2022 (11) TMI 574 - AT - Income Tax

Appellate Tribunal cancels revision order on TDS liability for roaming charges under Income-tax Act

The Appellate Tribunal quashed the revision-order passed by the Ld. CIT under section 263 of the Income-tax Act, 1961, in favor of the assessee. The ... Revision u/s 263 by CIT - deduction of tax at source u/s 194H of roaming-charges - HELD THAT:- Department has made independent enquiries from assessee with respect to TDS out of roaming-charges and the assessee had filed adequate replies. Thereafter, no order was passed against assessee u/s 201(1)/201(1A) qua TDS out of roaming charges. By such action, the department has accepted that no TDS was required out of roaming-charges. As further demonstrated by assessee had filed the details of such enquiry having been made by department, to Ld. CIT in the reply to the show-cause notice u/s 263. When it is so, the Ld. CIT ought to have taken cognizance and adjudicate the proceeding of section 263 fairly and lawfully. Lastly, we observe that there are decisions in favour of assessee where it has been held that roaming charges does not attract TDS u/s 194J. We also observe from the reply given by DR that the revenue is still contesting the applicability of TDS u/s 194J to roaming charges. It is a settled law that if two views are possible and the AO has followed one which is favourable to assessee, the order of AO cannot be said to be erroneous. The reasons stated above, we are of the firm view that the revision-order passed by CIT does not fulfill the requirement of section 263. Therefore, we are inclined to hold that the revision order is not a valid order and deserves to be quashed. Appeal of assessee is allowed. Issues:1. Revision-order passed by Ld. CIT u/s 263 of the Income-tax Act, 1961.2. Alleged errors in passing the revision-order by Ld. CIT.3. Examination of TDS liability out of roaming charges under sections 194H and 194J.4. Adequacy of departmental enquiries regarding TDS out of roaming charges.5. Legal precedents and settled law regarding TDS on roaming charges.6. Contention between the parties on the finality of the issue.Issue 1: Revision-order passed by Ld. CIT u/s 263 of the Income-tax Act, 1961:The judgment revolves around the revision-order dated 27.03.2014 passed by the Ld. CIT under section 263 of the Income-tax Act, 1961, which arose from an order passed by the Ld. AO u/s 201(1)/(1A) for the Financial Year 2009-10. The assessee filed an appeal against this revision-order, claiming that it was erroneous.Issue 2: Alleged errors in passing the revision-order by Ld. CIT:The assessee contended that the revision-order passed by the Ld. CIT was factually and legally flawed. The Ld. AR argued that the original-order by the Ld. AO was specific to TDS u/s 194H, not u/s 194J, and thus, the Ld. CIT erred in invoking section 263 based on non-examination of TDS out of roaming charges.Issue 3: Examination of TDS liability out of roaming charges under sections 194H and 194J:The judgment highlighted the discrepancy between the sections under which TDS liability was to be examined. The Ld. AR argued that the original-order focused on TDS u/s 194H, while the roaming charges fell under section 194J. This discrepancy formed the crux of the appeal.Issue 4: Adequacy of departmental enquiries regarding TDS out of roaming charges:The Ld. AR presented evidence of enquiries conducted by the department regarding TDS out of roaming charges paid by the assessee. Despite adequate responses from the assessee, no order was passed u/s 201(1)/(1A) concerning TDS on roaming charges, indicating the department's satisfaction with the situation.Issue 5: Legal precedents and settled law regarding TDS on roaming charges:The Ld. AR cited legal precedents, including a decision by the Hon'ble Madras High Court, to support the contention that roaming charges do not attract TDS u/s 194J. This aspect was crucial in challenging the revision-order passed by the Ld. CIT.Issue 6: Contention between the parties on the finality of the issue:While the Ld. DR supported the Ld. CIT's order, the department's contestation of the issue's finality in favor of the assessee was noted. The judgment emphasized the principle that if two views are possible and the AO has followed one favorable to the assessee, the order cannot be deemed erroneous.In conclusion, the Appellate Tribunal held that the revision-order passed by the Ld. CIT did not meet the requirements of section 263 and ordered its quashing, allowing the appeal of the assessee. The judgment provided a detailed analysis of the issues raised, focusing on legal interpretations, factual discrepancies, and precedents to arrive at the decision.