2018 (7) TMI 1973 - AT - Income Tax

Short deduction of tds - TDS u/s 194J or 194C - payments made to field agents - disallowance u/s 40(a)(ia) - whether payments were made for conducting market research survey and on data analysis/tabulation thus falling under section 194J of the Act and warranting deduction of tax at 10%? - HELD THAT - As decided in assessee s own case 2016 (7) TMI 1394 - ITAT MUMBAI provisions of Sec. 40(a)(ia) have no application when there is short deduction of tax - Decided against revenue

Summary

Issues involved:
1. Disallowance under section 40(a)(ia) in respect of payments made to field agents.
2. Applicability of proper provisions under TDS Chapter to the payment under dispute.

Detailed Analysis:
1. The appeal by Revenue challenged the order of the ld. Commissioner of Income-tax (Appeals)-4, Mumbai for Assessment Year 2011-12 regarding the disallowance under section 40(a)(ia) for payments made to field agents. The Revenue contended that the payments were for market research survey and data analysis/tabulation, falling under section 194J of the Act, requiring a deduction of tax at 10%. The Authorized Representative of the assessee argued that the issue was already decided in favor of the assessee by the Tribunal in earlier years. The Departmental Representative for the Revenue relied on the order of the assessing officer.

2. The Tribunal considered the decision in the assessee's own case for Assessment Year 2010-11 and noted that a similar ground of appeal was raised in earlier years. The Tribunal referred to a Co-ordinate Bench decision for Assessment Year 2009-10, which held that provisions of Sec. 40(a)(ia) did not apply in cases of short deduction of tax. The Tribunal cited conflicting views from different High Courts on the applicability of section 40(a)(ia) and emphasized the importance of following decisions in favor of the assessee. Relying on precedent and the principle of favoring the assessee, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal based on the precedent set in the assessee's own case and the principle of favoring the assessee in cases of conflicting interpretations of tax provisions. The decision highlighted the importance of following judgments that benefit the assessee and upheld the order of the Ld. CIT(A) regarding the disallowance under section 40(a)(ia) for payments made to field agents.