ACIT, New Delhi V. M/s. Global One India Pvt. Ltd., New Delhi

ITA 774/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58947 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SAKSENA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.774/DEL/2011 774/DEL/2011 774/DEL/2011 774/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 200 200 200 2006 66 6- -- -07 0707 07 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -12(1), 12(1), 12(1), 12(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S GLOBAL ONE INDIA PVT.LTD., M/S GLOBAL ONE INDIA PVT.LTD., M/S GLOBAL ONE INDIA PVT.LTD., M/S GLOBAL ONE INDIA PVT.LTD., C CC C- -- -56, NEETI BAGH, 56, NEETI BAGH, 56, NEETI BAGH, 56, NEETI BAGH, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AABCG2558B. PAN : AABCG2558B. PAN : AABCG2558B. PAN : AABCG2558B. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K.SAKSENA, CIT-DR. RESPONDENT BY : SHRI SATYEN SETHI, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS FILED AGAINST THE OR DER OF LEARNED CIT(A)-XV, NEW DELHI DATED 15 TH NOVEMBER, 2010 FOR THE AY 2006-07. 2. FOLLOWING GROUNDS ARE RAISED BY THE REVENUE :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS ERRONEOUS, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASI DE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.28,97,10,110/- MADE ON ACCOUNT OF DISALLOWANCE O F CIRCUIT EXPENSES PAID TO VARIOUS TELECOM COMPANIES. ITA-774/DEL/2011 2 3. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THIS ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE FOR AY 2005-06 BECAUSE THE SIMILAR DIS ALLOWANCE WAS MADE IN AY 2005-06. THE LEARNED CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE. THE REVENUE HAD FILED APPEAL AGAINST THE ORDER OF CIT(A) IN AY 2005-06 BUT, IN THE SAID APPEAL, THIS GROUND WAS NOT RAISED. HE CLARIFIED THAT IN AY 2005-06, SOME OTHER DISALLOWAN CES WERE ALSO MADE WHICH WERE ALSO DELETED BY THE CIT(A) AND, IN THE R EVENUES APPEAL, THE ISSUE RAISED WAS ONLY WITH REGARD TO OTHER DISA LLOWANCES AND NOT AGAINST THE DISALLOWANCE OF CIRCUIT EXPENSES PAID T O VARIOUS TELECOM COMPANIES. HE FURNISHED BEFORE US THE COPY OF THE CIT(A)S ORDER FOR AY 2005-06 AS WELL AS THE GROUNDS OF APPEAL FURNISH ED BEFORE ITAT AND ALSO THE DECISION OF THE ITAT. HE ALSO POINTED OUT THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE ONLY GROUN D THAT THE CIRCUIT CHARGES PAID BY THE ASSESSEE TO VARIOUS TELECOM COM PANIES WERE IN THE NATURE OF RENT AND, THEREFORE, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS UNDER SECTION 194I. HE POINTED OUT THAT SECTIO N 194I CAME INTO EFFECT WITH EFFECT FROM 13.7.2006 AND WOULD BE APPL ICABLE FOR AY 2007- 08. THIS ASPECT IS ALSO CLARIFIED BY THE CBDT IN C IRCULAR NO.1 OF 2007. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND ALSO PERUSED THE MATERIAL PLACED BEFORE US. TH E ASSESSING OFFICER DISALLOWED THE PAYMENT OF CIRCUIT EXPENSES OF ` 28.97 CRORES ON THE GROUND THAT THE PAYMENT IS TOWARDS LEASED LINE AND, THEREFORE, THE PAYMENT FOR USE OF LEASED LINE IS IN THE NATURE OF RENT LIABLE FOR TDS UNDER SECTION 194I. SINCE THE ASSESSEE FAILED TO D EDUCT TDS, THE ASSESSING OFFICER, APPLYING SECTION 40(A)(IA), DISA LLOWED THE CIRCUIT EXPENSES PAID TO VARIOUS TELECOM COMPANIES. THE LE ARNED CIT(A) REFERRED TO CBDT CIRCULAR NO.1 OF 2007 DATED 27 TH APRIL, 2007 AND HAS ITA-774/DEL/2011 3 POINTED OUT THAT THE AMENDED PROVISION WOULD BE APP LICABLE WITH EFFECT FROM AY 2007-08. FOR READY REFERENCE, THE SAME IS REPRODUCED BELOW:- 13.4 IN A FEW REPRESENTATIONS RECEIVED AFTER T HE PASSAGE OF THE TAXATION LAWS (AMENDMENT) BILL, 2005 AND ASSENT THERETO ON 13 TH JULY, 2007, APPREHENSIONS WERE EXPRESSED THAT THE PROVISIONS OF SECTION 40(A)(IA) AMENDED AS ABOVE WOULD BE EFFECTIVE FROM ASSESSMENT YEAR 20 06- 07 (I.E. IN RESPECT OF THE PAYMENTS MADE IN 194-I R ELATING TO DEDUCTION OF TAX AT SOURCE ON RENT AND THOSE OF SECTION 194J RELATING TO DEDUCTION OF TAX ON FEES FOR PROFE SSIONAL OR TECHNICAL SERVICES HAD BEEN INSERTED IN SECTION 40( A)(IA) WITH EFFECT FROM 13 TH JULY, 2006, A DATE WHICH WOULD RELATE TO ASSESSMENT YEAR 2007-08 AND NOT TO 2006-07. IT IS, THEREFORE, NECESSARY TO CLARIFY THAT IN ANY CASE IN WHICH TAX IS NOT DEDUCTED FROM PAYMENT OF RENT OR ROYALTY DUR ING THE FINANCIAL YEAR 2005-06, NO DISALLOWANCE IN THE COMP UTATION OF INCOME WOULD BE REQUIRED IN TERMS OF THE AMENDED PROVISIONS OF SECTION 40(A)(IA). A PERUSAL OF SUB- CLAUSE (IA) MAKES IT CLEAR THAT A DISALLOWANCE IS ATTRACTED ONL Y WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AN D IT IS NOT DEDUCTED OR NOT PAID TO GOVERNMENT ACCOUNT. SI NCE TAX IS DEDUCTIBLE UNDER THE AMENDED PROVISIONS OF S ECTION 194-I AND SECTION 194J FROM 13 TH JULY, 2006, ASSESSMENT YEAR 2007-08 WOULD BE THE FIRST RELEVANT ASSESSMENT YEAR IN WHICH A DISALLOWANCE WOULD BE ATTRACTED FOR NOT DEDUCTING OR NOT DEPOSITING THE TAX IN TERMS OF THE PROVISIONS OF SECTION 40(A)(IA). 6. WHEN THE CBDT ITSELF HAS CLARIFIED THAT THE AMEN DED PROVISIONS OF SECTION 194I RELATING TO DEDUCTION OF TAX AT SOU RCE FOR THE PURPOSE OF SECTION 40(A)(IA) WOULD BE APPLICABLE FOR AY 2007-0 8, THE ASSESSING ITA-774/DEL/2011 4 OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANC E. WE ALSO FIND THAT SIMILAR ISSUE CAME UP BEFORE THE LEARNED CIT(A) IN AY 2005-06 WHEREIN HE ACCEPTED THE ASSESSEES CONTENTION. THOUGH IN A Y 2005-06, THE REVENUE FILED THE APPEAL AGAINST THE ORDER OF CIT(A ) ON THIS POINT, BUT THE GROUND RELATING TO DELETION OF DISALLOWANCE OF CIRCUIT CHARGES BY THE CIT(A) WAS NOT RAISED BEFORE THE ITAT. THUS, THE R EVENUE HAS ACCEPTED THE ORDER OF THE CIT(A) ON THIS POINT FOR AY 2005-06. IN SUCH CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION FOR INTERFERING WITH THE ORDER OF THE LEARNED CIT(A) IN THE YEAR UNDER CONSI DERATION WHEREIN HE HAS FOLLOWED THE ORDER OF HIS PREDECESSOR FOR AY 20 05-06 WHICH IS ACCEPTED BY THE REVENUE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2012. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 23.03.2012 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR