2013 (1) TMI 963 - AT - Income Tax

Summary

Issues involved: Appeal against the order of CIT (A) for the assessment year 2006-07 regarding disallowances u/s 14A and non-deduction of TDS.

Issue 1 - Disallowance u/s 14A:
The appellant, engaged in share trading & mutual fund distribution, declared total income of Rs. 12,98,780. The AO disallowed Rs. 2,17,981 u/s 14A and Rs. 8,50,000 u/s 40(a)(ia), adding them to the total income. CIT (A) partly allowed the appeal, directing the AO to recompute the disallowance based on a reasonable basis per the Bombay High Court's judgment in M/s Godrej Boyce & Mfg Co. The Tribunal upheld this decision, dismissing the appeal.

Issue 2 - Non-deduction of TDS:
Regarding the addition of Rs. 8,50,000 for non-deduction of TDS on sub-brokerage paid, CIT (A) granted relief to the assessee based on the explanation to section 194H. The Tribunal found that the sub-brokerage paid was for services related to buying and selling units of Mutual Funds, falling outside the scope of TDS as per section 194H. The Tribunal noted that the issue was covered by a previous decision and ruled in favor of the assessee, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT (A)'s decisions on both issues.