AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 547
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....s not incurred any expenditure for making investment in exempt income yielding asset, no disallowance under section 14A of the Act can be made. The Assessing Officer, however, did not find merit in the submissions of the assessee and held that expenditure has to be disallowed under section 14A of the Act. Thereafter, applying the provisions of rule 8D, the Assessing Officer worked out the total disallowance at Rs. 1,76,29,278, comprising of interest expenditure of Rs. 1,29,06,728 under rule 8D(2)(ii) and administrative expenditure of Rs. 47,22,550 under rule 8D(2)(iii). The assessee challenged the disallowance before the learned Commissioner (Appeals). However, the learned Commissioner (Appeals) also sustained the disallowance made by the Assessing Officer. 4. The learned Authorised Representative submitted before us that during the relevant previous year the assessee has not earned any exempt income. Therefore, no disallowance under section 14A of the Act can be made. In support of such contention, the learned Authorised Representative relied upon the decision of the Tribunal, Mumbai Bench, in assessee's own case for the assessment year 2008-09 and 2009-10 in ITA no.2066 and 20....
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....uring the year no disallowance under section 14A of the Act can be made. In view of the aforesaid, we direct the Assessing Officer to verify assessee's claim that no exempt was earned during the relevant previous year and in case aforesaid claim of the assessee is found to be correct no disallowance under section 14A r/w rule 8D should be made. The ground is allowed for statistical purposes. 7. In ground no.2, assessee has challenged disallowance of Rs. 7,18,15,595, under section 40(a)(ia) of the Act. 8. Brief facts are, the assessee is engaged in the business of Direct To Home (DTH) operator, satellite television services, teleport services, etc. As observed by the Assessing Officer, the assessee distributes various channels through DTH platform. In course of assessment proceedings, the Assessing Officer noticing that the assessee has paid commission charges of Rs. 7,18,15,595 called upon the assessee to furnish the details of such expenses and also to justify the reason for not deducting tax at source while making such payment, as, according to the Assessing Office such payment is covered under section 194H of the Act. In reply, it was submitted by the assessee that as per ....
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....se in assessee's own case for assessment years 2011-12 and 2012-13. The Tribunal after considering the submissions made by the assessee and the evidences produced passed an order in ITA no.3061 3062/MUM./2017, dated 10.10.2017 restoring the issue to the Assessing Officer with the following observations:- "8. We have gone through the copy of the agreement entered into by the assessee with the distributor available on pages 138 to 148 as well as the sample subscription application form available on pages 149 to 150 of the paper book. On the basis of the document and the issue involved we are of the view that examination of these documents as a whole along with the terms and conditions of the agreement entered into between the assessee and the distributor in respect of talk time card is essential to determine the true nature of the transaction whether the transaction entered into between the assessee and the distributor relates to discount or commission. The TDS provisions are applicable under section 194H in case it is held that the nature of the transaction entered into between the assessee and the distributor is that of commission but in case if it is decided that the natu....
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....ough, the assessee objected to the proposed disallowance, however, the Assessing Officer rejecting the objections of the assessee disallowed the amount of Rs. 361,13,12,717 under section 40(a)(ia) of the Act. Assessee challenged the disallowance before the first appellate authority. 17. The learned Commissioner (Appeals) taking note of the fact that the assessee has deducted tax at source @ 2% by applying provisions of section 194C of the Act held that it is a case of short deduction of tax and not a case of no TDS. Therefore, following the decision of the Hon'ble Calcutta High Court in CIT v/s S.K. Tekriwal, 206 CTR 73 (Cal.), he held that no disallowance under section 40(a)(ia) of the Act can be made. Of course, the learned Commissioner (Appeals) also referred to the order passed by the first appellate authority in assessee's own case for assessment year 2008-09 and 2010-11 against the order passed under section 201(1) and 201(1A) of the Act, wherein, the assessee's claim that the payment made is not in the nature of royalty was accepted. 18. The learned Departmental Representative submitted that the learned Commissioner (Appeals) was not justified in deleting the disal....
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.... payment of channel subscription charges. Thus, it is not a case of failure to deduct tax at source but, if at all, it is a case of deduction of tax at source at a lower rate. On a reading of the provisions contained under section 40(a)(ia) of the Act it appears that any payment to a resident which is subject to deduction of tax at source, if paid, without deducting tax or after deduction it was not paid to the Government account before the due date of return of income under section 139(1) of the Act, it has to be disallowed under section 40(a)(ia) of the Act. Thus, the aforesaid provision operates under two conditions; firstly, if tax is not deducted at source; and secondly, if after deduction it is not paid to the Government account before the prescribed date. In the present case, admittedly, the assessee has deducted tax at source on the payment made, though, at a lower rate. Therefore, the first condition of section 40(a)(ia) of the Act does not apply. Even, there is no allegation that after deduction of tax the assessee has not remitted it to the Government account before the prescribed date. Therefore, the second condition of section 40(a)(ia) of the Act also does not apply. ....
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....at source, the Assessing Officer disallowed the payment by applying the provisions of section 40(a)(ia) of the Act. 23. The learned Commissioner (Appeals) while deciding assessee's appeal on this issue deleted the disallowance, since; it is not a case of no-deduction of tax but short deduction of tax. 24. We have considered rival submissions and perused materials on record. As could be seen from the facts on record, while paying the up-linking fees the assessee has deducted tax at source @ 2% by applying the provisions of section 194C of the Act. It is the case of the Revenue that the assessee should have deducted tax @ 10% as per section 194J of the Act. Thus, there is no dispute that the assessee has deducted tax at source, but, may be at a lower rate. It is not a case of failure to deduct tax at source. That being the case, following our reasoning in Para-20 of this order, we uphold the deletion of disallowance made under section 40(a)(ia) of the Act. 25. The next dispute is with regard to payment of up-linking fees of Rs. 6,62,06,997, to a non-residence entity viz. B.T. Worldwide. 26. During the assessment proceedings, the Assessing Officer noticing that the assesse....
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....f royalty. He submitted that subsequently by way of retrospective amendment the scope of "Royalty" was widened by introducing Explanation-6 to section 9(1)(vi) of the Act. He submitted, since, the aforesaid provision was not in existence at the time of payment made by the assessee, the assessee could not have deducted tax at source anticipating a change in law. In this context, the learned Authorised Representative relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s M/s. N.G.C. Network (India) Pvt. Ltd., ITA no.397 of 2015, judgment dated 29th January 2018. Further, the learned Authorised Representative submitted, in assessee's own case for the impugned assessment year the Income Tax Officer (TDS) has passed an order under section 201(1) / 201(1A) of the Act on 7th February 2014, holding that the up-linking fees paid to B.T. Worldwide is not liable to deduction of tax at source as such payment is towards services rendered outside India. Thus, the learned Authorised Representative submitted, learned Commissioner (Appeals) was justified in deleting the disallowance. 30. We have considered rival submissions and perused materials on record. At the outset....
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....ce at the relevant time but introduce later by retrospective amendment. Moreover, as could be seen from the material placed before us, Income Tax Officer (TDS), International Taxation, Noida, vide order dated 7th February 2014, passed under section 201(1) / 201(1A) of the Act for assessment years 2009-10, 2010-11 and 2011-12, has held that assessee was not liable to deduct tax at source on the payment made to this company as such payment was towards services rendered outside India. In view of the aforesaid, the disallowance made under section 40(a)(ia) of the Act deserves to be deleted. Therefore, we uphold the decision of the Commissioner (Appeals) on the issue, though, on our own reasoning. 31. The next dispute is with regard to payment of transponder fees amounting to Rs. 50,25,99,456. 32. The Assessing Officer noticing that the assessee while making the aforesaid payment has deducted tax at source @ 2% under section 194C of the Act as against @ 10% under section 194J of the Act called upon the assessee to explain why the payment made should not be disallowed under section 40(a)(ia) of the Act. Though, the assessee objected to the proposed disallowance, however, the Assess....