9911796707
TMI Blog2016 (3) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... t, if there are to conflicting decisions and in absence of any jurisdictional High Court, decision one favourable to the assessee should be preferred and this proposition has been long back settled by the Hon’ble Supreme Court in the case of Vegetable Products Ltd (1973 (1) TMI 1 - SUPREME Court ). Thus, we hold that, no disallowance under section 40(a)(ia) should be made on short deduction of tax under different or wrong provision of the section. Moreover, in this case, Ld. Counsel has pointed out that the amount paid to Hathway Cable and Datacom Ltd. has been offered to tax in the return of income filed by the said concern, therefore, in view of the second proviso to section 40(a)(ia) no disallowance under section 40(a)(ia) should be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has debited a sum of ₹ 54,27,239/- towards royalty and connection charges on which the assessee had deducted tax @ 2% under section 194C on the ground that the payment has been made in pursuance of a works contract. In response to the show cause notice as to why the TDS should not deducted under section 194J being payment on account of TDS on professional / technical services and why disallowance under section 40(a)(i) should not be made, the assessee submitted that, Royalty and connection charges do not fall within the ambit of "royalty". In fact assessee was not required to deduct TDS, however, by way of abundant precaution it has debited tax-at-source @ 2% under section 194C. The payment does not fall within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(1)(ia) should be made on account of short deduction of tax at source. However, the Ld. Counsel very fairly, pointed out that there is one, Kerala High Court decision in the case of CIT vs M/S. PVS Memorial Hospital Ltd, in ITA No. 16 of 2014 order dated 20.07.2015 wherein the Hon'ble High Court has held that TDS has to be deducted under the right section, because the word "tax-deductible-at-source" should be under appropriate provision and their Lordships have not agreed with the ratio of the Hon'ble Calcutta High Court decision. The Ld. Counsel submitted that, once there are two conflicting High Court decisions of nonjurisdictional High Courts, then, one which favours one which favours the assessee should be followed. In support, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. The AO's case is that, such payment is on account of "royalty" covered within the ambit of section 9(1)(vi) and therefore the TDS should have been deducted under section 194J. Accordingly he made the disallowance of the payment under section 40(a)(ia). The CIT(A) on the other hand relying upon the order of the first appellate order for AY 2009-10 wherein Tribunal decision in the case of CIT vs S K. Tekriwal, was followed, allowed the assessee's ground and disallowance was deleted. Now, the said decision of the Tribunal has been upheld by the Hon'ble Calcutta High Court, wherein the Hon'ble High Court held that, if the assessee under a bona fide belief or under any wrong impression had deducted the tax under a wrong provision or section w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 40(a)(ia). There is nothing in the section to treat the assessee as defaulter for claiming a deduction, where there is a short fall in deduction. This proposition has been upheld by the Hon'ble Kolkata High Court in the case of CIT Vs. S.K. Tekriwal reported in (2014) 361 ITR 432 (Kol). In this case the assessee has deducted tax u/s 194C instead of 194J, the Hon'ble High Court held that the expenses cannot be disallowed u/s 40(a)(ia) merely on account of short deduction of tax at source. Similar view has been taken by the Coordinate Benches in the cases relied upon by the learned counsel, which has been referred in the foregoing para. Accordingly, we hold that no disallowance u/s 40(a)(ia) can be made merely because assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
