2015 (9) TMI 1696 - AT - Income Tax

Short deduction of TDS - TDS u/s 194J OR 194I - disallowance u/s. 40(a)(ia) relating to VSAT and lease line payments - CIT(A) holds that only proportionate disallowance is to be made in view of the fact that the assessee had already deducted TDS - HELD THAT - It is evident that the co-ordinate bench in assessee s own case for assessment year 2006-07 holds that the disallowance in question cannot be made because of shortfall in TDS deduction as per hon ble jurisdictional high court decision in CIT vs. Prayas Engineering Ltd Tax 2014 (11) TMI 1086 - GUJARAT HIGH COURT and CIT vs. S.K. Tekriwal 2012 (12) TMI 873 - CALCUTTA HIGH COURT . The Revenue fails to draw any distinction on facts or law. CIT(A) has erred in partially confirming the Assessing Officer s action making the impugned disallowance of VSAT and lease line charges in question. The assessee s arguments are accordingly accepted and that of the Revenue are rejected. Disallowance of bad debts - assessee had claimed these amounts arising from downfall/market crash in Jan, 2008 due to which wealth of investors vanished and they were not in a position to pay the same as investment in question reached to negligible value resulting in huge unpaid liabilities. - HELD THAT - CIT(A) follows lower appellate order in preceding assessment year deciding the issue in assessee s favour. He quotes case law of TRF Ltd. 2010 (2) TMI 211 - SUPREME COURT and DCIT vs. Shreys Morakhia 2010 (7) TMI 455 - ITAT MUMBAI in support. We find that the co-ordinate bench (supra) has already rejected the Revenue s identical ground in preceding assessment year. It does not point out any exception on facts or law in the impugned assessment year. The Revenue s corresponding ground is decided in assessee s favour.

Summary

Issues:
1. Disallowance under section 40(a)(ia) for VSAT and lease line expenses.
2. Disallowance of bad debts under section 36(2).

Analysis:
1. The judgment involves cross-appeals by the assessee and the Revenue for the assessment year 2008-09, challenging the CIT(A)'s order on disallowances under section 40(a)(ia) for VSAT and lease line expenses. The Revenue contested the deletion of disallowances on bad debts and VSAT/lease line charges. The tribunal's order in the assessee's previous case was cited, deciding against the Revenue. The CIT(A) confirmed the disallowance under section 40(a)(ia) but the tribunal found in favor of the assessee. The tribunal held that TDS deduction under section 194J was correct, rejecting the Revenue's arguments based on legal precedents. As a result, the assessee's appeal was allowed.

2. The Revenue's appeal focused on the disallowance of bad debts amounting to a substantial sum, invoking section 36(2). The assessee claimed these debts were due to a market crash in 2008, rendering investors unable to pay. The Assessing Officer disallowed the debts, but the CIT(A) reversed this decision, citing relevant case law. The tribunal noted that the Revenue's grounds were rejected in a previous assessment year and found no new legal or factual basis for a different outcome. Consequently, the Revenue's appeal was dismissed, affirming the lower appellate order in favor of the assessee.

In conclusion, the tribunal allowed the assessee's appeal regarding the disallowance under section 40(a)(ia) for VSAT and lease line expenses, while dismissing the Revenue's appeal concerning the disallowance of bad debts under section 36(2). The judgment was pronounced on 4th September 2015.