2021 (4) TMI 370 - AT - Income Tax

ITAT Mumbai rules in favor of assessee, dismissing Revenue's appeal on Income Tax Act disallowances.

Jt. Commissioner of Income Tax (OSD) – 8 (1) (1), Mumbai. Versus M/s. Reliance Communication Infrastructure Limited

The Appellate Tribunal ITAT Mumbai ruled in favor of the assessee, dismissing the Revenue's appeal on all three issues involving disallowances under ... TDS u/s 194H - payment on principal to principal basis and was not a payment of a principal to the agent - HELD THAT:- As decided in s relying on M /S. RELIANCE COMMUNICATIONS INFRASTRUCTURE LTD. [2019 (7) TMI 1371 - BOMBAY HIGH COURT] as independently examined the nature of the transaction and come to the conclusion that when the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H, would not be made since the payment was not for commission or brokerage. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The undisputed facts are that the assessee did not have any exempt income during the year. Thus as relying on M /S. RELIANCE COMMUNICATIONS INFRASTRUCTURE LTD. [2019 (7) TMI 1371 - BOMBAY HIGH COURT] the assessee had not earned any exempt income and there is, therefore, no question of disallowance under section 14A that would arise.- Decided in favour of assessee. Disallowance u/s 14A while computing the book profits under Section 115JB - HELD THAT:- Since we have dismissed ground no. 1 of Revenue’s appeal by confirming the order of learned CIT(A) wherein the learned CIT(A) has deleted the disallowance made under Section 14A of the Act on the ground that assessee is not having any exempt income during the year, therefore, this ground is consequential and required to be dismissed Issues Involved:1. Disallowance under Section 14A of the Income Tax Act, 1961.2. Disallowance under Section 40a(ia) r.w.s. 194H of the Act.3. Disallowance of expenses while computing book profits under Section 115JB of the Act.Issue 1: Disallowance under Section 14A of the Income Tax Act, 1961:The appeal by the assessee was against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of Rs. 1,63,08,773 under Section 14A. The appellant argued that the issue was decided in their favor by the jurisdictional High Court and cited precedents to support their case. The Departmental Representative agreed that the issue was covered by the decision of the Bombay High Court. It was established that the assessee did not have any exempt income during the year. The Tribunal referred to a previous decision of the Bombay High Court and concluded that the issue was in favor of the assessee. Therefore, the appeal was dismissed concerning this issue.Issue 2: Disallowance under Section 40a(ia) r.w.s. 194H of the Act:The second issue involved the deletion of disallowance made under Section 40a(ia) r.w.s. 194H by the Commissioner of Income Tax (Appeals). The appellant contended that the issue was covered in their favor by a decision of the Bombay High Court. The Departmental Representative concurred with this argument. The Tribunal examined the High Court's decision and found that the issue was decided in favor of the assessee. Consequently, the appeal by the Revenue on this ground was dismissed.Issue 3: Disallowance of expenses while computing book profits under Section 115JB of the Act:The third issue pertained to the deletion of disallowance of Rs. 1,63,08,773 under Section 14A while computing book profits under Section 115JB. Since the Tribunal had already dismissed the Revenue's appeal regarding the disallowance under Section 14A due to the absence of exempt income, this issue was deemed consequential and was also dismissed. As a result, the appeal by the Revenue was dismissed in its entirety.In conclusion, the Appellate Tribunal ITAT Mumbai ruled in favor of the assessee on all three issues, dismissing the Revenue's appeal and upholding the decisions of the Commissioner of Income Tax (Appeals) based on the precedents set by the Bombay High Court.