Appeal Details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 9246 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 8 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-02-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
02-01-2017
Assessment Year
2010-2011
Appeal Filed On
28-05-2015
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1526/AHD/2015 ( / ASSESSMENT YEAR: 2010-11) SHRI PRANAY B. SHAH, AHMEDABAD / VS. ACIT, CIRCLE-7, AHMEDABAD ./ ./ PAN/GIR NO. : ALTPS 6487 K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI. SOPARKAR & UKTI SHAH, A.R. / RESPONDENT BY : SHRI SANJAY AGARWAL, SR.D.R. / DATE OF HEARING 02/01/2017 / DATE OF PRONOUNCEMENT 09/02/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-II, AHMEDABAD, DATED 19/03/2015 FOR THE ASSESSMENT YEAR (AY) 2010-11 AND ASSESSEE HAS TAKEN FOLLOWING GROUND OF APPEAL: ( I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT ERRED IN ASSUMING HIS JURISDICTION U/S.263 OF THE I.T. ACT WHEREAS THE MANDATORY CONDITIONS FOR ASSUMING SUCH JURISDICTION ARE TOTALLY ABSENT, WITH THE RESULT THAT THE IMPUGNED ORDER PASSED U/S.263 IS BAD IN LAW. (A). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT ERRED IN ARRIVING AT A CONCLUSION WITHOUT ANY BASIS WHATSOEVER TO THE EFFECT THAT THE ASSESSMENT ORDER PASSED BY THE ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 2 - ASSESSING OFFICER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. (B). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT ERRED IN CANCELLING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER 2 ND JANUARY, 2013 U/S.143(3) OF THE I.T. ACT AND DIRECTING THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT. (II). IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN HOLDING THAT PAYMENT MADE TOWARDS SPACE/HOARDING PURCHASE FOR RS.1,92,76,472/- NEEDS TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT CONTENDING THAT THE APPELLANT HAS MADE SHORT DEDUCTION OF TAX BY DEDUCTING TAX AT SOURCE ON SUCH PAYMENTS U/S.194C OF THE ACT WHEN SUCH PAYMENTS WERE ACTUALLY LIABLE FOR TAX DEDUCTION U/S 194-1 OF THE ACT AS THE SAME WERE IN THE NATURE OF RENT PAYMENT. (III). IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED HOLDING THAT THE PAYMENT OF RS.11,03,000/- NEEDS TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT FAILING TO APPRECIATE THE FACTS THAT THE SAID PAYMENT WAS MADE IN CONSONANCE WITH A CONTRACTUAL OBLIGATION WHEREIN THE APPELLANT ACQUIRED THE RIGHT TO DISPLAY HOARDINGS AND TAX HAD ALSO BEEN DULY DEDUCTED ON THE SAME. (IV). IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN DIRECTING ASSESSING OFFICER TO VERIFY THE PAYMENT MADE TO HET GRAPHICS FOR TWO ENTRIES OF RS.5,68,964/- AND RS.5,06,920/- PERTAINING TO ADVERTISING CONTRACT AND APPLICABILITY OF PROVISION U/S 40(A)(IA) OF THE ACT. (V). IN THE FACT AND IN CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN DIRECTING ASSESSING OFFICER TO EXAMINE THE DISALLOWANCE U/S 40(A)(IA) FOR RS.10,00,000/- ON THE GROUND THAT BILL RAISED BY CINEMAX INDIA LTD. WAS FOR RS.15,99,587/- AND ENTRY MADE IN ANNEXURE-O BEING TDS DETAILS ENTRY OF RS.25,99,587/-. (VI). IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT DIRECTED ASSESSING OFFICER TO VERIFY DETAILS REGARDING PRE- PAID AD FILM AND SLIDE PURCHASE FOR RS.9,97,362/- REFLECTED ON ASSET SIDE OF ANNUAL ACCOUNTS WITHOUT APPRECIATING APPELLANTS CONTENTION THAT SAID AMOUNT REPRESENTS EXPENDITURE INCURRED IN YEAR UNDER CONSIDERATION BUT PERTAINING TO SUBSEQUENT ASSESSMENT YEAR AND SAME ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 3 - WAS NOT CLAIMED AS EXPENDITURE IN THE YEAR UNDER CONSIDERATION, EVEN SAME WAS NOT SUBJECT MATTER OF NOTICE ISSUED U/S.263/- OF THE ACT AND NO OPPORTUNITY WAS ALLOWED TO THE APPELLANT WITH REGARDS TO THIS ISSUE. (VII). IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS DIRECTED ASSESSING OFFICER TO EXAMINE EXPENDITURE PERTAINING TO AD FILM PURCHASE TO THE TUNE OF RS.1,28,59,012/- CONTENDING THAT THE SAME WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS. (VIII). THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND/OR WITHDRAW ANY GROUND OR GROUND OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE FACTS OF THE CASE ARE THAT IN THIS CASE, RETURN OF INCOME FOR A.Y.2010-11 WAS FILED ON 30/09/2010 DECLARING TOTAL INCOME OF RS.22,15,180/- AND THEREAFTER, THE CASE WAS SELECTED CASS AND ACCORDINGLY NOTICE UNDER SECTION 142(1) WAS ISSUED WERE COMPLIED BY THE ASSESSEES REPRESENTATIVE FROM TIME TO TIME BOOKS OF ACCOUNT WERE EXAMINED ON TEST CHECK BASIS. 3. IT WAS SEEN THAT ASSESSEE HAS DEBITED THE FOLLOWING EXPENSES IN P&L ACCOUNT ON WHICH PERSONAL USE IS NOT RULED OUT:- MOBILE FOR PRANAY : RS. 76,874/- VEHICLE REPAIRE : RS. 41,969/- PETROL : RS. 1,93,099/- CAR DEPRECIATION : RS. 1,43,593/- TOTAL : RS. 4,55,535/- LOOKING TO THE PROBABILITY OF PERSONAL USE, A 20% OF THE ABOVE I.E. RS.91,107/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 4 - 4. FURTHER, IT WAS OBSERVED THAT TRAVELLING EXPENSES HAVE BEEN DEBITED RS.9,27,481/- OUT OF THESE EXPENSES ALSO, LOOKING TO THE PROBABILITY OF PERSONAL USE A DISALLOWANCE OF @10% I.E. RS.92,748/- WAS FILED BY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AND FINALLY TOTAL INCOME OF THE ASSESSEE WAS ASSESSED RS.23,98,765/- 5. THEREAFTER, LD.CIT CALLED FOR AND EXAMINED THE RECORD OF ASSESSMENT PROCEEDINGS FOR A.Y.2010-11 IN THIS CASE, WAS OF THE OPINION THAT THE ASSESSMENT ORDER PASSED ON 02.01.2013 U/S 143(3) OF THE 1.1. ACT, 1961 BY ERSTWHILE ACLT, CIR-7, AHMEDABAD, DETERMINING THE TOTAL INCOME AT RS.23,98,765/-, WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF REVENUE, ON THE FOLLOWING GROUNDS :- I. ON PERUSAL OF ASSESSMENT RECORDS AND THE LEDGER ACCOUNTS OF VARIOUS PARTIES SUCH AS TIRUPATI PUBLICITY, BALAJI ENTERTAINMENT, KRISHNA COMMUNICATION, RAAG ART, FUTURE MEDIA INDIA LTD. ETC. FROM WHOM SPACE/HOARDING WERE PURCHASED BY ASSESSEE FOR THE TOTAL SUM OFF RS.3,22,46,373/- (RS.1,25,98,492/- TOWARDS SPACE HOARDING AND RS.1,96,47,881/- TOWARDS SPACE PURCHASE) WHICH WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT. IT IS FURTHER REVEALED THAT EVEN THOUGH THE TERMINOLOGY WAS USED AS HOARDING PURCHASED FOR FIXED PERIOD AND FIXED AMOUNT, THESE PURCHASES WERE FOR THE FIXED AMOUNT PAYABLE PER MONTH AND THEREFORE, THE PAYMENTS SO MADE OUGHT TO HAVE BEEN TREATED AS RENT AND ACCORDINGLY PROVISIONS OF SECTION 194-I SHOULD HAVE BEEN APPLIED IN RESPECT OF ALL SUCH PAYMENTS. SINCE, ASSESSEE HAD DEDUCTED TAX AT SOURCE AT 2% U/S. 194C OF THE ACT, CONSIDERING THE SAME AS CONTRACTUAL PAYMENTS AS AGAINST THE RATE OF TDS OF 10% OR 15% IN RESPECT OF RENT, DIFFERENCE OF 8% OR 14% OF TDS IS TO BE TREATED AS NOT DEDUCTED AND PAID TO THE GOVT. ACCOUNT AND THE EXPENSES CORRESPONDING TO NON-DEDUCTION OF SUCH TAX WAS REQUIRED TO BE ADDED TO THE TOTAL INCOME AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE PAYMENTS SO MADE ON ACCOUNT OF SPACE/HOARDING/RENT PURCHASED HAVE BEEN WORKED OUT ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 5 - AT RS.1,92,76,472/-. THE BASIS FOR WORKING OUT THIS AMOUNT IS AS UNDER:- S.N O. PARTICULARS AMOUNT (IN RS.) 1. TOTAL AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD SPACE PURCHASES. RS. 3,22,46,373/- 2. TOTAL AMOUNT OF SPACE PURCHASED FROM 23 PARTIES EXCEEDING RS.1.20 LAKHS PER PARTY RS.2,11,17,513/- 3. T.D.S. MADE @2% ON THE ABOVE PAYMENTS. RS. 4,47,343/- 4. T.D.S. TO BE MADE @10% UPTO 30.09.2010 AND 15% W.E.F. 1.10.2009 RS. 51,31,213/- 5. SHORT DEDUCTION OF TAX (4)-(3) RS. 46,83,870/- 6. AMOUNT TO BE DISALLOWED U/S.40(A)(IA)=2,11,17,513X76,83,870 RS. 1,92,76,472/- II. IT WAS ALSO REVEALED FROM THE A/C. OF ESSEM ENTERTAINMENT PVT. LTD. THAT THERE WAS A TRANSACTION ON ACCOUNT PURCHASING OF SPACE FROM THE SAID CONCERN AND THERE WAS AN ADJUSTMENT OF RS.7,42,162/- ON 15/05/2009 WHICH HAD BEEN DEBITED IN THE A/C OF THE SAID CONCERN. WHILE PASSING THE ASSESSMENT ORDER, THE A.O. DID NOT EXAMINE THE NATURE OF SUCH ADJUSTMENT AND AS TO WHETHER THE SAME WAS TO BE ADJUSTED TO TDS AND IF SO, DETAILS OF TDS MADE AND DEPOSITED IN GOVT. ACCOUNT. FAILURE OF THE A.O. TO EXAMINE THIS ISSUE RESULTED IN PASSING OF AN ERRONEOUS ASSESSMENT ORDER REQUIRING REVISION U/S. 263 OF THE ACT. III. IT WAS ALSO OBSERVED FROM THE LEDGER A/C OF THE CITY GOLD ENTERTAINMENT LTD, THAT AMOUNT OF RS.11,03,000/- HAS BEEN CREDITED ON 31/03/2013 BEING SPACE PURCHASE. HOWEVER, THE MONTHLY PURCHASE MADE BY ASSESSEE AS PER THE A/C. IS RS.1,83,833/-. SIMILARLY, THE LEDGER A/C. OF HET GRAPHICS ALSO REFLECTS THE SIMILAR CREDIT ENTRIES ON 01/02/2010 FOR RS. 5,68,964/- AND RS. 5,06,920/- EVEN THOUGH, THE PURCHASES FOR EARLIER MONTH IS MUCH LESSER THAN THESE TWO FIGURES. IT APPEARS THAT THERE WERE INFLATED PURCHASES ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 6 - WHICH ARE INCLUDED IN THE AMOUNT OF RS. 14,98,133/- OUTSTANDING AS ON 31/03/2010. WHILE PASSING THE ASSESSMENT ORDER, THE A.O. DID NOT EXAMINE THE NATURE OF THESE CREDITS AND CORRESPONDING DOCUMENTS ON THE BASIS OF WHICH THESE ENTRIES HAD BEEN MADE SO AS TO ASCERTAIN AS TO WHETHER THESE WERE PAYMENTS SUBJECTED TO TDS AND IF SO, THE DETAILS OF TDS MADE AND DEPOSITED IN GOVT. ACCOUNT. OMISSION ON THE PART OF THE A.O. RESULTED IN PASSING AND ERRONEOUS ASSESSMENT ORDER WARRANTING REVISIONARY PROCEEDINGS U/S. 263 OF THE ACT. IV. THE LEDGER A/C OF CINEMAX INDIA LTD. (SLIDE A/C.) REVEALS THAT ADVANCE PAYMENT MADE TO THE SAID CONCERN FOR OBTAINING GOODS. HOWEVER, THE FIGURES REFLECTED IN THE LEDGER A/C DO NOT MATCH WITH THE TDS DETAILS GIVEN IN ANNEXURE-O OF THE REPLY. THE PAYMENTS/PURCHASES REFLECTED IN THE LEDGER A/C IS FOR 6 SIMILAR AMOUNT WHEREAS THE TDS DETAILS REFLECTS 7 SIMILAR PAYMENTS FOR RS.15,99,587/-. FURTHER THERE IS ANOTHER DIFFERENCE IN THE ENTRY DATED 01/11/2009 PURCHASE OF RS.15,99,587/- HAS SHOWN BY ASSESSEE. HOWEVER, AS PER TDS PAYABLE A/C, THE AMOUNT IS RS.25,99,587/- ON WHICH THE TDS OF RS.31,992/- HAS BEEN DEDUCTED. THE A.O. DID NOT EXAMINE THIS ISSUE AND CALL FOR NECESSARY EXPLANATION SO AS TO ASCERTAIN AS TO WHICH THE CORRECT FIGURE IS MENTIONED IN THIS ACCOUNT AND TAKE APPROPRIATE ACTION FOR DISALLOWING THE AMOUNT ON WHICH LESS TDS IS MADE. THIS RESULTED IN PASSING OF AN ERRONEOUS ASSESSMENT ORDER REQUIRING REVISION U/S. 263 OF THE ACT. V. ON PERUSAL OF LEDGER A/C OF THE CINEMAX INDIA LTD. (SLIDE A/C.) ENTRY DATED 18/03/2010 REVEALS THAT PURCHASE OF RS. 15,99,587/- WHICH IS FOR PERIOD 16/03/2010 TO 15/04/2010 MEANING THEREBY IS THAT 50% OF THE AMOUNT FALLS TO F.Y. 2010-11 RELEVANT TO A.Y. 2011- 12. THIS ITEM OF EXPENSES IS ALSO FOUND TO HAVE BEEN BOOKED IN THEIR A/C. HOWEVER, IN BALANCE SHEET, IT IS SHOWN AS PREPAID EXPENSES IN THE ASSETS SIDE AS AN ADVANCE AMOUNT PAID AT RS. 9,97,362/- TOWARDS THIS PARTY. THIS OUGHT TO HAVE BEEN DISALLOWED BY THE A.O. AS EXPENDITURE NOT FALLING WITHIN THE PREVIOUS YEAR RELEVANT TO AY UNDER CONSIDERATION, WHILE PASSING THE ASSESSMENT ORDER. OMISSION TO CONSIDER THIS ASPECT HAS BEEN RESULTED IN PASSING OF AN ERRONEOUS ASSESSMENT ORDER REQUIRING REVISION U/S. 263 OF THE ACT. ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 7 - 6. ACCORDINGLY, NOTICE U/S.263 OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. 7. IN RESPONSE TO THE NOTICE, THE ASSESSEE EXPLAINED THAT IT HAS ALREADY DEDUCTED TAX AT SOURCE ON PAYMENTS MADE TO CLP ASIA SERVICES AND ACCORDINGLY HAS DULY COMPLIED WITH THE PROVISIONS OF SECTION 195 OF THE ACT. FURTHER, IT WAS EXPLAINED THAT PAYMENT OF REGISTRATION FEES TO IREDA WAS FOR GENERATION BASED INCENTIVE WHICH WAS INTRODUCED BY THE GOVERNMENT FOR WIND POWER PROJECT. IT WAS EXPLAINED THAT THE PAYMENT OF REGISTRATION FEES DOES NOT ATTRACT THE PROVISIONS OF SECTION 194J OF THE ACT. SINCE, THE SAME CANNOT BE CONSTRUED AS PROFESSIONAL FEES. 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE RELATED DOCUMENTARY EVIDENCES, THE LD. PR. CIT WAS OF THE OPINION THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX @ 20% AND SINCE IT HAS DEDUCTED TAX @ 10%, THE ASSESSMENT ORDER IS FOUND TO BE ERRONEOUS AND PRE-JUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THE LD. PR. CIT FURTHER HELD THAT EVEN THE REGISTRATION FEE PAID TO IREDA ATTRACTS THE PROVISIONS OF SECTION 194J OF THE ACT AND SINCE NO TAX WAS DEDUCTED AT SOURCE, THE ASSESSMENT ORDER BECOMES ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ASSESSMENT ORDER WAS CANCELLED/SET ASIDE ON THESE ISSUES WITH A DIRECTION TO THE AO TO RE- FRAME THE ASSESSMENT DE NOVO. ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 8 - 9. THE FIRST THING WHICH HAS TO BE CONSIDERED IS WHETHER THE LD. COMMISSIONER HAS RIGHTLY ASSUMED THE POWER U/S. 263 OF THE ACT. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 HAS LAID DOWN THE FOLLOWING RATIO:- A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. 10. NOW, LET US SEE IN THE LIGHT OF THE ABOVE RATIO WHETHER THE ASSESSMENT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS OF AN INCORRECT APPLICATION OF LAW. THE FIRST OBSERVATION OF THE LD. CIT RELATES TO THE LOWER DEDUCTION OF TAX AT SOURCE MADE BY THE ASSESSEE ON PAYMENTS MADE TO M/S. CLP ASIA SERVICES. IN OUR CONSIDERED OPINION, WE DO NOT FIND ANY MERIT IN THE OBSERVATION OF THE PR. CIT, THE APPLICABILITY OF A PARTICULAR RATE ON A PARTICULAR PAYMENT IS ALWAYS A DEBATABLE ISSUE AND A HIGHLY DEBATABLE ISSUE CANNOT BE A GROUND FOR ASSUMING JURISDICTION U/S. 263 OF THE ACT. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF DLF LTD., 350 ITR 555 HAS HELD THAT IN THESE CIRCUMSTANCES, WHETHER THE DEDUCTION UNDER SECTION 14A WAS WARRANTED, WAS A DEBATABLE FACT. IN ANY EVENT, EVEN IF IT WERE NOT ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 9 - DEBATABLE, THE ERROR BY THE ASSESSING OFFICER WAS NOT UNSUSTAINABLE. POSSIBLY HE COULD HAVE TAKEN ANOTHER VIEW; YET, THAT HE DID NOT DO SO, WOULD NOT RENDER HIS OPINION AN UNSUSTAINABLE ONE, WARRANTING EXERCISE OF SECTION 263. 11. WE FIND THAT THE LD. PR. CIT HAS LAID EMPHASIS ON THE AMENDED PROVISION OF SECTION 263 WHEREIN THE EXPLANATION HAS BEEN INSERTED. THE SAME WAS EMPHASIZED BY THE LD. D.R. DURING THE COURSE OF HIS ARGUMENTS. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF ANIL KUMAR SHARMA 335 ITR 83 HAS EXPLAINED THAT THERE IS A DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDER UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. 12. CONSIDERING THE TOTALITY OF THE FACTS, IN OUR CONSIDERED OPINION, THE LD. PR. CIT HAS WRONGLY ASSUMED THE JURISDICTION U/S. 263 INSOFAR AS THE ALLEGED LOWER DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE TO M/S. CLP ASIA SERVICES LTD. 13. THE SECOND PAYMENT CONSIDERED BY THE LD. PR. CIT RELATES TO THE REGISTRATION FEES TO IREDA. THE LD. PR. CIT WAS OF THE FIRM BELIEF THAT THE SAID PAYMENT ATTRACTS PROVISIONS OF SECTION 194J OF THE ACT. THE PROVISIONS OF SECTION 194J OF THE ACT READ AS UNDER: 194J ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU INDIVIDUAL FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES. OR (B) FEES FOR TECHNICAL SERVICES, OR ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 10 - (BA) ANY REMUNERATION OR FEES OR COMMISSION BY WHATEVER NAME CALLED, OTHER THAN THOSE ON WHICH TAX IS DEDUCTIBLE UNDER SECTION 192, TO A DIRECTOR OF A COMPANY, OR (C) ROYALTY, OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 28. SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OF DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. 14. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS THAT THE LIABILITY ARISES ONLY IF THE PAYMENTS ARE MADE FOR PROFESSIONAL FEES, FEES FOR TECHNICAL SERVICES OR ROYALTY, FURTHER, THE EXPLANATION TO SECTION 194J DEFINES PROFESSIONAL SERVICES, FEES FOR TECHNICAL SERVICES AND ROYALTY AS UNDER:- EXPLANATION FOR THE PURPOSE OF THIS SECTION (SECTION 194J) (A) PROFESSIONAL SERVICES MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADVERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION; (B) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (BA)ROYALTY SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB- SECTION (1) OF SECTION 9; 15. THUS, EVEN IF THE EXPLANATION IS CONSIDERED, THE PAYMENT OF REGISTRATION FEES BY ANY STRETCH OF IMAGINATION CANNOT BE CONSTRUED AS PROFESSIONAL FEES OR FTS. 16. IN OUR CONSIDERED OPINION, THE LD. PR. CIT HAS WRONGLY ASSUMED THE APPLICABILITY OF SECTION 194J OF THE ACT ON THE IMPUGNED PAYMENT OF ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 11 - REGISTRATION FEES. THEREFORE, THE ASSUMPTION OF POWER VESTED UPON HIM U/S. 263 OF THE ACT IS UNCALLED FOR AND UNWARRANTED ON THE FACTS OF THIS ISSUE. 17. CONSIDERING THE FACTUAL MATRIX AS DISCUSSED HEREINABOVE, IN THE LIGHT OF OUR DETAILED DISCUSSION, IN OUR OPINION, THE ORDER OF THE LD. PR. CIT MADE U/S. 263 OF THE ACT IS WITHOUT JURISDICTION AND DESERVE TO BE QUASHED. WE ORDER ACCORDINGLY. 18. RESPECTFULLY, FOLLOWING THE ORDER OF OUR CO-ORDINATING BENCH, WE ALLOW THE APPEAL OF THE ASSESSEE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/02/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/02/2017 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT ITA NO. 1526/AHD/2015 SHRI PRANAY B. SHAH VS. ACIT ASST.YEAR 2010-11 - 12 - 4. ( ) / THE CIT-II, AHMEDABAD. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 04/01/2017 (DICTATION-PAD 7 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02/02/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 07/02/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 07/02/2017 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S 09/02/2017 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/02/2017 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DISPATCH OF THE ORDER
Other Referred Cases
-
Laws Referred To
-
1:1 Consultation on Legal Requirements
₹1
Tax Holiday Secrets for Startups
₹0
1:1 Consultation on Startup Fundraising
₹5000
Form AOC-2 - Disclosure of Related Party Transaction
Mehul₹50
Affidavit - Application for condonation of delay in filing the appeal before ITAT - Type 2
Mehul₹0
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Residency Rules: Income Tax Act, 1961 vs Income Tax Bill, 2025 — A Subtle Yet Significant Shift!
Team Counselvise - February 18, 2026
Budget 2026: 5 Major Personal Tax Changes Every Taxpayer Must Know
Team Counselvise - February 05, 2026