9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 1437 - AT - Income TaxDisallowance under section 40(a)(ia) - non deduction of TDS on internet lease line charges - Held that - A similar issue is considered by the Special Bench of the Tribunal (Vizag) in the case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) wherein it was held that the provisions of section 40(a)(ia) are applicable only to the expenses that are payable and outstanding at the end of the close of the year relevant to the assessment year and not to the amount already paid. The same view was taken by the High Court of Allahabad in the case of CIT vs. M/s. Vector Shipping Services (P) Ltd 2013 (7) TMI 622 - ALLAHABAD HIGH COURT by holding that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year. Being so, in our opinion an amount outstanding at the end of the close of the assessment year is not to be allowed u/s.40(a)(ia) of the Act. We direct the Assessing Officer to disallow only that amount which is outstanding at the end of the close of the assessment year. With these observations, we are remitting the issue back to the file of the Assessing Officer for fresh consideration. - Decided partly in favour of assessee for statistical purposes.
Issues involved:
1. Disallowance under section 40(a)(ia) of the Income Tax Act for non-deduction of TDS on internet lease line charges. 2. Interpretation of the term "payable" under section 40(a)(ia) of the Act. Analysis: 1. The appeal concerned the disallowance under section 40(a)(ia) of the Income Tax Act for non-deduction of TDS on internet lease line charges. The Assessing Officer contended that tax should have been deducted at the source under section 194J for the dedicated leased line provided exclusively to the assessee. The Commissioner of Income Tax (Appeals) upheld the disallowance, leading to the appeal before the ITAT Chennai. 2. The ITAT Chennai referred to a similar issue considered by the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT, where it was held that section 40(a)(ia) applies only to expenses that are "payable" and outstanding at the end of the relevant assessment year. The High Court of Allahabad also supported this interpretation in the case of CIT vs. M/s. Vector Shipping Services (P) Ltd. The ITAT Chennai concurred with this view, emphasizing that the disallowance under section 40(a)(ia) is not applicable when there is no outstanding balance at the end of the assessment year. 3. The ITAT Chennai directed the Assessing Officer to disallow only the amount outstanding at the end of the assessment year under section 40(a)(ia) of the Act. The judgment highlighted the importance of the term "payable" in determining the applicability of the TDS provisions. The appeal was partly allowed for statistical purposes, and the issue was remitted back to the Assessing Officer for fresh consideration in line with the interpretation provided by the ITAT Chennai. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the legal interpretation applied by the ITAT Chennai in deciding the appeal related to TDS disallowance on internet lease line charges.
|
