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TMI Blog2016 (8) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld. CIT(A) is incorrect. Therefore, we are of the view that the CIT(A) has rightly deleted the additions made by the A.O. under the provisions of section 40(a)(ia) of the Act, by holding that the expenditure incurred by the assessee is not coming under the provisions of section 30 to 38 of the Act, hence no disallowance can be made u/s 40(a)(ia) for non deduction of TDS. We do not see any error or infirmity in the order passed by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue. - Decided in favour of assessee. - I.T.A.Nos.593&594/Vizag/2013, C.O. Nos.125&126/Vizag/2013 - - - Dated:- 29-6-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri A. Ramesh Kumar, DR For The Respondent : Shri C. Subrahmanyam, AR ORDER PER G. MANJUNATHA, Accountant Member: These are two appeals filed by the revenue and cross objections filed by the assessee are directed against the separate, but identical orders of CIT(A), Visakhapatnam for the assessment years 2007-08 2009-10. Since, the facts are identical and issues are common, they are clubbed, heard together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the main activity of the assessee, therefore, adjustable against the revenue for the purpose of determining the profit from the business under the provisions of section 28(1) of the Act. Hence, any payments made in the nature of direct expenditure are not hit by the provisions of section 40(a)(ia) of the Act. In support of his arguments relied upon the decision of ITAT Hyderabad bench in the case of Teja Constructions Vs. ACIT (2010) 36 DTR 220 and also ITAT Delhi bench decision in the case of ITO Vs. Aahar Consumer Products Pvt. Ltd. in ITA No.2910/Del/2010. The CIT(A) after considering the explanations furnished by the assessee held that the expenditure incurred by the assessee is in the nature of direct expenditure referred to in section 28 of the Act, which is incurred to earn the revenue from the business, therefore, not coming within the provisions of section 40(a)(ia) of the Act. With these observations, deleted the additions made by the A.O. under the provisions of section 40(a)(ia) of the Act. Aggrieved by the CIT(A) order, the revenue is in appeal before us and raised the following grounds: 1. The order of the CIT(A) is erroneous on facts and in law. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding anything to the contrary in section 30 to 38 of the Act the following amount shall not be deducted. On a close reading of the provisions of section 40(a)(ia) of the Act, it would apply with regard to the payments made related to section 30 to 38 of the Act alone. This indicates that any item of expenditure allowable under the provisions of the Act preceding to section 30 of the Act are not covered by the said statutory disallowance envisaged under the provisions of section 40(a)(ia) of the Act. The A.R. further submitted that payments made by the assessee to pay channels represents direct cost incurred for the purpose of earning income and therefore adjustable against revenue for the purpose of determining the profit provided u/s 28(1) of the Act before allowing any deductions towards expenditure/deductions envisaged under the provisions of section 30 to 43D of the Act. Since, the expenditure incurred by the assessee is in the nature of direct expenditure, the provisions of section 40(a)(ia) of the Act for non deduction of TDS is not applicable. The CIT(A) has rightly deleted the additions therefore, his order should be upheld. 6. We have heard both the parties and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows: 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession . (a) In the case of any assessee (ia) any interest, commission or brokerage, [rent, royalty] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub-section (1) of section 139] . 9.5 A literal reading of the above provision indicates that the disallowance u/s.40(a)(ia) comes into play for non-deduction of TDS on the expenses referred in section 30 to 38 of the I.T. Act. The nature of payment to the channel companies is for distribution of the channels to the subscribers through cable operators, and the payment is made for the purpose which is not in dispute. The subscription revenue is earned f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made u/s 40(a)(ia) in regard to payment to channel companies is directed to be deleted. This ground of appeal is allowed in favour of the appellant. 8. The facts remain same before us. The revenue has failed to brought on record any evidences to prove that the findings of the fact recorded by the Ld. CIT(A) is incorrect. Therefore, we are of the view that the CIT(A) has rightly deleted the additions made by the A.O. under the provisions of section 40(a)(ia) of the Act, by holding that the expenditure incurred by the assessee is not coming under the provisions of section 30 to 38 of the Act, hence no disallowance can be made u/s 40(a)(ia) for non deduction of TDS. We do not see any error or infirmity in the order passed by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the revenue. 9. The assessee has filed cross objections supporting the order of the Ld. CIT(A). Therefore, for the reasons recorded in the preceding paragraphs, we dismiss the cross objections filed by the assessee as not maintainable. 10. In the result, the appeals filed by the revenue in ITA Nos.593 594/Vizag/2013 and the cross objections filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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