2015 (11) TMI 1567 - HC - Income Tax

Disallowance u/s 40(a)(ia) - Held that - The Court is unable to find any feature of the MoU in the present case, which is different from that in CIT v. Zebian Real Estate Pvt. Ltd SEE Commissioner of Income Tax-IV v. Zebian Estate P. Ltd 2015 (11) TMI 932 - DELHI HIGH COURT . Court is satisfied that such payments could not be characterized as brokerage only for the purposes of bringing it within the ambit of Section 194H of the Act.

Summary

Issues: Appeal against disallowance of payment under Section 40(a)(ia) of the Income Tax Act.

Analysis:
1. Delay in re-filing the appeal: The High Court condoned a delay of 19 days in re-filing the appeal, based on the reasons stated in the application, and disposed of the application. This procedural aspect was addressed at the outset.

2. Nature of the appeal: The appeal was filed by the Revenue against an order passed by the Income Tax Appellate Tribunal (ITAT) concerning the Assessment Year 2008-09. The main issue raised was whether the payment made by the Assessee to M/s Vikram Electric Equipment Pvt. Ltd. (VEEPL) should be disallowed under Section 40(a)(ia) of the Act as it was considered a commission for services.

3. Comparison with previous case: The Court referred to a detailed order in a previous case involving similar facts and legal questions. The Court highlighted that the Revenue contended that certain aspects of the arrangement between the Assessee and VEEPL, as per the Memorandum of Understanding (MoU), were not adequately considered by the ITAT.

4. Court's analysis: The Court examined the MoU in the present case and compared it with the MoU in the previous case. It concluded that there were no distinguishing features that warranted a different view in the present appeal. The Court found no reason to deviate from the decision made in the previous case and dismissed the appeal.

5. Substantial question of law: The Court held that no substantial question of law arose from the appeal, leading to the dismissal of the appeal by the Revenue. The decision was based on the Court's analysis of the facts and legal arguments presented, ultimately affirming the ITAT's decision regarding the disallowance of the payment under Section 40(a)(ia) of the Income Tax Act.