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2024 (7) TMI 1550 - AT - Income Tax


Issues: Appeal against orders of NFAC for assessment years 2015-16 & 2017-18 regarding disallowance of payment for leased line/data link charges due to non-deduction of TDS under section 40(a)(ia) of the Act.

Analysis:

Issue 1: Disallowance of payment for leased line/data link charges
In the case, the appellant, a domestic company engaged in shipping agency business, filed returns for AY 2015-16 and 2017-18. The Assessing Officer disallowed Rs. 50,73,949/- for leased line/data link charges due to non-deduction of TDS under section 40(a)(ia) of the Act. The CIT(A)/NFAC upheld the AO's decision. The Tribunal considered whether the lower authorities were justified in disallowing the payment. Referring to the Supreme Court's decision in CIT Vs. Kotak Securities Ltd., it was established that charges for leased lines are not technical services under the Act. The Tribunal held that no TDS was required on the payment for leased line/data link charges, reversing the NFAC's order and allowing the assessee's appeal.

Issue 2: Common findings for AY 2017-18
The Tribunal found that the facts and issues in the appeal for AY 2017-18 were identical to those in the AY 2015-16 appeal. Therefore, the decision taken in the AY 2015-16 appeal applied equally to the AY 2017-18 appeal. Consequently, the appeal for AY 2017-18 was also allowed.

In conclusion, both appeals filed by the assessee were allowed by the Tribunal, setting aside the orders of NFAC for disallowance of payment for leased line/data link charges. The judgment was pronounced on July 1, 2024.

 

 

 

 

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