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2007 (9) TMI 131 - HC - Income TaxRevenue raised the two issue in which first relate to depreciation claimed by assessee on the decoders owned by it and second relates to exemption of TDS deducted by the cable operator in payment of channel subscription license fee to the assessee - Tribunal allowed both matter in favour of assessee
Issues:
1. Depreciation claimed on decoders given on loan to cable operators. 2. Claim of TDS amounting to Rs.11,77,709. Depreciation on Decoders: The Revenue challenged an order by the Income Tax Appellate Tribunal concerning depreciation claimed on decoders owned by the assessee but loaned to cable operators. The Revenue argued that since the decoders were not used by the assessee for its business, depreciation should not be allowed. However, the High Court disagreed, noting that the assessee retained control over the decoders and that the loan transactions were part of its business in distributing satellite channels and signals. The Court held that Section 32 of the Income Tax Act applied to the case, and the depreciation was rightfully allowed by the Tribunal. Claim of TDS: The second issue revolved around the claim of TDS amounting to Rs.11,77,709. The Assessing Officer and the Commissioner of Income Tax concluded that the TDS amounts were related to the income of the principal of the assessee, thus disallowing the claim. In contrast, the Tribunal found that the TDS corresponded to the income offered for taxation by the assessee under "channel subscription licence fees." The Tribunal believed that the assessee was entitled to credit for the tax deducted at source since it matched the income declared. The High Court agreed with the Tribunal, stating that the Revenue could have easily verified the correlation between income and deductions but failed to do so. Consequently, the Court upheld the Tribunal's decision to allow the assessee's claim for TDS. In conclusion, the High Court found no substantial question of law arising from the issues presented and dismissed the appeal.
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