 80IA(4)(i) for revenue generated from advertisements on Foot Over-bridges and Road Medians. The AO disallowed this, arguing that such structures are not 'roads' and citing a Supreme Court decision (Liberty India Ltd.) on the narrower interpretation of 'derived from.' The CIT(A) allowed the deduction, distinguishing the Assessee's case from Liberty India and emphasizing the direct nexus between the advertisement revenue and infrastructure development. The Tribunal upheld the CIT(A)'s decision, referencing consistent past rulings and rejecting new arguments not raised by the AO or CIT(A).5. TDS deduction under Section 194C vs. 194I for renting hoarding space:The Assessee deducted TDS at 2% under Section 194C for payments related to displaying advertisements on hoardings, while the AO argued that TDS should have been deducted at 10% under Section 194I, treating the payments as rent. The CIT(A) deleted the disallowance, following the Calcutta High Court's decision in M/s S.K. Tekriwal, which held that Section 40(a)(ia) applies only to non-deduction, not short deduction of TDS. The Tribunal upheld the CIT(A)'s decision, adhering to the jurisdictional High Court's binding precedent despite contrary views from other courts.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds, emphasizing consistency, lack of new evidence, and adherence to jurisdictional High Court rulings.