DCIT (TDS) 2(1), MUMBAI V. LARSEN & TOUBRO LTD, MUMBAI

ITA 4884/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3731 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGRAM GAIKWAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 4884/MUM/2014 (ASSESSMENT YEAR : 2009-10) THE DCIT (TDS)-2(1), R.NO.702, 7 TH FLOOR, SMT.K.G MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD, MUMBAI 400 002 ... APPELLA NT VS. M/S. LARSEN & TOUBRO LTD., 3 RD FLOOR, NORTH BLOCK-1, SAKI VIHAR ROAD, POWAI, MUMBAI 400 072 PAN: AAACL 0140P .... RESPONDENT APPELLANT BY : SHRI SANGRAM GAIKWAD RESPONDENT BY : SHRI VIJAY MEHTA DATE OF HEARING : 08/02/2016 DATE OF PRONOUNCEMENT : 29/04/2016 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAI NING TO THE A.Y. 2010-11 IS DIRECTED AGAINST AN ORDER PASSED B Y LD. CIT(A)-12, MUMBAI DATED 08/05/2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY ASSESSING OFFICER UNDER SECTION 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 19/03/2012. 2 ITA NO. 4884/MUM/2014 (ASSESSMENT YEAR : 2009-10) 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1.'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF INTERNET C HARGES IGNORING THAT USE OF INTERNET CHARGES FALLS WITHIN THE AMBIT OF SECTION 9(1 )(VI) EXPLANATION -2(IVA) AND 2(VI)' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT INTERNET CHARGES ARE PAID FOR REGULAR SERVICES AND ARE NOT IN THE NATURE OF TECHNICAL SERVICES AND NO TDS IS REQUIRED TO BE DEDUCTED, THEREBY DELETING THE ADDITION MADE ON ACCOUNT OF INTERNET CHARGES WITHOU T APPRECIATING THAT THE HON'BLE HYDERABAD ITAT IN THE CASE OF BRIGADE GLOBAL SERVIC ES(P) LTD. 2013) 33 TAXMAN. COM 618, HAS DECIDED THE ISSUE IN FAVOUR OF THE DEPARTM ENT. ' 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE BASIS OF REASONING THAT BANK GUARANTEE CHARGES ARE NOT IN THE NATURE OF 'COMMISSION' AND N O TDS WAS REQUIRED TO BE DEDUCTED ON SUCH CHARGES PAID TO BANKS U/S 194H OF THE I.T.ACT, 1961, IGNORING THE FACT BANK GUARANTEE CHARGES FALL WITHIN THE AMBIT O F EXPLANATION (I) TO SECTION 194H OF THE ACT' 3. IN SO FAR AS THE GROUNDS OF APPEAL NO.1 & 2 ARE CONCERNED, THEY RELATE TO THE STAND OF THE REVENUE THAT TAX WAS REQ UIRED TO BE DEDUCTED AT SOURCE ON PAYMENTS MADE FOR INTERNET CHARGES BEC AUSE OF THE PROVISIONS OF SECTION 194J OF THE ACT. AS PER THE REVENUE, PAYMENTS MADE FOR INTERNET CHARGES TO BSNL AMOUNTS TO FEE F OR TECHNICAL SERVICES AND HENCE, COVERED UNDER SECTION 194J OF THE ACT. THE AFORESAID STAND OF THE ASSESSING OFFICER WAS NOT AP PROVED BY THE CIT(APPEALS) FOLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF SKYCELL COMMUNICATIONS LT D. VS. DCIT, 251 ITR 53(MAD). FOR THE SAID REASON, REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE RESPON DENT ASSESSEE, AT THE OUTSET, POINTED OUT THAT IN THE ASSESSEES OWN CASE FOR THE SAME 3 ITA NO. 4884/MUM/2014 (ASSESSMENT YEAR : 2009-10) YEAR WITH ANOTHER TAN PARTICULARS, SIMILAR DECISION OF THE CIT(APPEALS) HAS BEEN ACCEPTED BY THE REVENUE AS NO APPEAL WAS F ILED BEFORE THE TRIBUNAL. THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT SUCH OTHER DECISION OF THE CIT(APPEALS)-14, MUMBAI IN APPEAL NO.CIT(A)-14/TDS RG.2/IT-97/2012-13 DATED 15/10/201 3 HAS BEEN FOLLOWED BY THE CIT(APPEALS) IN THE IMPUGNED ORDER. REFERENCE WAS MADE TO THE DECISION OF THE MUMBAI TRIBUNAL IN ITA NO. 7630/MUM/2013 DATED 04/06/2015, WHEREIN ORDER OF TH E CIT(APPEALS) -14 DATED 15/10/2013(SUPRA) IS ASSAILED, WHICH SHOW S THAT THE REVENUE DID NOT AGITATE THE DECISION OF THE CIT(APPEALS) IN RELATION TO THE REQUIREMENT OF TDS ON PAYMENT MADE FOR INTERNET CHA RGES. 5. THE AFORESAID FACTUAL MATRIX HAS NOT BEEN DISPUT ED BY THE LD. DEPARTMENTAL REPRESENTATIVE. IT IS QUITE EVIDENT F ROM RECORD THAT IN THE INSTANT CASE THE CIT(APPEALS) HAS FOLLOWED THE DECISION OF THE ANOTHER CIT(APPEALS) -14, MUMBAI DATED 15/10/2013(S UPRA) ON A SIMILAR ISSUE, WHICH HAS BEEN ACCEPTED BY THE REVEN UE INASMUCH AS NO APPEAL ON THE POINT HAS BEEN PREFERRED BEFORE THE T RIBUNAL, THOUGH ON OTHER ISSUES THE DEPARTMENT CAME IN APPEAL BEFORE T HE TRIBUNAL IN ITA NO.7630/MUM/2013(SUPRA). ON THIS COUNT ITSELF, THE GROUNDS OF APPEAL NO. 1&2 RAISED BY THE REVENUE ARE LIABLE TO BE DISM ISSED. EVEN OTHERWISE, THE RATIO OF THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF SKYCELL COMMUNICATIONS LTD.(SUPRA) SUPPORTS THE STAND OF THE CIT(APPEALS) THAT PAYMENTS MADE TO OBTAIN INTERNET FACILITY FROM BSNL WOULD NOT BE COVERED WITHIN THE MEANING OF FEE FO R TECHNICAL SERVICES SO AS TO BE LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194J OF 4 ITA NO. 4884/MUM/2014 (ASSESSMENT YEAR : 2009-10) THE ACT, AS IT IS A PAYMENT FOR OBTAINING A STANDAR D FACILITY AND NOT FOR TECHNICAL SERVICES. THUS, ON THIS ASPECT REVENUE H AS TO FAIL. 6. IN GROUNDS OF APPEAL NO.3, THE CASE SET UP BY TH E REVENUE IS THAT THE CIT(APPEALS) HAS ERRED IN HOLDING THAT BANK GUA RANTEE CHARGES PAID TO THE BANK ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194H OF THE ACT. 6.1 ON THIS ASPECT OF THE CONTROVERSY, IT WAS A COM MON POINT BETWEEN THE PARTIES, THAT THE MUMBAI BENCH OF TRIB UNAL IN THE CASE OF KOTAK SECURITIES LTD. VS. DCIT, 147 TTJ 443(MUM) HA S HELD THAT BANK GUARANTEE CHARGES ARE NOT LIABLE FOR DEDUCTION OF T AX UNDER SECTION 194H ON THE GROUND THAT SUCH TRANSACTIONS ARE ON PR INCIPAL TO PRINCIPAL BASIS AND THE ELEMENT OF AGENCY WHICH IS ESSENTIAL TO COVER IT AS COMMISSION AS PER EXPLANATION TO SECTION 194H IS ABSENT. 6.2 AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO OTHER DECISIONS OF THE TRIBUNAL ON THIS ASPECT IN SUPPORT OF THE CONCLUSION OF THE CIT(APPEALS). BE THAT AS IT M AY, IN THE ABSENCE OF ANY CONTRARY DECISION AND THE CIT(APPEALS) HAVING FOLLOWED THE DECISION OF THE JURISDICTIONAL TRIBUNAL, WE FIND NO REASON TO INTERFERE IN THE CONCLUSION DRAWN BY THE CIT(APPEALS). IN THIS VIEW OF THE MATTER REVENUE HAS TO FAIL ON THIS ASPECT ALSO. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL , 2016. SD/- SD/- (JOGINDER SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 29/04/2016 5 ITA NO. 4884/MUM/2014 (ASSESSMENT YEAR : 2009-10) VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI