2016 (12) TMI 938 - AT - Income Tax

TDS u/s 194J - non deducted TDS on payment made on account of VSAT charges/BOLT & Ethernet charges to Stock Exchange - Held that - There is no requirement to deduct tax at source from the payments made to NSE/BSE towards VSAT charges and Lease line charges. See Centrum Broking Ltd Versus Asstt. Commissioner of Income Tax 2015 (6) TMI 751 - ITAT MUMBAI - Decided in favour of assessee

Summary

Issues:
1. Dismissal of appeal by CIT(A) against order u/s 201(1)/201(A) for non-deduction of TDS.
2. Disallowance under sec. 40(a)(ia) for non-deduction of TDS on VSAT charges.
3. Proceedings conducted ex parte due to non-appearance of appellant.
4. Judicial consistency in deciding non-default status for VSAT and lease line charges.

Analysis:
1. The appeal was filed against the CIT(A)'s order for A.Y. 2008-09, challenging the demand raised under sec. 201(1)/201(A) of the Act. The appellant argued that the CIT(A) erred in dismissing the appeal without considering the evidence in light of amended provisions. However, the appellant did not appear during the hearing, leading to the proceedings being conducted ex parte.

2. The case involved a private limited company engaged in share broking and securities dealing. The Assessing Officer disallowed TDS deduction on payments for VSAT charges, leading to a demand of ?1,58,144 under sec. 40(a)(ia) of the Income Tax Act. Despite the appellant's non-appearance, the tribunal reviewed past judgments and determined that the appellant was not in default for non-deduction of tax on VSAT and lease line charges, following a similar decision by a coordinate bench.

3. The appellant's absence during the hearing indicated a lack of interest in pursuing the appeal. Consequently, the tribunal proceeded ex parte. The Revenue, represented by the Ld. DR, was present and ready for arguments, leading the tribunal to decide the case on merits based on the record and the Revenue's submissions.

4. The tribunal relied on a previous decision by a coordinate bench where a similar disallowance was deleted, concluding that there was no merit in holding the appellant in default for non-deduction of tax on VSAT and lease line charges. The tribunal upheld judicial consistency and allowed the appeal, ruling in favor of the appellant on the grounds related to TDS deduction issues.

In conclusion, the tribunal allowed the appeal, setting aside the order of the CIT(A) and determining that the appellant was not in default for non-deduction of tax on VSAT and lease line charges, based on judicial precedents and consistency in decision-making.