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TMI Blog2013 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source on the chit dividend paid to the subscribers. 4. At the outset, the learned Departmental Representative as well as the learned AR submitted before us that the issue raised in the aforesaid grounds are covered by the decision of the Income-tax Appellate Tribunal, Hyderabad Bench in assessee's own case for the earlier assessment year. A copy of the order dated 28/09/2012 passed by the Income-tax Appellate Tribunal, Hyderabad Bench in ITA No. 922 to 925/H/2012 was placed before us. On perusal of the aforesaid order of the coordinate bench, we find that the coordinate bench after following its earlier decision held that chit dividend paid to a subscriber of a chit fund does not partake the character of interest as defined u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A), the assessee contended that it is not just the assessee company which makes certain collections on behalf of the other group companies but the other group companies also reciprocate. It was further contended that the Assessing Officer while disallowing proportionate expenditure has considered the entire expenditure debited to the P&L a/c which was incurred by the assessee in its head office and branches. If at all proportionate disallowance has to be considered, then, it has to be made from the subscription expenses in the respective branches where collection was made on account of subsidiary companies. 9. The CIT(A) after considering the submissions of the assessee and materials produced before him, agreed with the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has challenged the disallowance of an amount of Rs. 61,07,575/- u/s 40(a)(ia) for non deduction tax at source on payments made to M/s Ushakiran Movies Ltd. 13. Briefly the facts of the issue are, in course of the assessment proceedings, the Assessing Officer noticed that the assessee had made various payments to M/s Ushakiran Movies Ltd. While the assessee has deducted tax at source on certain payments made but it has not deducted tax on payment of Rs. 61,07,575/- to the said company. In response to the query made by the Assessing Officer, the assessee replied that no tax is required to be deducted on these payments made to M/s Ushakiran Movies Ltd. as the payments were made towards purchases. The assessee further submitted that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 61,07,575/- consist of payment of Rs. 11,41,614/- made to M/s Ushakiran Movies Ltd. out of amount due to it as on 01/04/2008 and the balance represents payment towards the purchase of various items made by the assessee from M/s Ushakiran Movies Ltd. It was further submitted that out of the purchases made certain purchases were subjected to VAT and the some are not liable as per AP Value added Tax Act and as such the payments are not liable for TDS. The assessee further submitted that TDS under the IT Act depends on the nature of expenditure and the section and the provision under which TDS is to be made. Therefore, it is not correct to hold that TDS to be made on all payments since such payments are made under a composite contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not change. On the basis of the aforesaid conclusion, the CIT(A) held that since the payments were made in pursuance to composite contract for providing marketing services all other components are part and parcel of this contract. Since the assessee has failed to deduct tax at source on the payments made, the CIT(A) sustained the disallowance by the Assessing Officer. 17. The learned counsel for the assessee reiterating the submissions made before the CIT(A) submitted that the payments made were in fact towards purchases and cost of various items like stores consumables, staff drinking water, water charges for garden, staff conveyance, electricity charges, printing and stationery charges, postage and communication, vehicle spares, busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Movies Ltd. will market the shooting locations, sets and various other facilities including equipment of the assessee. For such services, to be rendered, M/s Ushakiran Movies Ltd. was entitled to receive from the assessee commission of 15% on the bills raised. In addition to this clause 16 of the MoU provides that the assessee shall reimburse M/s Ushakiran Movies Ltd. all the charges/costs for utilizing the infrastructural facilities, such as, internal and external road network, parking facilities, water, power and communication facilities. However, from the breakup of the payments of Rs. 61,01,575/- under various heads it appears that they are not exclusively towards reimbursement of charges/cost for utilizing the infrastructural facili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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