TaxTMI 
TaxTMI 
2018 (9) TMI 867
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....y in the following cases: "i. TDS was not made at all on payment of Rs. 1,52,37,877/- during F.Y. 2011-12, being communication charges, which is liable for TDS u/s 194J @ 10%. ii. TDS u/s 194C of the Act was made on payment of Rs. 1,71,71,481/- for manpower supply which is in the nature of managerial service and liable for TDS u/s 194J. iii. It also appeared from the Form 16 for the F.Y. 2011-12, issued by the deductor company to its employees that benefit of deduction on House Rent Allowance and benefit of interest on self-occupied house property were allowed simultaneously." 3. The assessee company, therefore, was called upon by the A.O. to explain as to why it should not be treated as assessee in default within the meaning of section 201(1) of the Act for non-deduction / short deduction of tax at source. In reply, it was submitted by the assessee that the net amount of communication charges was substantially lower than what was pointed out by the A.O. and the same involved payment for the use of internet connectivity which was not in the nature of payment covered by section 194J. This explanation of the assessee was not found acceptable by the A.O. and by relying on th....
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....st paid was entirely allowed as deduction from the rental income while working out the loss under the head income from house property. Simultaneously, deduction u/s 10 was also allowed to the said employees on account of house rent allowance u/s 10 after taking into consideration the rent actually paid by them. This explanation of the assessee was not found acceptable by the A.O. According to him, when their properties were given on rent by the concerned employees, it was not permissible to the assessee company as a deductor to allow the interest portion only. He held that the employees who had been allowed exemption for house rent allowance on the basis of rent paid thus were not entitled to deduction on account of interest on housing loan and the benefit of such interest was allowed by the assessee in excess to the extent of Rs. 43,66,699/- while deducting tax at source. Accordingly the assessee was treated by him as the assessee in default to the extent of Rs. 11,74,088/-. The A.O. thus passed an order dated 31.03.2014 u/s 201(1) / 201(1A) of the Act treating the assessee company as the assessee in default for non-deduction / short deduction of tax at source to the tune of Rs. 2....
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....efore, direct the AO to restrict the determination of tax deductable by way of TDS in respect of line charges to 2% or as applicable in case of plants u/s 194J. This ground is therefore partly allowed." TDS default in respect of manpower supply charges "From the AO's observation as reproduced it appears that the AO has treated providing of Security Guard as managing the manpower so supplied. The AO has failed to point out how the supply of labour may be termed as managerial, professional or technical activity u/s 194J. The appellant submission on the point is reproduced as under: 'From the copy of contract as well as confirmation of M/s. Zealot Industrial & Logistics Servies it is crystal clear that the labour (manpower) supplied were mainly for carrying out services of loading/unloading Cargo, Security Guards and House Keeping (sweeping and cleaning). Thus such services squarely falls under the provisions of section 194C for withholding of tax, as already reiterated both in the statement of facts and letter dated 11.01.2016 being in the nature of pure labour contract for carrying out work not involving any technical, professional, consulting or managerial functions. The....
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....umstances of the case, the CIT(A) - 24, Kolkata has erred in holding that in case of deduction of tax at source on salary, the employer can simultaneously allow benefit of exemption of HRA and benefit on loss on account of interest payment on housing loan of self-occupied property as the provisions relating to the same are independent. Actually the employer can allow the benefit of any one of the two, while deducting the tax at source on salary and in case due to some peculiar circumstances, the employee is eligible for both the benefits, he has to file an Income Tax return to claim the benefit. The Assessee deductor failed to furnish any documentary evidences in this regard to prove that the double benefit allowed by the assessee was legitimate." Ground raised in the Assessee's appeal "Under the facts and circumstances of the case the Ld. CIT(A) erred in holding that expenditure under the head specialised line rental of Rs. 25,37,618/- taken on lease should be subject to withholding of tax u/s 194I as applicable in case of plants." 8. We have heard the arguments of both the sides and also perused the relevant material available on record. As regards the common issue involve....
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.... in its appeal. As submitted by the learned counsel for the assessee in this regard, the amount in question was paid by the assessee company towards multi protocol label switching, virtual private networks, port rental charges, internet port rental charges, mailing solution charges etc. to Reliance Broadband and other service providers. The said payment thus was made by the assessee company for utilisation of the standard facilities which were provided by the various service providers. In the case of Destimoney Securities Pvt. Ltd. vs ITO (ITA No. 4106/Mum/2014), a similar issue had come up for consideration before Mumbai Bench of this Tribunal. In the said case, it was held by the Ld. CIT(a) that use of broadband, internet was in the nature of providing a right to use lease equipment and the provisions of section 194I, therefore, were attracted. The Tribunal however overruled this decision of the Ld. CIT(A) by holding that the lease line charges were paid by the assessee to the internet service provider for faster internet access on dedicated lease line and as such the said payment had been made for use of telecommunication services / connectivity for transmission of voice / data ....