Appeal details
Counselvise Citation
47025314 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-04-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB
Assessment Year
2008-2009
Appeal Filed On
17-06-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY , ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 470/VIZAG/2013 ASSESSMENT YEAR : 2008-09 M/S MY GURU ONLINE LTD., VIJAYAWADA PAN AACCM 9663 Q VS. COMMISSIONER OF INCOME- TAX, VIJAYAWADA. (APPELLANT) (RESPONDENT) ITA NO. 509/VIZAG/2014 ASSESSMENT YEAR : 2008-09 M/S MY GURU ONLINE LTD., VIJAYAWADA PAN AACCM 9663 Q VS. INCOME-TAX OFFICER 2(1), VIJAYAWADA. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI A.V. RAGHURAM REVENUE BY: SHRI D. MANOJ KUMAR DATE OF HEARING : 05.03.2015 DATE OF PRONOUNCEMENT : 15.04.2015 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- ITA NO. 470 V 13 THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 25/03/2013 PASSED U/S 263 OF THE ACT. 2. BRIEFLY THE FACTS ARE, ASSESSEE A COMPANY IS CAR RYING ON BUSINESS AS INTERNET SERVICE PROVIDER. FOR THE AY U NDER DISPUTE, ASSESSEE FILED HIS RETURN OF INCOME ON 03/10/08 DEC LARING TOTAL INCOME AT NIL AFTER SET OFF OF LOSS. AO COMPLETED THE ASSESSMENT IN CASE OF ASSESSEE U/S 143(3) OF THE ACT VIDE ORDER D ATED 27/12/10 BY ASSESSING THE INCOME AT NIL UNDER THE NORMAL PROV ISIONS AND BOOK PROFIT OF RS. 1,87,530 U/S 115JB OF THE ACT. LD. CI T IN EXERCISE OF ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 2 POWER U/S 263 OF THE ACT CALLED FOR THE ASSESSMENT RECORD OF ASSESSEE FOR THE IMPUGNED AY AND AFTER EXAMINING TH E SAME WAS OF THE VIEW THAT ASSESSMENT ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE FOR THE FOLLOWING REASO NS: 1. THOUGH ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE O N PAYMENT OF BANDWIDTH CHARGES/LEASELINE CHARGES AND COMPUTER MAINTENANCE CHARGES TOTALLING TO RS. 3,46, 04,997, BUT, THE AO FAILED TO APPLY THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. 2. AS PER THE BALANCE SHEET UNDER THE HEAD PROVISI ON AN AMOUNT OF RS. 6,05,905 AND RS. 90,920 WAS SHOWN AS SERVICE TAX PAYABLE AND FBT PAYABLE BUT NO EVIDENCE IS AVAI LABLE ON RECORD, WHICH ATTRACT THE PROVISIONS FO SECTION 43B OF THE ACT. 3. ON THE BASIS OF THE AFORESAID ISSUES, LD. CIT IS SUED A SHOW CAUSE NOTICE TO ASSESSEE CALLING UPON TO SHOW CAUS E AS TO WHY ASSESSMENT ORDER SHALL NOT BE REVISED. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, IT WAS SUBMITTED BY ASSESSEE THAT AS FAR AS PAYMENT OF BANDWIDTH CHARGES AND LEASELINE CHARGES ARE CONC ERNED, THEY CANNOT BE TREATED AS ROYALTY AS ASSESSEE WAS TRADIN G IN BANDWIDTH AND IT WAS NOT MAKING USE OF THE SAME IN ITS ACTIVI TIES. IT WAS SUBMITTED THAT BANDWIDTH WAS NEITHER PRODUCED NOR T HERE WAS ANY PROCESS DONE BY ASSESSEE AND NO EQUIPMENT WAS USED BY ASSESSEE. THEREFORE, PROVISIONS OF SECTION 194J WOU LD NOT APPLY. LD. CIT, HOWEVER, WAS NOT CONVINCED WITH THE REPLY OF ASSESSEE. HE OBSERVED THAT BANDWIDTH IS NOT A OFF-THE-SELF PRODU CT WHICH ASSESSEE CAN PURCHASE AND SELL TO THE CUSTOMERS IN BITS AND PIECES. AFTER ANALYSING THE TECHNICALTIES OF THE BANDWIDTH, LD. CIT OBSERVED THAT IT IS NOT A PHYSICAL COMMODITY, BUT IT IS INVI SIBLE, INTANGIBLE ELECTRONIC SIGNAL WHICH ASSESSEE ACCESSES FROM THE SERVICE PROVIDER AND MAKES IT AVAILABLE TO THE CUSTOMERS FOR EFFICIE NT DATA TRANSFER. BANDWIDTH IS A FACILITY BY WAY OF SERVICE, PROVIDED TO THE CUSTOMERS FOR PURPOSE OF EFFICIENT DATA TRANSFER. IT IS A SER VICE PROVIDED BY THE SERVICE PROVIDER FOR WHICH ASSESSEE MADE PAYMENT. H E OBSERVED THAT BANDWIDTH IS NOT A READY-MADE PRODUCT WHICH CA N BE ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 3 MANUFACTURED, STORED AND SUPPLIED. IT IS PRODUCED B Y WAY OF CONTINUOUS PROCESS AND CONTINUING EFFORTS OF SEVERA L TECHNICALLY COMPETENT PEOPLE WORKING ON SOPHISTICATED MACHINERY . IN ORDER TO MAKE THE BANDWIDTH AVAILABLE TO ASSESSEE, A FURTHER PROCESS IS REQUIRED BY INVOLVING SATELLITES, OPTICAL CABLES AN D OTHER EQUIPMENT. EVEN ASSESSEE CANNOT ACCESS THE SAME IN THE MANNER HE CAN ACCESS A TANGIBLE COMMODITY IN THE MARKET. ASSESSEE REQUIRES A COMPATIBLE NET WORK AND EQUIPMENT TO ACCESS THE BAN DWIDTH. PAYMENT MADE BY ASSESSEE IS FOR USING THE PROCESS T HROUGH WHICH THE BANDWIDTH IS PRODUCED AND MADE AVAILABLE TO IT AND ALSO FOR FINAL CONNECTED SERVICES PROVIDE BY THE SERVICE PROVIDER FOR A FIXED PERIOD. HE OBSERVED, EVEN SERVICE PROVIDERS IN THEI R INVOICE MENTIONED BANDWIDTH CHARGES AS SERVICE CHARGES AND ALSO PAID SERVICE TAX THEREON. LD. CIT REFERRING TO SOME DECI SIONS OF ITAT HELD THAT THE PAYMENT TOWARDS BANDWIDTH BEING IN TH E NATURE OF ROYALTY, PROVISIONS OF SECTION 194J ARE APPLICABLE. AS ASSESSEE HAS NOT DEDUCTED TAX ON PAYMENT OF BANDWIDTH CHARGES O F RS. 3,39,54,917, THE SAME IS NOT ALLOWABLE AS PER THE P ROVISIONS OF SECTION 40(A()(IA) OF THE ACT. AS FAR AS THE PROVIS ION MADE IN THE BALANCE SHEET TOWARDS SERVICE TAX AMOUNTING TO RS. 6,05,905 AND FBT OF RS. 90,920 ARE CONCERNED, THOUGH, ASSESSEE E XPLAINED THAT THE AMOUNT OF SERVICE TAX PAYABLE WAS BROUGHT FORWA RD FIGURE AND FBT PAYMENT WAS ADDED BACK TO TOTAL INCOME, BUT, LD . CIT BY OBSERVING THAT ASSESSEE HAS NOT FURNISHED ANY EVIDE NCE DIRECTED AO TO VERIFY THE SAME. ACCORDINGLY, ASSESSMENT ORDE R PASSED BY AO WAS SET ASIDE WITH A DIRECTION TO REDO THE ASSESSME NT DE-NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. BEING AGGRIEVED, ASSESSEE IS BEFORE US RAISING SEVEN MAIN GROUNDS AND TWO ADDITIONAL GROUNDS. 4. AS FAR AS GROUND NOS. 1 & 2 ARE CONCERNED, THEY ARE ON THE VALIDITY OF POWER EXERCISED BY LD. CIT IN INVOKING THE PROVISIONS OF SECTION 263. AS FAR AS GROUND NOS. 3 & 7 ARE CONCE RNED, NO SPECIFIC ARGUMENT WAS ADVANCED BY LD. R, HENCE, THE SE GROUNDS ARE DISMISSED AS NOT PRESSED. AS FAR AS GROUND NOS. 5 & 6 ARE ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 4 CONCERNED, LD. AR SUBMITTED THAT IN THE CONSEQUENTI AL ORDER PASSED, AO AFTER VERIFICATION HAS ACCEPTED ASSESSEES CLAIM AND NO ADDITION/DISALLOWANCE HAS BEEN MADE. IN VIEW OF THE AFORESAID SUBMISSION, GROUND NOS. 5 & 6 HAVING BECOME INFRUCT UOUS, ARE NOT REQUIRED TO BE ADJUDICATED. THE ONLY GROUND, WHICH SURVIVES FOR CONSIDERATION IS GROUND NO. 4, WHICH READS AS UNDER : THE LD. CIT ERRED IN HOLDING THAT THE AMOUNTS PAID FOR BANDWIDTH AND LEASE LINE CHARGES ARE TO BE TREATED AS ROYALTY WITHOUT APPRECIATING THE FACT THAT AN AMOUNT PAID F OR AN ITEM THAT IS CONSUMED AND CANNOT BE RETRIEVED CANNOT BE ROYALTY AND COULD BE ONLY COST AND THEREBY ERRED IN HOLDING THAT THEY ATTRACT THE PROVISIONS OF SECTION 194J AND NOT ALLO WABLE AS DEDUCTION AS PER PROVISIONS OF SEC. 40(A)(IA) OF IT ACT. 5. REITERATING HIS SUBMISSIONS MADE BEFORE LD. CIT, LD. AR SUBMITTED, PAYMENT TOWARDS BANDWIDTH CHARGES NOT BE ING IN THE NATURE OF ROYALTY, IT WILL NOT ATTRACT THE PROVISIO NS OF SECTION 194J OF THE ACT, HENCE, QUESTION OF DISALLOWANCE U/S 40(A)( IA) WILL NOT ARISE. IN SUPPORT OF SUCH CONTENTION, LD. AR RELIED UPON T HE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ESTEL C OMMUNICATIONS PVT. LTD., 318 ITR 185 AND THE FOLLOWING DECISIONS OF ITAT: 1. INFOSYS TECHNOLOGIES LTD. VS. DCIT, 45 SOT 157 2. DCIT VS. M/S EXCEL MEDIA (P) LTD., ITA NO. 628/H YD/2009, DT. 03/12/2010 3. ACIT VS. USHODAYA ENTERPRISES (P) LTD., 53 SOT 1 93 6. LD. DR STRONGLY SUPPORTING THE ORDER OF LD. CIT SUBMITTED BEFORE US, BANDWIDTH CHARGES PAID BY ASSESSEE TO TH E SERVICE PROVIDER BEING IN THE NATURE OF ROYALTY, PROVISIONS OF SECTION 194J ARE APPLICABLE. IN SUPPORT OF SUCH CONTENTION, HE R ELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE O F VERIZON COMMUNICATIONS SINGAPORE PTE LTD. VS. ITO (INTERNAT IONAL TAXATION), [2014] 361 ITR 575 (MAD.). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL A S OTHER MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BEFORE US BY BOTH THE PARTIES. AS CAN BE SEEN, THE ISSUE IN DISPUTE IS LIMITED TO THE FACT, WHETHER PAYMENT OF BANDWIDTH ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 5 CHARGES ARE IN THE NATURE OF ROYALTY SO AS TO ATTRA CT THE PROVISIONS OF SECTION 194J OF THE ACT. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE HAS PAID AN AMOUNT OF RS. 3,39,54,927 TOWA RDS BANDWIDTH CHARGES AND RS. 5,06,075 TOWARDS LEASELINE CHARGES WITHOUT DEDUCTING TAX AT SOURCE. IT IS THE CLAIM OF ASSESSE E THAT FOR PROVIDING INTERNET SERVICES TO ITS CUSTOMERS, ASSES SEE IS NOT UTILIZING ANY SERVICES PROVIDED BY THE SERVICE PROVIDER, HENC E, THE PAYMENT MADE WOULD NOT BE IN THE NATURE OF ROYALTY TO ATTRA CT THE PROVISIONS OF SECTION 194J. LD. CIT HAS HELD THAT SUCH PAYMENT S ARE IN THE NATURE OF ROYALTY. ON A PERUSAL OF THE DECISION IN CASE OF CIT VS. ESTEL COMMUNICATIONS P. LTD. (SUPRA) OF THE HONBLE DELHI HIGH COURT, IT IS SEEN THAT HONBLE DELHI HIGH COURT HEL D THAT PAYMENT MADE TO INTERNET SERVICE PROVIDER TOWARDS BANDWIDTH CHARGES IS NOT IN THE NATURE OF ROYALTY, HENCE, TDS PROVISIONS ARE NOT APPLICABLE. ITAT, BANGALORE BENCH IN CASE OF INFOSYS TECHNOLOGI ES LTD. VS. DCIT (SUPRA) WHILE DEALING WITH SIMILAR ISSUE HELD AS UNDER: 4.8 SOFTWARE DEVELOPED BY COMPANIES IN INDIA IS EXP ORTED EITHER IN PHYSICAL MODE (I.E. THROUGH FLOPPY DISKS) OR THROUG H WIRELESS COMMUNICATION USING SATELLITE LINKS. WHEN AN INDIAN COMPANY EXPORTS SOFTWARE TO COMPANIES OUTSIDE INDIA USING SATELLITE COMMUNICATION FACILITIES, THE DIGITAL SIGNALS ARE CONVERTED INTO ANALOG SIGNALS THROUGH EARTH STATIONS AND ARE TRANSMITTED TO ONE OF THE GE O-STATIONERY SATELLITES USING THE REQUIRED BANDWIDTH PROVIDED BY VIDESH SANCHAR NIGAL LTD. (VSNL) OR SOFTWARE TECHNOLOGY PARKS OF I NDIA (STPI). THE SIGNALS THAT HAVE BEEN BEAMED TO THE SATELLITE WILL BE DOWNLINKED TO THE EARTH STATION IN THE UNITED STATES AND SENT TO THE CLIENT LOCATIONS USING THE BANDWIDTH AND DOWNLINKING FACILITY PROVIDED BY INTERNATIONAL SERVICE PROVIDERS SUCH AS AT&T, MCI TELECOMMUNICATIONS ETC. THE ASSESSEE SHARES THE BANDWIDTH PROVIDED BY THE INTERNATIONAL SERVICE PROVIDERS. BANDWIDTH IN NORMAL PARLANCE REFERS TO THE AMOUNT OF TRAFFIC THAT COULD BE CARRIED ON THE INTERNET. GREATER THE BANDWIDTH, GREATER WOULD BE THE ABILITY TO TRANSMIT, DATA AND OTHER COMMUNICATION. 4.9 THE PAYMENTS MADE TO SERVICE PROVIDERS SUCH AS AT&T OR MCI TELECOMMUNICATIONS ARE FOR THE USE OF BANDWIDTH PRO VIDED FOR DOWNLINKING SIGNALS IN THE UNITED STATES. THE PAYME NTS MADE ARE NOT IN THE NATURE OF MANAGERIAL, CONSULTANCY OR TECHNIC AL SERVICES NOR IS IT FOR THE USE OF OR RIGHT TO USE INDUSTRIAL, COMMERCI AL OR SCIENTIFIC EQUIPMENT. THE SERVICE PROVIDES SUCH AS MCI TELECOM MUNICATIONS OR AT&T ONLY ENSURE THAT THE SUFFICIENT BANDWIDTH IS A VAILABLE ON AN ONGOING BASIS TO THE ULTIMATE USERS TO UPLINK AND D OWNLINK THE SIGNALS. ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 6 4.10 THE MADRAS HIGH COURT IN THE CASE OF SKYCELL C OMMUNICATION SERVICES LTD. V DCIT 251 ITR 53 HAS HELD THAT PAYME NT FOR USE OF MOBILE PHONE SERVICES WOULD NOT CONSTITUTE ROYALTIE S OR FEES FOR TECHNICAL SERVICES. PAYMENTS MADE FOR BANDWIDTH ARE AKIN TO THE PAYMENT MADE FOR USE OF MOBILE PHONE SERVICES. ITAT, HYDERABAD BENCHES ALSO IN THE DECISIONS CITED BY LD. AR HAS EXPRESSED SIMILAR VIEW. HOWEVER, IT NEEDS TO BE OBS ERVED , THE HONBLE MADRAS HIGH COURT IN CASE OF VERIZON COMMUN ICATIONS SINGAPORE PTE LTD. (SUPRA) HAS EXPRESSED A CONTRARY VIEW. IN THIS CONTEXT, IT IS TO BE NOTED THAT NO DECISION OF THE JURISDICTIONAL HIGH COURT ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE. WHEN THERE ARE CONFLICTING VIEWS EXPRESSED BY NON-JURISDICTIONAL H IGH COURTS AND DECISIONS OF DIFFERENT BENCHES OF ITAT ARE IN FAVOU R OF ASSESSEE, THE VIEW FAVOURABLE TO ASSESSEE HAS TO BE ADOPTED. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF ESTEL COMMUNICATIONS P. LTD. (SUPRA), AND T HE DECISIONS OF COORDINATE BENCHES (SUPRA), WE HOLD THAT PAYMENT MA DE TOWARDS BANDWIDTH/LEASELINE CHARGES NOT BEING IN THE NATURE OF ROYALTY, PROVISIONS OF SECTION 194J WOULD NOT BE APPLICABLE. THEREFORE, NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. 8. THIS ISSUE CAN ALSO BE LOOKED INTO FROM ANOTHER ANGLE. AS CAN BE SEEN, VIEW EXPRESSED BY DIFFERENT HIGH COURTS A S WELL AS ITAT ON THE ISSUE ARE DIVERGENT. WHILE, IN MAJORITY OF THE DECISIONS A VIEW FAVOURABLE TO ASSESSEE HAS BEEN TAKEN, IN THE DECIS ION OF HONBLE MADRAS HIGH COURT A VIEW AGAINST ASSESSEE HAS BEEN TAKEN. THUS, IT IS APPARENT THAT, MORE THAN ONE VIEW IS POSSIBL E ON THE ISSUE. THAT BEING THE CASE, THE VIEW TAKEN BY AO WHILE ALL OWING EXPENDITURE CLAIMED BEING ONE OF THE POSSIBLE VIEW SUPPORTED BY JUDICIAL PRONOUCEMENTS, PROVISIONS OF SECTION 263 C ANNOT BE INVOKED ON THE PRETEXT THAT ASSESSMENT ORDER IS ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF REVENUE. IN THIS CONTEXT, IT NEEDS TO BE MENTIONED FOR THE IMPUGNED ASSESSMENT YEAR PROCEEDINGS U/S 20 1 WERE ALSO INITIATED AGAINST ASSESSEE FOR NON-DEDUCTION OF TDS U/S 194J ON PAYMENT OF BANDWIDTH CHARGES AND ULTIMATELY ORDERS WERE PASSED BY RAISING DEMAND U/S 201(1) AND 201(1A). WHEN ASSE SSEE ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 7 PREFERRED APPEAL AGAINST THE SAID ORDER, LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING THAT ASSESSEE IS ENGAGED IN TRADING OF BANDWIDTH, HENCE, THE PROVISIONS OF SECT ION 194J ARE NOT APPLICABLE. IT WAS BROUGHT TO OUR NOTICE BY LD. AR, THIS ORDER OF LD. CIT(A) HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO FU RTHER APPEAL WAS FILED. THIS CONTENTION OF LD. AR REMAINED UNCON TROVERTED. THUS, AS CAN BE SEEN FROM THE AFORESAID FACTS, OPINION OF THE DEPARTMENTAL AUTHORITIES ON APPLICABILITY OF SECTION 194J TO PAY MENT OF BANDWIDTH CHARGES ARE ALSO DIFFERENT. THEREFORE, THE ASSESSME NT ORDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF REVENUE ON SUCH A DEBATABLE ISSUE. FOR THE REASONS STATED A BOVE, WE HOLD THAT LD. CIT WAS NOT CORRECT IN HOLDING THE ASSESSM ENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE FOR NOT APPLYING THE PROVISIONS OF SECTION 40(A)(IA) TO THE PAYMENTS MADE TOWARDS BANDWIDTH/LEASELINE CHARGES. ACCORDINGLY, G ROUND RAISED ON THIS ISSUE IS ALLOWED. 9. IN VIEW OF OUR FINDING IN PRECEDING PARAGRAPHS, THE ISSUES RAISED IN THE ADDITIONAL GROUNDS ARE OF MERE ACADEM IC INTEREST, HENCE, WE DO NOT FEEL THE NECESSITY TO ADJUDICATE T HEM. 10. IN THE RESULT, ASSESSEES APPEAL IS CONSIDERED TO BE PARTLY ALLOWED. ITA NO. 509/VIZAG/2014 11. THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23/0-6/2014 PASSED BY LD. CIT(A)-V, VIJAYAWADA DISM ISSING THE APPEAL AGAINST CONSEQUENTIAL ORDER PASSED BY AO IN PURSUANCE TO THE LD. CITS DIRECTION U/S 263 OF THE ACT. 12. AS CAN BE SEEN, THE AO MADE ADDITION OF PAYMENT S MADE TOWARDS BANDWIDTH AND LEASELINE CHARGES BY APPLYIN G SECTION 40(A)(IA) IN THE CONSEQUENTIAL ORDER PASSED IN PURS UANCE TO THE DIRECTIONS OF LD. CIT U/S 263. LD. CIT(A) HAS DISMI SSED ASSESSEES ITA NOS. 470/VIZAG/2013 & 509/V/14 M/S MYGURU ONLINE LTD. 8 APPEAL SINCE DISALLOWANCE WAS MADE AS PER THE ORDER PASSED U/S 263. CONSIDERING THE FACT THAT WHILE DECIDING ASSES SEES APPEAL IN ITA NO. 470/VIZAG/2013, WE HAVE SET ASIDE THE DIREC TIONS OF LD. CIT ON THE ISSUE OF APPLICABILITY OF SECTION 40(A)(IA) TO PAYMENT MADE TOWARDS BANDWIDTH/LEASELINE CHARGES, NO DISALLOWANC E CAN BE MADE U/S 40(A)(IA) OF THE ACT. IN VIEW OF THE AFORESAID, THE IMPUGNED ORDER OF CIT(A) DESERVES TO BE SET ASIDE. 13. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 14. TO SUM UP APPEAL IN ITA NO. 470/VIZAG/13 IS PAR TLY ALLOWED AND APPEAL IN ITA NO. 509/VIZAG/14 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 15 TH APRIL, 2015. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 15 TH APRIL, 2015 COPY TO 1 M/S MYGURU ONLINE LTD., C/O K. VASANTKUMAR, A.V. RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDER ABAD 01. 2 ITO, WARD 2(1), VIJAYAWADA 3 THE CIT(A), VIJAYAWADA 4 THE CIT, VIJAYAWADA 5 DR, ITAT, HYDERABAD
