TaxTMI 
TaxTMI 
2017 (12) TMI 927
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....4. The learned CIT (A) erred in law as well as on facts in holding that consideration for exclusive privilege to be first party to conduct campus interview provided by Sir Mohmed Yusuf Seamen Welfare Foundation is similar to those of recruitment agency therefore liable to TDSu/s. 194JoftheAct. 5. The learned CIT (A) erred in relying on the judgement of Hon'ble ITAT Hyderabad Bench in case of M/s. Bajaj Consumer Care Ltd vs DC1T (ITA no. 1368/Hyd/2013) which is distinguishable on facts therefore would not apply to the facts the case under consideration. 6. Without prejudice to above, the learned CIT (A) erred in not adjudicating the alternate contention of the appellant that when payee has offered the alleged amount as income in their return of income and paid the required tax thereon if any. then appellant should not be treated as "assessee in default" and no disallowance to be made u/s. 40(a)(ia). Apropos claim u/s. 35D 3. Brief facts of this issue are as under: During the course of assessment proceedings, the Assessing Officer observed that the assessee has in its computation of income claimed preliminary expenditure of Rs. 49,367/-. The said claim represents 1/5th....
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....g the authorized capital was claimed as revenue expenditure u/s.37(1) and there was no contention of assessee for allowing it u/s.35D. In present case, the assessee has claimed the expenditure incurred for increasing the authorized share capital u/s.35D. Hence, the ld. Counsel of the assessee claimed that this claim is falling u/s. 35D and hence, the same is to be allowed. He contended that the decisions rendered by the Hon'ble Apex Court were not considering the provisions of section 35D. 7. Per contra, the ld. Departmental Representative relied upon the orders of the authorities below. 8. In this regard, the provisions of section 35D and the assessee's contention as referred before the ld. Commissioner of Income Tax (Appeals) may be gainfully referred as under: 35D. (1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2), - (i) before the commencement if of his business, or (ii) after the commencement of his business, in connection with the extension of his undertaking or in connection with his setting up a new unit, the assessee sh....
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....at Annexure- 5) In view of the above, it is submitted that appellant has fulfilled the conditions prescribed u/s.35D (i) Authorised Capital has been increased before commencement of business (sub section (1)) (ii) the words 'such other items of expenditure' in sub-section (2) of section 35D is wide enough to cover a payment of fee to the Registrar for raising capital of the appellant-company. Hence, the expenses of Rs. 2,46,834/- incurred for increasing the authorized share capital fall under section 35D and eligible for 1/5th deduction for five years. 9. Upon careful consideration, I find that there is no infirmity in the order's of the authorities below. The case laws from the Hon'ble Supreme Court relied upon the authorities below duly supported the case of the Revenue. The distinction referred by the assessee has no cogency. The assessee has sought to make the claim u/s.35D which provides for allowance as preliminary expense fee paid for registering the company. In the present case, the company was registered on 20.03.2009. Hence, the fee paid for increase in capital in the current assessment year can by no stretch of imagination be said to be the fee paid for registering ....
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....greed basis. 12. The assessee has contended that the payment made to the Seamen Foundation during the year refers to the facilities availed as per Part A of the MOD in which there is mention of any particular services. In this regard, it may be noted that the payment made by the assessee during the year is in the nature of fees for professions or technical services covered u/s. 194J of the IT. Act. 13. The Assessing Officer stated after careful reading of the provision of section 194J r.w.s. 28(va) of the Act, it comes to light that payment made by the assessee to Seamen Foundation during the year is in the nature of payment of sum defined in clause (va) of section 28 of the Act. Accordingly, the assessee should have deducted TDS @ 10% considering the said payment covered u/s 194J of the IT Act. However, the assessee has not deducted TDS on payment made to Seamen Foundation of Rs. 16,00,000/- which was claimed in the profit and loss account as recruitment and training expenses. Therefore, recruitment and training expenses of Rs. 16,00,000/- claimed by the assessee was disallowed and added to the total income of the assessee. 14. Upon the assessee's appeal, the ld. Commissioner ....
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.... sum, whether received or receivable, in cash or kind, on account of transfer of the right to manufacture, produce or process any article or thing or right to carry or any business, which is chargeable under the head "Capital gains"; (ii) any sum received as compensation from the multilateral fund of the Montreal Protocol on Substances that Deplete the Ozone layer under the United Nations Environment Programme, in accordance with the terms of agreement Government of India." 3. Section 28(va) envisages the payment for (a) not c trying out any activity in relation to any business (b) not sharing of any know-how, patent, copyright, trade mark, license etc. In other words payment should be either for not carrying out any activity or for not sharing any intangibles. In the present case the payment is made for giving priority over the others. Therefore Clause (va) of sec :ion 28 would not apply 4. The appellant company has entered in to agreement with Seaman foundation not to ensure denial of opportunity for conducting of campus interview to others but to have the privilege for itself to be the first party to conduct the campus interview. Sub-clause (b) of clause (va) has no rel....