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2020 (1) TMI 824 - HC - Income TaxTDS u/s 194J or 194H - payment made to a holding company of the assessee - sub-brokerage payments - company providing various Professional or Technical Services - HELD THAT - As decided in M/S SHCIL SERVICES LTD. 2019 (2) TMI 536 - BOMBAY HIGH COURT any person responsible for paying to a resident any income by way of commission or brokerage would at the time of crediting of such income to the account of the payee or at the time of payment of such income whichever is earlier, deducted income tax at the rate of 5%. This specific provision requiring deduction of tax at source in relation to payment of commission of brokerage cannot be ignored while examining the payment of brokerage in the present case so as to take the case within the ambit of Section 194J as was admitted by the Assessing Officer, CIT (Appeals) and the Tribunal correctly assessing the statutory position and deleted the disallowance - Decided in favour of assessee.
Issues:
1. Challenge to the order passed by the Income Tax Appellate Tribunal for Assessment Year 2010-2011. 2. Interpretation of provisions under sections 194J and 194H of the Income Tax Act, 1961. 3. Admissibility of additional evidence under Rule 46A in Income Tax proceedings. Analysis: Issue 1: Challenge to ITAT Order The appellant challenged the ITAT order for Assessment Year 2010-2011. The substantial questions of law raised by the Appellant-Revenue pertained to the nature of payments made to a holding company under section 194J, classification of sub-brokerage payments under sections 194H and 194J, and admissibility of additional evidence under Rule 46A. The High Court noted that the ITAT had based its decision on a previous ruling for the Assessment Year 2011-2012. Referring to a decision in a similar case, the Court held that the questions raised did not give rise to any substantial question of law, thereby dismissing the appeal. Issue 2: Interpretation of Sections 194J and 194H Regarding the classification of payments to a holding company under section 194J or 194H, the appellant argued that the payments should fall under section 194J, while the ITAT classified them under section 194H. The Court observed that the holding company provided various professional or technical services, and the appellant did not exclusively avail services related to buying and selling securities. The ITAT's decision to allow the sub-brokerage amount under section 194H was upheld by the Court, as it found no error in the ITAT's interpretation of the provisions. Issue 3: Admissibility of Additional Evidence The appellant contended that the additional evidence submitted by the respondent-assessee regarding three creditors was considered by the Commissioner of Income Tax (Appeals) without giving the Assessing Officer an opportunity to rebut it. The ITAT, however, forwarded the evidence to the Assessing Officer for comments, and the Assessing Officer did not provide any comments in the remand report. The Court agreed with the ITAT's decision, stating that there was no violation of Rule 46A, as the Assessing Officer had been given an opportunity to respond. Consequently, the Court dismissed the appeal, as it found no question of law arising from the issues raised. In conclusion, the High Court upheld the ITAT's decision, emphasizing the importance of adherence to procedural rules and the correct interpretation of tax provisions in resolving disputes related to income tax assessments.
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