2015 (10) TMI 1383 - AT - Income Tax

Revision u/s 263 - CIT(A) directed the ITO(TDS) to look into the correctness of tax deducted at source on the entire roaming charges of ₹ 95.86 crores paid by all the 21 circles and debited to audited profit and loss account, and not only the roaming charges paid by Mumbai circle - Held that - In the instant case, the CIT has alleged the order of ITO(TDS), Mumbai as erroneous and prejudicial, therefore, it is not correct to allege the order passed by other ITO(TDS) at different places without pointing out any fault therein. Accordingly, CIT(TDS) was to be confined to the erroneous act of ITO(TDS), Mumbai with respect to roaming charges, discount and commission pertaining to Mumbai circle only. In respect of TDS on commission and discount, we found that Hon ble Delhi High Court in the case of CIT Vs. Idea Cellular Limited, 2010 (2) TMI 24 - DELHI HIGH COURT has already decided the issue against the assessee, held that commission is subject to TDS 194H. Accordingly, the CIT was justified in alleging that ITO(TDS) was not correctly appreciated assessee s default for non-deduction of tax at source in respect of commission and discount. In view of the above, it is not a fit case for grant of any stay of the proceedings. Accordingly, we modify the order of CIT(TDS), Mumbai only to a limited extent of directing the ITO(TDS) to verify the correctness of tax deducted at source in respect of roaming charges, discount and commission pertaining to Mumbai circle only, in place of entire expenditure debited in the profit and loss account which is pertaining to all 21 TANs allotted to the assessee all over India. Assessee is directed to furnish full details with regard to the actual amount of expenditure debited in respect of roaming charges, discount and commission before the AO along with documentary evidence so as to substantiate its claim of expenditure being pertaining to Mumbai circle.

Summary

Issues:
Stay applications arising from appeals filed by the assessee before ITAT against CIT order under section 263 of the Income Tax Act for A.Y. 2009-10 to 2011-12.

Analysis:
1. The assessee filed appeals against the CIT order .263 of the Act, seeking stay of proceedings. No demand was raised in the CIT order. Both parties agreed to argue on merits rather than just the stay applications, leading the Bench to consider hearing the appeals on merit to resolve the entire controversy.

2. The CIT .263 order found the ITO (TDS) order .201(1)/(1A) erroneous and prejudicial to Revenue due to inadequate tax deduction on roaming charges. The CIT directed the ITO (TDS) to verify TDS applicability on the entire roaming charges paid by all circles, not just Mumbai, where the assessee's jurisdiction lay.

3. The learned AR argued that the CIT exceeded jurisdiction by asking the ITO (TDS) Mumbai to consider all roaming charges paid by the assessee across circles. The DR contended that the CIT correctly directed examination of all roaming charges due to incorrect tax deduction by the assessee.

4. The Tribunal found that separate TDS officers with jurisdiction over each TAN should handle compliance matters. The CIT (TDS) Mumbai could only challenge the ITO (TDS) Mumbai's order, not orders from other circles. The CIT's jurisdiction was limited to errors in the Mumbai circle's TDS matters.

5. Regarding TDS on commission and discount, the Tribunal referenced a Delhi High Court case holding commission subject to TDS .194H. The CIT's challenge to the ITO (TDS) Mumbai's handling of commission and discount was deemed justified.

6. The Tribunal modified the CIT (TDS) Mumbai's order to limit verification of tax deduction correctness to Mumbai circle's roaming charges, discount, and commission. The assessee was directed to provide detailed evidence for Mumbai circle's expenditures, and the ITO (TDS) was tasked with verifying TDS compliance for Mumbai circle only.

7. Consequently, the stay applications were rendered ineffective, and the appeals were partially allowed based on the modifications made to the CIT (TDS) Mumbai's order.

This detailed analysis covers the issues involved in the judgment, providing a comprehensive understanding of the legal reasoning and decisions made by the Tribunal.