2014 (1) TMI 1435 - AT - Income Tax

TDS on JCB charges treated as contractual payment u/s 194C instead of rent u/s 194I of the Act Held that - The CIT(A) has given a finding on fact that all the parties have filed their returns of income and paid their taxes due as applicable - The assessee s case is duly covered by the CBDT Circular and the decision inM/s. Hindustan Coca Cola Beverage Pvt. Ltd Versus Commissioner of Income Tax 2007 (8) TMI 12 - SUPREME COURT OF INDIA - The Revenue could not controvert the finding of the CIT(A) by placing any relevant material on record thus, the order of the CIT(A) upheld Decided against Revenue. TDS in respect of interest expenditure - Held that - There was force in the assessee that the tax would be deductible only on the interest part and the liability can be fastened to that extent thus, the AO is directed to verify the claim of the assessee with regard to the deduction of tax and also direct to compute the liability of the assessee to the extent of interest paid by the assessee Decided partly in favour of Assessee.

Summary

Issues:
- Appeal against orders of Commissioner of Income Tax (Appeals) for multiple Assessment Years
- Treatment of JCB charges as contractual payments instead of rent under section 194-I
- Deduction of TDS on interest payments and JCB charges
- Liability of the assessee for TDS on interest payments
- Application of CBDT Circular and judicial precedent in assessing liability

Analysis:

1. Appeal against Commissioner of Income Tax (Appeals) Orders:
The appeals by the Revenue were directed against separate orders of the Commissioner of Income Tax (Appeals) for various Assessment Years. The Tribunal heard these appeals together due to common issues involved and disposed of them through a consolidated order for convenience.

2. Treatment of JCB Charges:
The primary issue revolved around the treatment of JCB charges as contractual payments instead of rent under section 194-I of the Income Tax Act. The Assessing Officer contended that these payments should have attracted TDS under section 194-I. However, the Commissioner of Income Tax (Appeals) partly allowed the appeal, leading to the Revenue's challenge. The Tribunal upheld the Commissioner's decision, citing the CBDT Circular and a Supreme Court judgment in a similar case.

3. Deduction of TDS on Interest Payments and JCB Charges:
A survey revealed non-deduction of TDS on interest paid to TML Finance Ltd. and the misapplication of TDS provisions on JCB machine payments. The Assessing Officer passed orders under sections 201(1) and 201(1A) against the assessee. The Commissioner of Income Tax (Appeals) partly allowed the appeal, leading to the Revenue's challenge. The Tribunal upheld the Commissioner's decision, emphasizing that the liability should only extend to the interest amount, not the principal.

4. Liability of the Assessee for TDS on Interest Payments:
The Revenue argued that the assessee should be held in default for not deducting TDS on interest payments. However, the Tribunal, after considering submissions and relevant precedents, found no infirmity in the Commissioner's order. It was established that the tax liability should be limited to the interest component, and the Tribunal directed the Assessing Officer to verify and compute the liability accordingly.

5. Application of CBDT Circular and Judicial Precedent:
The Tribunal relied on the CBDT Circular and a previous Supreme Court judgment to support its decision regarding the liability of the assessee for TDS on interest payments. The Revenue's appeals for various Assessment Years were either dismissed or partly allowed based on the application of these legal principles and factual findings.

In conclusion, the Tribunal dismissed or partly allowed the appeals and cross-objections based on the specific issues of TDS deduction, treatment of JCB charges, and the extent of liability for TDS on interest payments. The decisions were guided by legal provisions, judicial precedents, and factual considerations presented during the proceedings.