ALOK INDUSTRIES LTD, MUMBAI V. DCIT iTDS) 1(1), MUMBAI

ITA 1423/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0187 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Retrospective amendment
• Section: 133A; 194C; 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 1423/MUM/2015 ( / ASSESSMENT YEAR: 2007 - 08 ) ALOK INDUST RIES LIMITED, PENINSULA BUSINESS PARK, TOWER B, SECOND FLOOR, G. K. MARG, LOWER PAREL, MUMBAI - 400 013 / VS. DY. CIT, (TDS) 1(1), 8 TH FLOOR, ROOM NO. 803, SMT. K. G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI - 400 002 ./ ./ PAN/GIR NO. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. P. LOHIA & SHRI NIKHIL TIWARI / RESPONDENT BY : SHRI RAJESH KUMAR YADAV / DATE OF HEARING : 05 .4.2017 / DATE OF PRONOUNCEMENT : 03 .7 .2017 / O R D E R PER SA KTIJIT DEY , J . M.: THIS IS AN A PPEAL BY THE A SSESSEE AGAINST THE O RDER DATED 18.7.2014 OF COMMISSIONER OF INCOME TAX (APPEALS) - 14, MUMBAI (CIT(A) FOR SHORT) FOR THE AS SESSMENT YEAR (A.Y.) 2007 - 08 . 2. ALTOGETHER , THE ASSESSEE HAS RAISED 11 GROUNDS. GROUND NO. 1 BEING GENERAL IN NATURE REQUIRES NO ADJUDICATION. GROUND NO S . 2 AND 4 ARE NOT PRESSED BY THE ASSESSEE , HENCE, DISMISSED. IN GROUND NO.3, THE ASSESSEE HAS CHALLEN GED THE DECISION OF LD. 2 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) CIT(A) IN CONFIRMING THE DEMAND RAISED U/S. 201(1) AND 201(1A) FOR NON DEDUCTION OF TAX AT SOURCE U/S. 194J ON PAYMENTS MADE TO M /S. AVERY DENNISSON HONG KONG BV. 3. BRIEFLY THE FACTS ARE DURING A SURVEY CONDUCTED U/S. 133A OF THE ACT ON THE ASSESSEE TO VERIFY TDS COMPLIANCE IT WAS FOUND THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.66,80,622/ - TO M/S. SIF Y LTD. TOWARDS INTER NET CHARGES FOR BROADBAND CONNECTION. IT WAS ALSO FOUND THAT WHILE MAKING SUCH PAYMENTS, THE ASSESSEE HAS DEDUCT ED TAX BY APPLYING THE PROVISIONS OF SECTION 194C INSTEAD OF SECTION 194J. T HE ASSESSING OFFICER (A.O.) WAS OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESSEE IS TOWARDS TECHNICAL SERVICES, HENCE, ASSESSEE WAS REQUIRED TO DEDUCT THE TAX U/S. 194J. HE, THERE FORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT FOR NON - DEDUCTION OF TAX AT SOURCE AT THE APPROPRIATE RAT E . THOUGH , THE ASSESSEE OBJECTED TO THE PROPOSED ACTION OF THE A.O., HOWEVER, REJECTING THE OBJECTIONS OF THE ASSESSEE , THE A.O. HELD THAT THE PAYMENT MADE BY THE ASSESSEE TOWARDS INTERNET CHARGES IS TOWARDS TECHNICAL SERVICES , H ENCE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX U/S. 194J. ACCORDINGLY, HE PROCEEDED TO TREAT THE ASSESSEE AS AN ASSESSEE IN DEFAULT AND RAISED A DEMAND OF RS.6,44,627/ - INCLUDING INTEREST CHARGE D U/S. 201(1A) AMOUNTING TO RS.2,69,844/ - . 4. BEING AGGRIEVED OF THE DEMAND RAISED BY THE A.O., THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). 3 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) 5. DURING THE FIRST APPELLATE PROCEEDING , THE LD. CIT(A) NOTICING THAT THE A.O. HAD NOT PROVIDED THE COMPLETE BREAKUP OF THE PAYMENTS MADE BY THE ASSESSEE TO VARIOUS PARTIES CALLED FOR NECESSARY DETAILS , AS PER WHICH THE BREAKUP OF PAYMENT OF RS.66,80,622/ - WAS FOUND TO BE AS UNDER: PARTY AMOUNT REASONS FOR NON - DEDUCTION OF TDS PROVISIONS SUBMITTED BY THE APPELLANT AVERY DENNISSON HONG KONG BV 32,69,015 PAYMENTS MADE FOR POURCHASE OF BARCODES FROM NON - RESIDENT NOT LIABLE TO TDS UNDER THE ACT. (A) 32,69,015 HATHWAY CABLE & DATACOM PVT. LTD. 5 ,897 PELIKAN XEROX 6,674 AMOUNTS WITHIN THRESHOLD LIMITS AS PRESCRIBED UNDER SECTION 194C OF THE ACT PENTIUM COMPUTERS 898 TRACOM NETWORKS LTD. 40,803 VIDESH SANCHAR NIGAM LTD. 4,800 YOU TELECOM INDIA PVT. LTD. 3,966 PETTY CASH EXPENSES 3,559 (B) 66,597 SIFY LIMITED 33,45,011 TDS DEDUCTED U/S. 194C OF THE ACT (C) 33,45,011 TOTAL A+B+C 66,80,623 6. FROM THE DETAILS FURNISHED, THE LD. CIT(A) FOUND THAT THE PAYMENTS MADE TO M/S. AVERY DENNISSON HONG KONG BV AND M/S. SIFY LTD. AND TRACOM NE TWORKS LTD , ATTRACTED TDS PROVISION. AS FAR AS PAYMENT AMOUNTING TO RS.32,69,015/ - TO M/S. AVERY DENNISSON HONG KONG BV IS CONCERNED, IT WAS SUBMITTED BY THE ASSESSEE THAT SUCH PAYMENTS ARE FOR PURCHASE OF BARCODE STICKERS WHICH IS IN THE NATURE OF STATION ERY. HENCE, THE PROVISIONS OF SECTION 194J ARE NOT APPLICABLE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , HOWEVER , HELD THAT THE BARCODE IS 4 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) NOT A COMMODITY BUT AN INTANGIBLE PROPERTY, THEREFORE, PAYMENT MADE FOR PURCHASE OF SUCH PROP ERTY IS IN THE NATURE OF ROYALTY. RELYING UPON CERTAIN DECISIONS, THE LD. CIT(A) ULTIMATELY HELD THAT THE PAYMENT MADE TO M/S. AVERY DENNISSON HONG KONG BV FOR PURCHASE OF BARCODE BEING IN THE NATURE OF ROYALT Y , THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOU RCE U/S. 194J. A CCORDINGLY, HE U PHELD THE DECISION OF THE A.O. 7. T HE LD. AUTHORIZED REPRESENTATIVE (A R ) SUBMITTED BEFORE US THAT THE ASSESSEE HAD MADE PAYMENT OF RS.32,69,015/ - TO M/S. AVERY DENNISSON HONG KONG BV FOR PURCHASE OF BAR CODE STICKERS, THER MAL TRANSFER PRINTERS , SOFTWARE CHARGES , ON - SITE INSTALLATION AND OPERATOR TRAINING. HE SUBMITTED , AS FAR AS THERMAL TRANSFER PRINTERS ARE CONCERNED THEY ARE CAPITAL GOODS, HENCE PAYMENT MADE FOR PURCHASE OF SUCH GOODS CANNOT BE TREATED AS ROYALTY , THEREBY ATTRACTING THE PROVISION OF SECTION 194J. HE SUBMITTED , BARCODES ARE IN THE NATURE OF STAT IONE RY, HENCE , CANNOT BE EQUATED TO INTANGIBLE PROPERTY AS HELD BY THE LD. CIT(A). HE SUBMITTED , BARCODES ARE NOTHING BUT STICKERS WHICH ARE ATTACHED TO THE GOODS /CO MMODITIES SOLD BY THE ASSESSEE. IN THIS CONTEXT , THE LD. AR DREW OUR ATTENTION TO THE LITERATURE/ BRO CHURE OF BAR CODE AND PRINTER TO EMPHASIZE THAT THE PAYMENT S MADE WERE NOTHING BUT FOR PURCHASE OF GOODS/COMMODITIES. THEREFORE, IT CANNOT BE TREATED AS PAY MENT FOR TECHNICAL SERVICES. HE SUBMITTED , AS FAR AS THE PART PAYMENT MADE TOWARDS SOFTWARE IS CONCERNED, IT IS FO R ASSESSEES OWN USE . THEREFORE, IT WILL NOT COME WITHIN THE PURVIEW OF SECTION 194J. HE SUBMITTED , UNDER NO CIRCUMSTANCES IT CAN BE TREATED A S ROYALTY. FURTHER, THE LD. AR SUBMITTED COMPUTER SOFTWARE WAS TREATED AS ROYALTY BY VIRTUE OF AMENDMENT TO SECTION 5 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) 9(1)(VI) BY INSERTION OF EXPLANATION 4 BY FINANCE ACT, 2012 W.R.E.F. 01.6.1976. THE LD. AR SUBMITTED , AS A RESULT OF SUCH RETROSPECTIVE LEGI SLATION WHICH THE ASSESSEE COULD NOT HAVE FORESEEN WHEN THE PAYMENT WAS MADE , LIAB ILITY TO DEDUCT TAX AT SOURCE U/S. 194J WOULD NOT ARISE. IN SUPPORT OF SUCH CONTENTION, THE LD. AR RELIED UPON THE FOLLOWING DECISIONS: CAPGEMINI BUSINESS SERVICE INDIA LTD. VS. ACIT [2016] 158 ITD 1 8. THE LD. D EPARTMENTAL REPRESENTATIVE (D R ) RELIED UPON THE OBSERVATIONS OF THE LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AT THE OUTSET, WE MUST OBSERVE , THE LD. CIT(A) HAS DECID ED THE ISSUE ON THE PREMISE THAT THE ENTIRE PAYMENT MADE BY THE ASSESSEE TO M/S. AVERY DENNISSON HONG KONG BV , AMOUNTING TO RS.32,69,015/ - IS TOWARDS BARCODE. HOWEVER, FROM THE DETAILS SUBMITTED BEFORE THE DEPARTMENTAL AUTHORITIES AS WELL AS BEFO RE US, WE FIND THAT THE PAYMENTS MADE BY THE ASSESSEE FALL INTO FO LLOWING CATEGORIES: 1. PURCHASE OF THERMAL TRANSFER PRINTERS 2. PURCHASE OF BARCODES 3. SOFTWARE CHARGES FOR ONSITE INSTALLATION AND OPERATOR TRAINING 10. THEREFORE , THE DEPARTMENTAL AUTHORITIES HA VE NOT PROPERLY APPRECIATED THE FACT RELATING TO THE PAYMENTS MADE BY THE ASSESSEE. AFTER PERUSING THE COPIES OF THE INVOICE RAISED BY M/S. AVERY DENNISSON HONG KONG BV, WE HAVE FOUND THAT THE PAYMENTS HAVE BEEN MADE TOWARDS PURCHASE OF THERMAL TRANSFER PR INTER WHICH IS 6 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) NOTHING BUT CAPITAL GOODS. THEREFORE, SUCH PAYMENT CANNOT BE TREATED AS FEES FOR TECHNICAL SERVICE /ROYALTY SO AS TO BRING THEM WITHIN THE SWEE P OF S ECTION 194J. SIMILARLY, THE BAR CODE STICKERS ARE NOTHING BUT STATIONERY ITEMS PURCHASED BY TH E ASSESSEE. THEREFORE , P AYMENT MADE FOR PURCHASE OF BAR CODE CANNOT BE TREATED AS FEES FOR TECHNICAL SERVICES OR ROYALTY , SO AS TO APPLY THE PROVISIONS OF SECTION 194J. T HEREFORE, WE ARE LEFT WITH THE PAYMENTS MADE TOWARDS SOFTWARE CHARGES , ONSITE INSTALLAT ION AND OPERAT OR TRAINING. AS FAR AS SOFTWARE CHARGES ARE CONCER N ED, IT IS REQUIRED TO BE SEEN WHETHER THE SOFTWARE SUPPLIED ARE IN THE NATURE OF COPY RIGHT OR COPY RIGHTED ARTICLE. THE AFORE - SAID FACTUAL ASPECT HAS NOT BEEN EXAMINED BY ANY DEPARTMENTAL AU THORITIES. TO PUT IT IN PROPER PERSPECTIVE, THE DEPARTMENTAL AUTHORITIES HAVE FAILED TO PROPERLY EXAMINE THE NATURE OF PAYMENTS. WHILE A.O. HAS TREATED THE ENTIRE PAYMENT AS INTERNET CHARGES PAID TO M/S. SIFY LTD. THE LD. CIT(A), THOUGH, HAS CALLED FOR BRE AKUP OF PAYMENT MADE, HOWEVER, HE HAS WRONGLY ASSUMED THAT ENTIRE PAYMENT MADE TO M/S. AVERY DENNISON WAS FOR BARCODE. IN OUR VIEW, WITHOUT PROPERLY EXAMINING THE FACTS, A.O. AND CIT(A) HAVE WRONGLY CONCLUDED THAT PAYMENT MADE IS FOR TECHNICAL SERVICES OR SOFTWARE, HENCE, ROYALTY. THEREFORE, THERE WAS NO LIABILITY ON THE ASSESSEE TO DEDUCT TAX U/S. 194J. 11. IN GROUND NOS. 5 TO 7, THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF SECTION 194J TO THE PAYMENTS MADE TO M/S. SIFY LTD. FOR INTERNET BROADBAND CH ARGES. AS DISCUSSED EARLIER, THE A.O. WAS OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESSEE TO 7 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) M/S. SIFY LTD. TOWARDS INTERNET CHARGES IS IN THE NATURE OF FEES FOR TECHNICAL SERVICES LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER T HE PROVISIONS OF SECTION 914 J. 12. T HE LD. CIT(A) UPHELD THE VIEW OF THE A.O. FURTHER, LD. CIT(A) HELD THAT EVEN IF THE PAYMENT MADE IS NOT COMING WITHIN SECTION 194J, IT WILL CERTAINLY COME U/S. 194I , A S IT IS RENT PAID FOR USE OF EQUIPMENTS AND MISCELLANY . ACCORDINGLY, HE UPHELD T HE ORDER OF THE A.O. 13. THE LD. AR SUBMITTED , THE ASSESSEE HAS MADE THE PAYMENT TOWARDS INTERNET/BROADBAND CONNECTIVITY AND THERE IS NO TECHNICAL SERVICE INVOLVED IN RESPECT OF SUCH PAYMENT. HE SUBMITTED , THE LD. CIT(A) HAS HELD THAT THE INTERNET CONNEC TIVITY IS A PROCESS AS PROVIDED IN EXPLANATION 6 TO SECTION 9(1)(VI). HOWEVER, THE SAID EXPLANATION WAS INTRODUCED TO THE STATUTE BY FINANCE ACT, 2012 W.R.E.F. 01.6.1976. HE SUBMITTED , BY VIRTUE OF SUCH RETROSPECTIVE AMENDMENT, THE ASSESSEE CANNOT BE FASTE NED WITH L IABILITY TO DEDUCT TAX U/S. 194J. HE SUBMITTED , IN VARIOUS DECISIONS , IT HAS BEEN HELD THAT THE PAYMENT MADE TOWARDS INTERNET/BROADBAND/LEASE LINE CHARGES A RE NOT IN THE NATURE OF ROYALTY, H ENCE, THERE IS NO LIABILITY TO DEDUCT TAX U/S. 194J. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: LINTAS INDIA PVT. LTD. VS. DY. CIT (IN ITA NO. 3803/MUM/2015 DATED 18.1.2017) MY GURU ONLINE LTD. VS. CIT (IN ITA NO. 470/VIZAG/2013) DATED 15.4.2015 14. HE SUBMITTED , EVEN , THE PAYMENT CANNOT BE TRE ATED AS RENT U/S. 194I , AS HELD BY THE LD. CIT(A). THE LD. AR SUBMITTED , AS PER THE PROVISION OF SECTION 194I EXIS TING AT 8 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) THE RELEVANT POINT OF TIME , RENT DID NOT INCLUDE MACHINERY, PLANT OR EQUIPMENT. BY VIRTUE OF AN AMENDMENT MADE IN THE TAXA TION L AW S ( A MENDMENT ) T AX, 2006 W.E.F. 13.7.2006 , PLANT , MACHINERY AND EQUIPMENT WERE BROUGHT WITHIN THE MEANING OF RENT. HE SUBMITTED , AS A RESULT OF SUCH AMENDMENT THE ASSESSEE COULD NOT HAVE DEDUCTED TAX U/S. 194I OF THE ACT. HE SUBMITTED , IN ANY CASE OF THE MATTER , PAYMENT MADE TOWARDS INTERNET/LEASE LINE CHARGES CANNOT BE TREATED AS REN T U/S. 194I , AS HELD IN VARIOUS DECISIONS OF THE TRIBUNAL. FOR SUCH PREPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: GLOBAL INDIA VS. ACIT [2014] 150 ITD 203 (DEL) HERO MOTO C OR P. LTD. VS. ADDL. CIT [2013] 60 SOT 25 (DEL) 15. THE LD. DR RELIED UPON THE OBSERVATIONS OF THE LD. CIT(A). 16. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. UNDISPUTEDLY , THE ASSESSEE HAS PAID THE AMOUNT IN QUEST ION TO SIFY LTD. TOWARDS USE OF INTERNET /L EASE LICENSE CHARGES. AS COULD BE SEEN, IN A NUMBER OF JUDICIAL PRECEDENT S, SOME OF WHICH HAVE BEEN CITED BEFORE US, IT HAS BEEN HELD THAT PAYMENT MADE TOWARDS BROADBAND/LEASE LINE CHARGES IS NOT IN THE NATURE OF R OYALTY SO AS TO ATTRACT THE PROVISIONS OF SECTION 194J. SINCE , THE SERVICES RENDERED ARE NOT IN THE NATURE OF TECHNICAL SERVICE AS ENVISAGED U/S. 194J, THE LD. CIT(A) HAS ATTEMP TED TO ROPE IN THE PAYMENT U/S. 194 I BY REFERRING TO THE DEFINITION OF PROCESS AS PROVIDED UNDER EXPLANATION (6) TO SECTION 9(1)(VI). HOWEVER, THE SAID AMENDMENT WAS MADE BY FINANCE ACT, 2012 W.R.E.F. 01.6.1976. THUS , AS PER E XISTING PROVISION, WHEN THE ASSESSEE MADE THE PAYMENT THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE BY TRE ATING IT 9 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) AS ROYALTY. THE AM ENDMENT MADE WITH RETROSPECT IVE EFFECT CANNOT FASTEN LIABILITY ON THE ASSESSEE . THAT BEING THE CASE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT. THE DECISIONS RELIED UPON BY THE LD. AR SUPPORT THIS VIEW. AS FAR AS THE OBSER VATION OF THE LD. CIT(A) THAT THE PAYMENT MADE OTHERWISE IS COVERED U/S. 194I, WE MUST OBSERVE IN CASE OF HERO MOTO C ORP. LTD. (SUPRA) AND GLOBAL INDIA (SUPRA) , THE TRIBUNAL H A S HELD THAT THE BROADBAND/LEASE LINE FACILITIES PROVIDED BY THE SERVICE PROVIDER FOR TRANSMISSION OF DATA DOES NOT COME IN THE CATEGORY OF PAYMENT MADE TOWARDS RENT FOR EQUIPMENT, PLANT AND MACHINERY. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE ITAT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. GROUNDS RAISED ARE ALLOWED. 17. IN GROUND NO. 8, THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF SECTION 194 - J TO PAYMENT MADE TO TRACOM NETWORK LTD. , IS ALSO TOWARDS BROADBAND CHARGES AND NOT IN THE NATURE OF ROYALTY . 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. T HE DEPARTMENT HAS NOT DISPUTED THA T THE PAYMENT MADE TO TRACOM NETWORK LTD IS FOR INTERNET/LEASE LINE CHARGES. THEREFORE, IN VIEW OF OUR DECISION IN GROUND NO. 5 , THERE IS NO LIABILITY TO DEDUCT TAX U/S. 194J. IN ANY CASE OF THE M ATTER, THE ASSESSEE HAS CONTENDED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE PAYEE HAS OFFERED THE AMOUNT RECEIVED FROM THE ASSESSEE AS INCOME WHICH HAS BEEN ACCEPTED BY THE LD. CIT(A) AND THE LD. CIT(A) HAS DIRECTED FOR LEVY OF INTEREST U/S. 201(1A). B E THAT AS IT MAY, IN VIEW 10 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) OF OUR DECISION IN GROUND NO. 5, WE HOLD THAT PAYMENT MADE TO TRACOM NETWORK LTD. FOR INTERNET/LEASE LINE CHARGES DO NOT ATTRACT PROVISION OF SECTION 194J. THIS GROUND IS ALLOWED. 19. IN GROUND NO. 9, THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF TDS PROVISION TO SERVICE TAX COMPONENT IN THE PAYMENT MADE TO M/S. SIFY LTD. T HE LD. AR SUBMITTED BEFORE US THAT THE PAYMENT MADE TO M/S. SIFY LTD. ALSO INCLUDES SERVICE TAX COMPONENT AMOUNTING TO RS.5,14,296/ - . HE SUBMITTED , SERVICE T AX CANNOT BE SUBJECT TO TDS PROVISION. IN THIS CONTEXT, HE REFERRED TO CBDT CIRCULAR NO. 1/2014 DATED 13.1.2014. HAVING PERUSED THE CBDT CIRCULAR REFERRED TO ABOVE, WE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. IN ANY CASE OF THE MATTER, WHILE DECIDING GROUND NOS. 5 TO 7, WE HAVE HELD THAT THE PAYMENT MADE TO M/S. SIFY LTD. DO NOT ATTRACT THE PROVISIONS OF SECTION 194J. IN THAT VIEW OF THE MATTER, THERE IS NO LIABILITY ON THE ASSESSEE TO DEDUCT TAX UNDER THE SAID PROVISION. THEREFORE, THE DEMAND RAISED BY THE A.O. U/S. 201 ( 1) AND 201(1A) HAVE TO BE DELETED. IN VIEW OF OUR ABOVE DECISION GROUND NOS. 10 AND 11 HAVE BECOME INFRUCTOUS. 20. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.07.2017 SD/ - SD/ - ( RAJESH KUMAR ) (S A KTIJIT DEY ) / A CCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 03.07.2017 . . ./ ROSHANI , SR. PS 11 ITA NO. 1423/MUM/2015 (A.Y. 2007 - 08) ALOK INDUSTRIES LIMITED VS. DY. CIT (TDS) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI