TaxTMI 
TaxTMI 
2016 (11) TMI 528
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....f appeal :- " (1) The CIT(A) has erred in law and on facts by deleting the addition of Rs. 70.18 lacs u/s 40(a)(ia) despite the fact that the assessee had not deducted TDS as per section 1941 on expenses in the nature of Rent paid to Ashvin Chinubhai Broking Pvt. Ltd. (2) The CIT(A) has erred in law and on facts by deleting the addition of Rs. 11,51 lacs u/s 40(a)(ia) despite the fact that the assessee had not deducted TDS as per section 1941 on expenses in the nature of Rent paid to NSE/BSE/Reliance com./Tata com." On the fact and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income/book pr....
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.... are relating to disallowance u/s 40(a)(ia) of the Act. During the course of assessment proceedings ld. Assessing Officer observed that assessee has paid Rs. 70,18,471/- to M/s Ashwin Chinubhai Broking Pvt. Ltd. (ACBPL) and deducted tax at source u/s 194C of the Act. However, ld. Assessing Officer on the basis of examination of agreement between the assessee and ACBPL was of the view that nature of payment is rent and not contract charges and, therefore, TDS u/s 194I of the Act is applicable and accordingly disallowed the expenditure u/s 40(a)(ia) of the Act. Also it was observed by ld. Assessing Officer that payments of Rs. 11.51 lacs were made to NSE/BSE/Reliance Communication/Tata Communication. towards lease-line charges and no tax was ....
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....e relevant part of the decision is quoted below;- From the above it is clear that as per jurisdictional ITAT no TDS is required to be deducted in the case where reimbursement bills were separately raised. Appellant has also made payment by separate bills in respect of reimbursement of expenses incurred by Ashwin C. Brokers Private Ltd. on behalf of appellant, The fact that separate bills were issued for use of infrastructure and for reimbursements is not in dispute. Since facts of the appellant's case are identical to the case in which jurisdictional tribunal decided this issue in favour of appellant, respectfully following the decision of jurisdictional tribunal, it is held that appellant was not liable to deduct TDS on reimbursemen....
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.... Appellant had deducted tax on this amount u/s.!94J whereas A.O. was of the opinion that the tax was to be deducted u/s. 1941. In the immediately preceding assessment year 2008-09, my predecessor vide the order dt 05.10.2011 held that appellant was entitled to proportionate relief of the amount with reference to the TDS made. However, during the course of present appellate proceedings, the Id. A.R, relied on the subsequent decisions cited at 49 SOT 448 (2012) (supra) and 90 DTR 26 (2013) (supra) wherein it was held that no disallowance u/s.40(a)(ia) can be madeon account of short deduction of tax. Keeping in view the fact of the appellant deducting tax u/s.!94J and in the light of these decisions, I am of the view that disallowance of this....
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.... decisions cited at 90 DTR 26 and 49 SOT 448. In the case of DCIT Vs. Chandabhoy and Jassobhoy (2012) 49 SOT 448 (Mumbai) it was held that "Section 40(a)(ia) can be invoked only in the event of nondeduction of tax but not for lesser deduction of tax". Similarly in the case of CIT Vs. S.K. Tekriwal 90 DTR 26 (2013), Calcutta High Court held that '"'Expenses are not liable to be disallowed u/s.40(a)(ia) on account of short deduction of tax at source". Keeping in view the fact of the appellant deducting tax U/S.194C and in the light of these decisions, disallowance of Rs. 6,25,680/- is not sustainable. 4.5. To sum-up, impugned disallowance totaling to Rs. 11,51,418/- is deleted. This ground of appeal is allowed. 7. In appeal before t....
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....sted upon his observation that the assessee has not deducted TDS under the correct provisions of the Act. However, in our view, payment of Rs. 68,32,4521/- to ACBPL does not fall under the Rent expenses because ACBPL is a business developer appointed by the assessee and as per the agreement ACBPL is providing multiple services relating to stock market and working on behalf of the assessee and more so, most of the expense incurred on the office premises of ACBPL are reimbursed by the assessee. Certainly, such kind of arrangement does not fall within the ambit of rent expenses and, therefore, assessee has rightly deducted TDS by bifurcating the payments made to ACBPL under the head brokerage, fees for providing technical services and reimburs....