TaxTMI 
TaxTMI 
2017 (1) TMI 172
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....ed and therefore the above present appeal has arisen to decide the above stated grounds of appeal. 2. We have culled out the above 3 grounds which are not adjudicated in the original appeal from the order dated 04/12/2015 in MA No. 133/del/2014 in ITA No. 5636/del/2011 for assessment year 2007 - 08 as under: 6.7 that the AO further failed to appreciate that the disallowance under section 40 (a) (ia) of the act was, in any case, not warranted, since no deduction of tax at source was on account of bonafides view taken by the appellant. 6.8 that the AO further failed to appreciate that the disallowance under section 40 (A) (i.a) of the act should have, if at all, been restricted to the amount remaining is payable is on the last day of the relevant previous year. 6.9 that in any case deduction in respect of the amount of discount on which tax was ultimately been paid by the payees/distributors, either in the year under consideration in the year of filing the return of income, or to have been allowed in view of amendment to section 40 (a) (ia) of the act. 3. Further, wide para No. 8 of the above order it has been held that though the additional ground of appeal was admitt....
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....lt for not deducting the tax at source and consequently, disallowance under Section 40(a)(ia) of the Act is not warranted. ii. The aforesaid principle has been upheld by the Bombay High Court in the case of CIT vs. Kotak Securities Ltd: 340 ITR 333. In the said case, the assessee company was engaged in the business of share broking, depositories, mobilisation of deposits and marketing of public issues. The assessee had paid to the BSE transaction charges. The question before the Court was whether the said payment of transaction charges constituted payment of fees for technical services' covered under section 194J of the Act so as to hold that the assessee was liable to deduct tax at source at the time of crediting the said transaction charges to the account of the stock exchange. Apart from the primary argument raised by the assessee on the issue of non-applicability of provisions of section 194J of the Act on the said transaction, the assessee also argued that though provisions of the said section was introduced with effect from 01.07.1995, the Revenue had never invoked the said section upto assessment year 2005-06 (i.e., the year under consideration) and thus the assessee ....
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.... way of transaction charges incurred by the assessee. 32. Accordingly, we hold that the transaction charges paid by the assessee to the stock exchange constitute "fees for technical services" covered under section 194J of the Act and, therefore, the assessee was liable to deduct tax at source while crediting the transaction charges to the account of (he stock exchange. However, since both the Revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can he found with the assessee In not deducting the tax at source in the assessment Year in question and consequently disallowance made by the Assessing Officer tinder section 40(a)(ia) of the Act in respect of the transaction charges cannot be sustained. We make it clear that we have arrived at the above conclusion in the peculiar facts of the present case, where both the Revenue and the assessee right from the insertion of section 194J in the year 1995 till 2005 proceeded on the footing that the assessee is not liable to deduct tax at source and in fact immediately after the assessment year in question, i.e., from the assessme....
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....mpany to which the Banking Regulation Act, 1949 applies and further that section 19of Banking Regulation Act, 1949 provides that a banking company shall not form any subsidiary company except a subsidiary company formed for under taking of any business which is permissible for a banking company to undertake. Again there is substance in the alternative submission of the assessee which is supported by the above cited decisions in the case of Rajiv Kumar Aggarwal (supra), Dr. Jai Deep Kumar Sharma (supra) and Raja Chakravorty (supra) that the amendments made by the Finance Act, 2012 to section 201 and Section 40(a)(ia) of the Act sought to be applied to cases prior to 01,07.2012 since the amendments are procedural in nature and are intended to remove the hardship being faced by the assessee, the amendments are declaratory and curative in nature and shall have retrospective effect. We thus set aside the matter to the file of the Assessing Officer to examine the submission of the assessee that KMPL had duly furnished the return of income and had considered the interest income amounting to Rs. 5,75,706 received from the assessee while computing its total income for the year under conside....
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.... the hands of the recipient, provisions of section 194H were not applicable; (d) the provisions of section 194H of the Act, which deal with tax deduction on payments of commission or brokerage are in any case not applicable in case of trade discounts1; (e) the amount on which tax was required to be deducted at source under section 194H of the Act was indeterminable and hence it was impossible for the appellant to withhold tax under section 194H of the Act; and (f) in the absence of any actual payment or credit of any amount in the books of the appellant (i.e. the payer), the machinery provisions contained in section 40(a)(ia) of the Act would fail and accordingly, the payer could not be required to deduct tax at source. ix. The principal issue whether tax is deductible at source on aforesaid transaction of sale of a product in the form of pre-paid sim-card is, it is further submitted, a highly disputed and vexed legal issue. x. In the following cases, the Courts and various benches of the Tribunal have held that tax is not deductible: i. Bharti Airtel Ltd. DCIT: 372 ITR 33 (Kar) ii. Vodafone Essar Gujarat Ltd. vs. ACIT: 60 taxmann.....
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....that it only covers situations where tax is deducted at source as and when required in law. It does not envisage a situation where payment has already been made and tax is to be subsequently deducted and paid. In view of the same, disallowance under section 40(a)(ia) of the Act should also be restricted to amounts which are payable on which tax can be deducted and paid as per Rule 30 of the Rules. d) Further, Rule 30, prior to its substitution by the Income-tax (Sixth Amendment) Rules, 2010 with retrospective effect from April 1, 2010 allowed 2 months for depositing TDS for amounts payable at the year-end as against one week from the end of the month in which TDS is deducted for amounts paid during the year. The words 'paid1 and 'payable1 have different connotations and, therefore, different time periods have been prescribed for depositing TDS. Since the language used in section 40(a)(ia) of the Act uses the word 'payable', it should only be restricted to amounts payable at the year end and should not cover amounts paid during the year. e) It is further respectfully submitted, that there is a marked difference between the language of the provision introduced a....
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....f the act. Secondly if the expenses are already paid and not payable in that case the provision of section 40a (ia} is required to be applied and no disallowance is called for to the extent sums are paid, in view of the decision of the Hon'ble Allahabad High Court in the case of CIT v. Vector Shinning Pvt. Ltd.: 357 ITR 642. In view of this above two directions, we set aside the issue to the file of the AO for verification if the payments are made to the agents of foreign shipping agents then no disallowance is called for. Further, the disallowance is also required to be reduced to the extent of amount paid by the assessee in view of decision of the Hon'ble Allahabad High Court. 11. In the result ground, No. 3 of the appeal is allowed with above direction, "(emphasis supplied) k) To the same effect is the decision of the Delhi Bench of the Tribunal in the case of Opitech Software (P) Ltd. v. ITO: 1584/Delhi/2013, wherein the Tribunal, following the decision of the Allahabad High Court in Vector Shipping (supra) deleted the disallowance made under section 40(a)(ia) of the Act on the ground that all payments on which disallowance was attracted, were made during th....
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....cutta High Court in the case of CIT v, Crescent Export Syndicate 216 Taxman 250 and Hon'ble Gujarat High Court in the case of CIT v. Sikander Khan 357 ITR 312 are not in favour of assessee but keening in view of Hon Supreme Court decision in the cane of CIT v. Vegetable Products 88 ITR 92, the assessee is entitled to application of judgment benefiting to it and, therefore* applying the Hon'ble Allahabad High Court judgment, the 1st ground of appeal is decided in favour of assessee and is therefore, allowed, "(emphasis supplied) l) To the same effect are the following decisions: - Matrix Infrastructure vs. ITO: 5428 and 5548/Del./2010(Del) - ITO vs. Vinod Datta 22 ITR (Trib.) 243 (Mum) - DCIT vs. Halani Shipping Pvt Ltd.: ITA No. 1919/Mum/2013 (Mum) - Arcadia Share & Stock Brokers Pvt. Ltd. vs. DCIT: ITA No. 1871/Mum/2013 (Mum) - ITO vs. MGB Transport 23 ITR (Trib.) 391(Kol) - DCIT vs. Ananda Marakala: 150 ITD 323 (Bang) - DCIT vs. Udupi Ananda Marakala: ITA No.l584/Bang/2013 (Bang) - DCIT vs. MRF Limited: ITA. No, 1985/Mds/2011 (Chennai) - Devendra Exports (P.) Ltd. vs. ACIT: ITA No.849 & 850/Mds/201....
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.... from assessment year 2005-2006, being the year of insertion of this provision. e) Attention in this regard is invited to the Memorandum explaining the provisions of the Finance Bill, 2012, which provides the rationale of the aforesaid amendment to section 40(a)(ia) of the Act in the following words:- "In order to rationalise the Prows ions of disallowance on account of non-deduction of tax from the payments made to a resident payee, it is proposed to amend section 40(a)(ia) to provide that where an assessee makes payment of the nature specified in the said section to a resident payee without deduction of tax and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the payee, then, for the purpose of allowing deduction of such sum, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. " (emphasis supplied) f) On perusal of the above, it may kindly be noted that the wordings 'In order to rationalise the provisions' indicates that the amendment was made with a view to remove unnecessary hardship caused to assesses by the ear....
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....inate unintended consequences which may cause undue hardship to the taxpayers, had to be regarded as clarificatory in nature and having retrospective operation with effect from 1st April, 2005, viz., the date on which section 40(a)(ia) was brought on the statute. k) The Hon'ble Delhi High Court in the case of CIT vs. Rajinder Kumar: 362 ITR 241 (Del), held that the amendment to section 40(a)(ia) of the Act by the Finance Act, 2010, extending period of payment till due date of filing of return was retrospective in nature as the said amendment was procedural in nature, intended to ensure collection of TDS. The pertinent findings of the Court in this regard, are reproduced as under: "25. In view of the aforesaid discussion in paras 18,19 and 20, it is apparent that the respondent assesse did not violate the unamended section 40(a)(ia) of the Act. We have noted the ambiguity and referred their contention of Revenue and rejected the interpretation placed by them. The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support view taken in paragraphs 17-20 that the expression "said due date"....
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....on 40(a)(ia) is having retrospective operation or not. The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e. well before-the due date of filing of the return of income for the year under consideration. This factual position was undisputed. Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. and also in the case of Alom Extrusions Ltd., has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 1TR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well In view of the authoritative pronouncement of the Supreme Court, this court cannot decide otherwise. Hence we dismiss the appeal without any order as to costs. " n) The aforesaid position is also buttressed by the amendment made in section 201(1) of the Ac....
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....l before the Hon'ble High Court, it was held as under: 9, It is seen that the second proviso to section 40(a) (la) was inserted by the Finance Act, 2012 with effect from 1st April 2013. The effect of the said proviso is to introduce a legal fiction where an assessee fails to deduct tax in accordance with the provisions of Chapter XVIIB. Where such assessee is deemed not to be an assessee in default in terms of the first proviso to sub-section (I) of section 201 of the Act, then, in such event, 'it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso'. 11. The first proviso to section 201 (1) of the Act has been inserted to benefit the assessee. It also states that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under section 139. No doubt, there is a mandatory requirement under section 201 to deduct tax at source under c....
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....the Finance Act [No. 2] 2004. From the operative para 6.7 of the first appellate order, it is apparent that the Id. CIT(A) upheld the disallowance by holding that the proviso, inserted by Finance Act 2012, w.e.f 1,4,2 014 is not applicable to A.YITA No. 880/Del/2014 2009-10. But in view of proposition rendered by the Hon'ble High Court of Delhi, it is settled that the proviso to section 40(a)(ia) of the Act being declaratory and curative is applicable from 1.4.2005 which is (lie date of insertion of sub-section (ia) of section 40(A) of the Act. Hence, view taken by the AO for making disallowance and basis on which the same was upheld by the Id. CITCA) is not sustainable in view of the dicta of Hon'ble Jurisdictional High Court. Thus, we are inclined to hold that the benefit of the proviso to section 40fa)(ia)of the Act is available for the assessee for A.Y 2009-10 as the AO could not controvert the fact supported by the certificate of the payee M/s Kotak Mahindra Pvt, Ltd stating that the payee has enclosed the said amount in its income in the return filed u/s 139 of the Act and has paid tax due on its income declared in the return. In tin s factual matrix the proviso to se....
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....uction of tax at source under section 194H of the Act, on transactions entered into with distributors for sale of pre-paid cards in respect of Kolkata circle involving transactions to the tune of Rs. 71,38,51,899. On appeal against the aforesaid order, the CIT(A), following the order of the Calcutta High Court in the appellant's own case for assessment years 2003-04 and 2004-05, was pleased to direct the assessing officer to verify whether the payees had considered the receipts from the assessee as part of their taxable income/ paid tax thereon and, accordingly, exclude the principal amount of taxes to that extent. x) In pursuance of the aforesaid directions, the assessing officer vide order dated 28.06.2013, deleted the principal amount of demand raised under section 201 in relation to non-deduction of tax at source under section 194H of the Act. y) Consistent with the aforesaid finding of the assessing officer in the order passed under section 201 dated 28.06.2013, the aforesaid amount included by the payees as part of taxable income should be directed to be excluded from consideration for the purpose of disallowance under section 40(a)(ia) of the Act. z) Further, in....
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....r to reduce the hardship, it is proposed that in case of non-deduction or nonpayment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. Further, existing provisions of section 40(a)(ia) of the Act provides that certain payments such as interest, commission, brokerage, rent, royalty fee for technical services and contract payment made to a resident shall not be allowed as deduction for computing business income if tax on such payments was not deducted, or after deduction, was not paid within the time specified under the said section. Chapter XVI1-B of the Act mandates deduction of tax from certain other payments such as salary, directors fee, which are currently not specified under section 40(a)(ia) of the Act. The payments on which tax is deductible under Chapter XVII-B but not specified under section 40(a)(ia) of the Act may also be claimed as expenditure for the purposes of computation of income under the head "Profits and gains from business or profession ~ Clause 14 " These amendments will take effect from 1st April, 2015 and will, accordingly, apply in rel....
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....er section 201 (1) of the income tax act, 1961. And on this ground. He submitted as under:- i. Further, apart from the above, it may also be pertinent to note that no order under section 201 of the Act was passed in respect of the year under consideration holding the assessee to be in default in respect of 11 circles involving transactions to the tune of Rs. 407,85,01,823 out of total transactions of Rs. 866,59,50,444 undertaken during the year under consideration. Thus, when no default was determined in terms of Chapter XVII-B of the Act to the extent of transactions of Rs. 407,85,01,823, there was, it is submitted, no warrant to invoke penal provisions of section 40(a)(ia) of the Act in respect of the said transactions, as elaborated hereunder: ii. Section 40(a)(ia) of the Act mandates that on account of failure to deduct tax at source, expenses (in respect of which tax was deductible at source at the time of credit/ payment) shall not be allowed as deduction while computing taxable income. The said section reads as under: "40. Notwithstanding anything to the contrary in sections 30 to 31, the following amounts shall not be deducted in computing the income chargeab....
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.... including section 200 of the Act, prescribing the period within which the deducted amount should be paid to the Government and also mandating filing of TDS return; (c) Section 201 provides for the consequences of failure to deduct or pay tax at source and mandates the assessing officer to pass an order where the asscssee is in default of failure to deduct/ deposit TDS under the provisions of the Act. vi. In terms of section 40(a)(ia), violation of provisions contained in Chapter XVII-B of the Act is sine qua non for making disallowance under that section. Default under Chapter XVII-B is, on the other hand, determined by way of an order passed under section 201 of the Act vii. As a necessary corollary, unless there is an order under section 201 holding the assessee to be in default under Chapter XVII-B, the provisions of section 40(a)(ia) of the Act cannot, it is submitted, be applied to make any disallowance under the latter section. This is for the simple reason that under the scheme of the Act, determination of default under Chapter XVII-B, which is sine qua non for application of section 40(a)(ia), is only possible by way of an order under section 201 of the Act.....
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....imposition of penalty for concealment, as was directed by the Assessing Officer in the present case. The aforesaid principle requires that a person should not be subjected to any sort of detriment unless the obligation is clearly imposed. When the words are equally capable of more than one construction, the one not inflicting the penalty or deterrent may be preferred. In Maxwell's The Interpretation of Statutes, 12th edition (1969) it has been observed:- The strict construction of penal statutes seems to manifest itself in four ways: in the requirement of express language for the creation of an offence; in interpreting strictly words setting out the elements of an offence; in requiring the fulfillment to the letter of statutory conditions precedent to the infliction of punishment; and in insisting on the strict observance of technical provisions concerning criminal procedure and jurisdiction." ................,....." (emphasis supplied) xi. It will thus, kindly be appreciated that the jurisdictional Delhi High Court has clearly held, "Section 40(a)(ia) is a deterrent and a penal provision". xii. It is trite law that penal consequences follow the charging....
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....t justified. xvi. The aforesaid decision, it is respectfully submitted, fortifies the contention of the appellant that unless the assessee is held to be an 'assessee in default' under section 201, it is not permissible for the assessing officer to make disallowance of any expenditure under section 40(a)(ia) of the Act. The application of provisions of section 40(a)(ia) must, it is submitted, necessarily follow determination of default, if any, in deduction of tax at source in proceedings under section 201 of the Act. xvii. Accordingly, in the following kinds of cases, where the assessee has not been held to be in default under Chapter XVII-B, the necessary corollary would be that such payment cannot be subject matter of any disallowance under section 40(a)(ia) of the Act. a) where TDS return filed stands accepted and there is no specific order under section 201 of the Act; b) where TDS return filed is followed by an order under section 201, wherein there is no specific adverse finding of default in respect of the expenditure under consideration. xviii. It will kindly be appreciated that in case one were to hold that provisions of 40(a)(ia) could b....
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....ing free airtime given as discount/trade margin to the distributors on maximum retail price of prepaid coupons. 6.1 That the assessing officer erred on facts and in law in holding that discount/trade margin given to the distributors on retail price of the prepaid products was in the nature of commission expense, on which tax was required to be deducted at source under section 194H of the Act. 6.2 That the assessing officer erred on facts and in law in holding that the business relationship between the appellant and distributors of prepaid products was in the nature of agency as against actual relationship of principal to principal, which does not fall within the purview of section 194H of the Act. 6.3 That the assessing officer erred on facts and in law in not appreciating that the appellant sold, on principal to principal basis, prepaid card/coupons, which comprised of the 'right to use airtime', a marketable product capable of being transferred, and consequently, the provisions of section 194H of the Act were not applicable Without Prejudice 6.4 That the assessing officer erred on facts and in law in not appreciating that no 'income' per se accrued in fav....
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....94 H, and, accordingly, disallowance under section 40(a)(ia) does not come into play. This explanation, however, was brushed aside by the Assessing Officer on the ground that, on materially identical facts and in the case of CIT v. Idea Cellular Ltd. [2010] 325 ITR 148/189 Taxman 118 (Delhi), Hon'ble Delhi High Court has decided the issue against the assessee. The assessee carried his objection to this disallowance before the DRP but without any success. The assessee is not satisfied and is in appeal before us. 31. Having heard the rival contentions and having perused the material on record, and having noted that the issue is covered against the assessee by Hon'ble High Court decisions in the case of Idea Cellular Ltd (supra) as in assessee's own case, we see no reasons to interfere in the matter. Learned counsel for the assessee has pointed out that there is no element of agency, that talk time is traded and distributed, that it's a principal to principal relationship that the assessee has with his distributors, that flow of payment is in the reverse direction which is contrary to the concept of commission payment and that the assessee had a bonafide belief that....
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....s model, with no or peripheral variations, has been followed by almost all the operators in the mobile telecommunication industry, this issue has been subject-matter before various forums, and more importantly, before various Hon'ble High Courts. Learned Representatives fairly agree that the above issue in appeal is subject-matter of difference of opinion by various Hon'ble non-jurisdictional High Courts and that we do not have the benefit of guidance by Hon'ble jurisdictional High Court. 9. This issue is covered, in favour of the assessee, by Hon'ble Karnataka High Court's common judgment in the cases of Bharti Airtel Limited, Tata Teleservices Limited and Voadfone South Limited, reported as Bharti Airtel Ltd. v. Dy.CIT [2015] 372 ITR 33/228 Taxman 219 (Mag)/[2014] 52 taxmann.com 31 (Kar) wherein their Lordships have, inter alia, observed as follows: "62. In the appeals before us, the assessees sell prepaid cards/vouchers to the distributors. At the time of the assessee selling these prepaid cards for a consideration to the distributor, the distributor does not earn any income. In fact, rather than earning income, distributors incur expenditure for ....
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....ice can be sold then the relationship between the assessee and the distributor would be that of principal and principal and not principal and agent. The terms of the agreement set out supra in unmistakable terms demonstrate that the relationship between the assessee and the distributor is not that of principal and agent but it is that of principal to principal. 63. It was contended by the revenue that, in the event of the assessee deducting the amount and paying into the department, ultimately if the dealer is not liable to tax it is always open to him to seek for refund of the tax and, therefore, it cannot be said that Section 194H is not attracted to the case on hand. As stated earlier, on a proper construction of Section 194H and keeping in mind the object with which Chapter XVII is introduced, the person paying should be in possession of an income which is chargeable to tax under the Act and which belongs to the payee. A statutory obligation is cast on the payer to deduct the tax at source and remit the same to the Department. If the payee is not in possession of the net income which is chargeable to tax, the question of payer deducting any tax does not arise. As held ....
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....ther person for the services rendered. We have already taken note of our finding in BPL Cellular's case (supra) above referred that a customer can have access to mobile phone service only by inserting Sim Card in his handset (mobile phone) and on assessee activating it. Besides getting connection to the mobile network, the Sim Card has no value or use for the subscriber. In other words, Sim Card is what links the mobile subscriber to the assessee's network. Therefore, supply of Sim Card, whether it is treated as sale by the assessee or not, is only for the purpose of rendering continued services by the assessee to the subscriber of the mobile phone. Besides the purpose of retaining a mobile phone connection with a service provider, the subscriber has no use or value for the Sim Card purchased by him from assessee's distributor. The position is same so far as Recharge coupons or e-Top ups are concerned which are only air time charges collected from the subscribers in advance. We have to necessarily hold that our findings based on the observations of the Supreme Court in BSNL'scase (supra) in the context of sales tax in the case of BPL Cellular Ltd. (supra) s....
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....the assessee and so much so, it falls within the definition of commission or brokerage under Explanation (i) of Section 194H of the Act. The test to be applied to find out whether Explanation (i) of Section 194H is applicable or not is to see whether assessee has made any payment and if so, whether it is for services rendered by the payee to the assessee. In this case there can be no dispute that discount is nothing but a margin given by the assessee to the distributor at the time of delivery of Sim Cards or Recharge coupons against advance payment made by the distributor. The distributor undoubtedly charges over and above what is paid to the assessee and the only limitation is that the distributor cannot charge anything more than the MRP shown in the product namely, Sim Card or Recharge coupon. Distributor directly or indirectly gets customers for the assessee and Sim Cards are only used for giving connection to the customers procured by the distributor for the assessee. The assessee is accountable to the subscribers for failure to render prompt services pursuant to connections given by the distributor for the assessee. Therefore, the distributor acts on behalf of the assessee for....
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....circumstances of the case, and in view of decision in the case of A.M. Sali Maricar v. ITO [1973] 90 ITR 116 (Mad) the penalty imposed on the assessee under s. 140A(3) was legal ? The specific question before Their Lordships thus was whether the Tribunal, while sitting in Bombay, was justified in following the Madras High Court decision. It was in this context that Hon'ble Bombay High Court concluded as follows: "It should not be overlooked that IT Act is an all India statute, and if a Tribunal in Madras has to proceed on the footing that s. 140A(3) was non-existent, the order of penalty under that section cannot be imposed by any authority under the Act. Until a contrary decision is given by any other competent High Court, which is binding on the Tribunal in the State of Bombay (as it then was), it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land . . . . . . an authority like Tribunal has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision on that issue by any other High Court . . . . . . " 13. In the case of CIT v. Shah Electrical....
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....unal committed an error in following the said judgment of the Madras High Court. In view of the said decision of the Madras High Court, the only course which the Tribunal could have followed was to direct the ITO to consider the partial partition on the merits and pass an order under s. 171 first and then under s. 143(3) of the Act." 15. It is clear that, except on the issue of legality of the statutory provision itself, the decisions of even the non-jurisdictional High Courts are binding on the lower tiers of judicial hierarchy such as this Tribunal. As we hold so, we are alive to the school of thought that non-jurisdictional High Courts are not binding on the subordinate courts and Tribunals, as articulated by Hon'ble Punjab & Haryana High Court in the case of CIT v. Ved Parkash [1989] 178 ITR 332/44 Taxman 365 but then that was a case in the context of validity of a statutory provision, i.e. 140A(3), covered by the rider to the general proposition. This exception does not come into play in the present case as we are not, and we cannot be, dealing with the constitutional validity of a provision. Clearly, therefore, the views expressed by Hon'ble non-jurisdictional High....
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.... Jatia (1976) 105 ITR 179 (SC); CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) and CIT v. Kulu Valley Transport Co. P. Ltd. (1970) 77 ITR 518 (SC) : . . . . . . . . The above principle of law is well-established and there is no doubt about that. . . . . . . " 19. Having noted the legal position as above, it is appropriate, for the sake of completeness, to note the exception to this general rule as well. Supreme Court had, however, some occasions to deviate from this general principle of interpretation of taxing statute which can be construed as exceptions to this general rule. It has been held that the rule of resolving ambiguities in favour of taxpayer does not apply to deductions, exemptions and exceptions which are allowable only when plainly authorized. This exception, laid down in Littman v. Barron 1952(2) AIR 393 and followed by Apex Court in Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commissioner of Commercial Taxes [1992] Suppl. (1) SCC 21 and Novopan India Ltd. v. CCE & C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, "in case of ambiguity, a taxing statute should be construed in favour of a taxpayer does not apply to a provision giving....
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....o 10/Hyd/10; order, dated 5th June, 2015) has reached the same conclusion but the reasoning adopted, for following Hon'ble Karnataka High Court's judgment in the case of Bharti Airtel Ltd. (supra), was stated to be that "Since no jurisdictional High Court decision is available as on date, the latest decision of Karnataka High Court, which has considered and distinguished earlier rulings of other High Courts, deserves to be followed". Our conclusion is the same but our decision to follow Hon'ble Karnataka High Court's judgment is simply this judgment is to be preferred over, in the light of settled legal principles set out above, other Hon'ble High Court judgments, because it is favourable to the assessee. With utmost respect and reverence to all the Hon'ble Courts, it is not for us to choose which decision is to be followed because of its merits because of what it has discussed or because of how it has distinguished other Hon'ble High Courts or because of its timing i.e. of its being latest. Even when a non-jurisdictional High Court distinguishes all other decisions of Hon'ble High Courts but holds a view unfavourable to the assessee, that decision c....
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....respect of or on in the name of the assessee.' Page 70. Distributor does not have an authority to assume or create any obligations VWL's behalf or incur any liability on behalf of VWL or accept any contract binding upon VWL (clause 17.1 of the Agreement). 'Channel Partner be liable to pay all the taxes such as sales tax, service tax applicable and payable in respect of the subject-matter of this agreement and statutory increase in respect therof' - Page 72. The distributor shall pay all licenses, fee, taxes, duties, sales tax, service tax and any other charges, assessments penalties whether statutory or otherwise levied by any authority in connection with the operation of distributor's office (Clause III(b) of Annexure III to agreement). 'After sale of products distributor/channel partner cannot return goods to the assessee for whatever reason' - Page 74. The assessee shall not be responsible for any post-delivery defect in the service tickets. No request of refund of any money shall be entertained by the assessee in any circumstances (Clause e-Annexure I). 'Distributors are even prevented from making any representation to the retai....
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.... the assessee to his distributor is concerned, while it has income potential at a future points of time (i.e. when this right to service is sold at a profit by the distributor), rather than earning income, distributors incur expenditure for the purchase of prepaid cards. Therefore, at the time of the assessee selling these prepaid cards, he is not in possession of any income belonging to the distributor. Accordingly, the question of any income accruing or arising to the distributor at the point of time of sale of prepaid card by the assessee to the distributor does not arise. (e) In a situation in which the assessee has credited the sale proceeds at the transaction value (in contrast with the transaction being shown at face value and the difference between face value and the transaction value credited to the distributor), the tax deduction liability under section 194H does not arise. While learned counsel for the assessee has stated at the bar that the sale proceeds are credited at the transaction value, this aspect of the matter is to be verified by the Assessing Officer, and in case the sales is accounted for at the face value, to that extent, the tax withholding liability is ....
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....change has discharged its tax liability for the assessment year in question. In any event, in the facts of the present case, in view of the undisputed decade old practice, the assessee had bona fide reason to believe that the tax was not deductible at source under section 194J of the Act and, therefore, the Assessing Officer was not justified in invoking section 40(a)(ia) of the Act and disallowing the business expenditure by way of transaction charges incurred by the assessee. 32. Accordingly, we hold that the transaction charges paid by the assessee to the stock exchange constitute "fees for technical services" covered under section 194J of the Act and, therefore, the assessee was liable to deduct tax at source while crediting the transaction charges to the account of the stock exchange. However, since both the Revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the Assessing Officer under section 40(a)(ia) of the Act in respect of the....
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....ersus income tax officer in 68 taxman.com 129 has held that above proviso inserted by the finance act 2012 can be said to be declaratory and curative in nature and therefore, should be given retrospective effect from 1-4-2005. No other contrary decision was pointed out by the learned departmental representative. In view of this we accept the argument of the assessee that the 2nd proviso inserted by the finance act 2012 should be given retrospective effect from 01/04/2005. Therefore this argument of the appellant is also set aside to the file of the ld. assessing officer with a direction to give the benefit of the above proviso to the appellant in case the 1st contention of bonafide belief of the assessee does not survive on any amount. 16. The other arguments of the ld. AR were also on the similar line with respect to the above disallowance that deduction should be directed to be allowed to the appellant in the subsequent year in which the tax has been deposited by the payer. We also agree with the contention of the Ld. A R that if in the subsequent year the assessee has deposited tax on the above sum then the deduction of the above expenditure may be allowed to the assessee in ....