2017 (9) TMI 746 - HC - Income Tax

TDS u/s 194H/194C - TDS on discounts offered by its collection agents/franchises etc - Disallowance under Section 40(a) (ia) - Held that - It is acknowledged by the learned counsel for the Revenue that, in view of the fact that the ITAT had allowed the Assessee s appeal for AY 2006-07, the rectification made by the ITAT by way of the impugned order dated 31st May 2016, at the instance of the Assessee, should be sustained. The learned counsel for the Revenue states that he is not aware as to whether the ITAT s order in the assessee s appeal for AY 2006-07 has been challenged by the Revenue. In terms of the ITAT s order the rectified para 7 of its order dated said that before the Ld. CIT(A) assessee has stated that the receipt include payments received form SRL Labs, walk in patients and pathological labs owned by the assessee. The working submitted by the assessee show that the amount of discount given to the Collection Centre is ₹ 11,78,24,030/- as against the disallowance of ₹ 16,80,66,667/- made by the AO. Keeping in view the above facts and circumstances and following the order dated 16.12.2011 of the Tribunal in the assessee s own Appeal for the same assessment year 2006-07, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, we affirm the same and the Ground No.1 raised by the Revenue stands rejected. No substantial question of law

Summary

Issues:
1. Delay in re-filing the appeal
2. Challenge to orders of the Income Tax Appellate Tribunal (ITAT) for Assessment Year (AY) 2008-09

Analysis:

Issue 1: Delay in re-filing the appeal
The delay in re-filing the appeal was condoned by the Court based on the reasons stated in the application. The application for delay in re-filing was allowed subject to all just exceptions, and the appeal was disposed of accordingly.

Issue 2: Challenge to orders of the ITAT for AY 2008-09
The challenge in this appeal was against two orders of the ITAT for AY 2008-09. The main question before the ITAT was whether the Respondent-Assessee was liable to deduct tax at source under Section 194H/194C of the Income Tax Act, 1961, on discounts offered by its collection agents/franchises, and whether disallowance under Section 40(a)(ia) of the Act would be attracted.

The Assessing Officer disallowed the claim, resulting in an addition to the returned income. The Respondent-Assessee appealed before the Commissioner of Income Tax (Appeals) (CIT (A)), who partly allowed the appeal.

The ITAT noted the issue of disallowance under Section 40(a)(ia) and affirmed the CIT (A)'s decision. However, the ITAT failed to consider that in the Assessee's appeal for AY 2006-07, the disallowance had been deleted as the provisions of Section 194H were wrongly invoked.

The ITAT rectified its order based on the Assessee's appeal for AY 2006-07, and the Revenue acknowledged that the rectification should be sustained. The Court found no substantial question of law arising from the ITAT's orders and dismissed the appeal.

In conclusion, the Court upheld the rectification made by the ITAT and dismissed the appeal based on the lack of substantial legal questions arising from the ITAT's orders for AY 2008-09.