2018 (9) TMI 2088 - AT - Income Tax

TDS u/s 194J - Addition u/s 40(a)(ia) - Non deduction of TDS on payment of subscription technology fee - CIT-A deleted the addition - HELD THAT - As decided in own case 2018 (7) TMI 2052 - ITAT KOLKATA the said amount was towards the reimbursement of the expenses, which was in fact incurred on behalf of the assessee and there was no profit element. That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition. TDS u/s 194I - Addition u/s 40(a)(ia) - non deduction of TDS on payment of rent for computer - a similar deduction on account of rent eimbursed to DTTIPL was claimed and allowed by the AO in scrutiny assessment for the A.Y.2008-09 - HELD THAT - As decided in own case 2018 (7) TMI 2052 - ITAT KOLKATA assessee had reimbursed its share of the rent for the laptops to DTTIPL and no tax is deductible at source on such payments. As it is a well settled legal position, as discussed by ld CIT(A) also that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts Payment of indemnity insurance expense - Proof of allowable business expenditure - HELD THAT - As decided in own case 2018 (7) TMI 2052 - ITAT KOLKATA the expenditure on professional indemnity insurance has been incurred wholly and exclusively for the purpose of business and is an admissible deduction. That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition. Revenue appeal dismissed.

Summary

Issues Involved:
1. Relief for payment of subscription and technology fee without tax deduction at source.
2. Relief for payment of rent for computers without tax deduction at source.
3. Relief for payment of indemnity insurance expense not incurred exclusively for business purposes.

Detailed Analysis:

1. Relief for Payment of Subscription and Technology Fee Without Tax Deduction at Source:

The Revenue contended that the assessee paid a subscription and technology fee of Rs. 44,27,412/- without deducting tax at source, violating section 194J read with section 40(a)(ia) of the Income Tax Act. The Tribunal referenced its earlier decision in the assessee's own case for assessment years 2010-11 and 2011-12, where it was established that the payment was a reimbursement of expenses and not subject to tax deduction at source. The Tribunal noted that the assessee paid Rs. 48,95,212/- to DHS, Mumbai as its share of subscription fees, which DHS, Mumbai paid to DTT after deducting TDS. Since the assessee was merely reimbursing its share, no further tax deduction was required. The Tribunal cited precedents, including CIT vs. Zee Entertainment Enterprises Ltd. and CIT vs. Kalyani Steels Ltd., which supported the principle that reimbursement of expenses is not taxable. Consequently, the Tribunal upheld the CIT(A)'s order, dismissing the Revenue's ground.

2. Relief for Payment of Rent for Computers Without Tax Deduction at Source:

The Revenue argued that the assessee paid Rs. 60,49,727/- as rent for computers without deducting tax at source, violating section 194I read with section 40(a)(ia) of the Act. The Tribunal again referred to its decision in the assessee's own case for assessment years 2010-11 and 2011-12. It was established that the assessee reimbursed its share of rent for laptops to DTTIPL, which had already deducted TDS on the payment to Rent Works India (P) Ltd. The Tribunal emphasized that the reimbursement did not require further tax deduction at source, as it was not a direct rental payment by the assessee. The Tribunal also noted the principle from Radhasoami Satsang vs. CIT, which discourages the Revenue from taking a different stand in subsequent years on identical facts without substantial changes. The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's ground.

3. Relief for Payment of Indemnity Insurance Expense Not Incurred Exclusively for Business Purposes:

The Revenue claimed that the indemnity insurance expense of Rs. 7,75,567/- was not incurred exclusively for business purposes, contrary to section 37(1) of the Act. The Tribunal referred to its earlier decision in the assessee's case for assessment years 2010-11 and 2011-12, where it was held that the indemnity insurance was for covering losses arising from professional business activities, not for unlawful acts. The Tribunal cited the Mumbai Tribunal's decision in M/s. A.F. Ferguson Associates vs. ACIT, which supported the deductibility of professional indemnity insurance premiums. The Tribunal concluded that the expense was incurred wholly and exclusively for business purposes and upheld the CIT(A)'s order, dismissing the Revenue's ground.

Conclusion:

The appeal filed by the Revenue was dismissed, with the Tribunal upholding the CIT(A)'s order on all grounds. The Tribunal emphasized the consistency of its decisions with prior judgments and the lack of new evidence or changes in facts and law presented by the Revenue. The order was pronounced in the open court on 28.09.2018.