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TMI Blog2019 (5) TMI 1502X X X X Extracts X X X X X X X X Extracts X X X X ..... research surveys, data compilation and translation etc.. Thus, Revenue fails in this appeal. - I.T.A. No. 1206/Mum/2018 - - - Dated:- 23-5-2019 - Shri Saktijit Dey, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Smt. Aarti Vissanji And, Shri. Ajit C. Shah And Ms. Aastha Shah For the Revenue : Shri. B. Srinivas (CIT-DR) ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by Revenue, being ITA No. 1206/Mum/2018, is directed against appellate order dated 12.12.2017, passed by learned Commissioner of Income Tax (Appeals)-4, Mumbai (hereinafter called the CIT(A) ), for assessment year(AY) 2012-13, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 23.03.2016 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) r.w.s. 144C(3) of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2012-13. 2. The grounds of appeal raised by Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had deducted income-tax at source u/s 194C of the 1961 Act while AO was of the view that the said services rendered were in the nature of technical services and as per AO income-tax ought to have been deducted at source u/s. 194J of the 1961 Act and hence additions u/s 40(a)(ia) were made by the AO as the assessee had deducted income-tax at source u/s 194C as against income-tax which ought to have been deducted u/s 194J of the 1961 Act on payments to various fields agent for conducting research surveys, data compilation and translation etc., wherein the AO vide assessment order dated 23.03.2016 passed u/s 143(3) read with Section 144C(3) held as under:- 6.2. The contention put forth by the authorised representative of the assessee has been duly considered but not found acceptable. The Field Agents for conducting research survey and Data Analysis Tabulation as the services availed for these expenses were in the nature of professional/ technical services. The provisions of section 194C come into force when the work is labour intensive and when the element of technical service is involved, the matter will be governed by section 194J. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e will find several authorities and suffice it will be to rely on the Supreme Court decisions in the case of Goodyear India Ltd. vs. State of Haryana [1991] 188 ITR 402 (SC) and also CIT vs. National Taj Traders [1980]121 ITR 535 (SC). 6.5. Section 40 has certain clauses providing for the amounts which are not deductible. Sub-clause (ia) of clause (a) of section 40 was inserted by the Finance (No.2) Act, 2004 with effect from 1st April, 2005 reading as under;- 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computed the income chargeable under the head 'Profits and gains of business or profession'-................ (ia)any interest, commission or brokerage, 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 or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section(1) of section 200; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be chargeable to income-tax under this head. Section 29 is computing provision which provides that income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43D. Sections 30 to 37 grant various deductions on account of expenses / allowances etc. Section 38 restricts the amount of depreciation allowance u/s 32. Then comes section 40 with the marginal note Amounts not deductible . It starts with the non-obstante clause by providing that notwithstanding anything to the contrary in sections 30 to 38, the amounts specified in this section shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession . Thus it is vivid that section 40 has overriding effect over sections 30 to 38. In other words if any expenditure or allowance is deductible as per the provisions contained in sections 30 to 38, it shall cease to be deductible if it falls within the domain of section 40. But for the prescription of section 40, the expenses or allowances otherwise deductible u/s 30 to 38 do not fail to qualify for deduction. Thus it is palpable that section 40 is a substantive provision which app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 38,67,70,433 Data Analysis Tabulation (₹ 15,31,42,352/-Minus ₹ 4,07,52,456/-} ₹ 11,23.89,896 Total ₹ 49,91,60,329 6.9. Therefore, for non-deduction of the TDS as per provision of Section 194J of the Income Tax Act, 1961 on amount of ₹ 49,91,60,329/-, by invoking provisions of Section 40(a)(ia) of Income Tax Act, 1961, is hereby disallowed and added back to the total income of the assessee. Penalty proceedings u/s. 271(1 }(c) of the Income-tax Act, 1961 is initiated separately for furnishing inaccurate particulars of income. 4. Aggrieved by an assessment framed by the AO u/s 143(3) read with Section 144C(3), the assessee filed first appeal with Ld. CIT(A) who observed that tribunal in assessee s own case from AY 2005-06 to 2010-11 has decided this issue in favour of the assessee. The learned CIT(A) vide appellate order dated 12.12.2017 by following the decision of tribunal in assessee s own case for AY 2010-11 in ITA no. 6729/Mum/2014 decided the issue in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the assessee that the appellate order of the Ld. CIT(A) be upheld as Section 40(a)(ia) has no applicability on short deduction of income-tax at source. 7. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is engaged in the business of Advertising Marketing Research. The assessee had made payments to various fields agent for conducting research surveys, data compilation and translation etc., during the previous year relevant to the impugned assessment year against which income-tax was deducted at source by the assessee by relying on the provision of section 194C while the revenue has contended that the income-tax ought to have been deducted at source u/s. 194J of the 1961 Act. The tribunal in assesses own case for earlier years has consistently held in favour of the assessee and deleted the additions on the ground that income-tax in any case has been deducted at source u/s. 194C and Section 40(a)(ia) has no applicability on short deduction of income-tax at source and consequently no disallowances are warranted u/s. 40(a)(ia). The tribunal has followed the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractual in nature, including supply of labour but Revenue is contending that these payments are for rendering of professional services and the assessee had wrongly deducted income-tax at source u/s 194C instead of applying provisions of Section 194J for deduction of income-tax at source. Thus, there was clearly a difference of opinion between the assessee and the Revenue. Thus, clearly facts are distinguishable in the instant appeal before us. One of the laudable objective of introducing system of deduction of income-tax at source under Chapter XVII-B of the 1961 Act is to collect income-tax at source at the time of making payment by payer to the payee to shore up the Revenue of Government while the other important objective of the system of deduction of income-tax at source under Chapter XVII-B by payers at the time of making payments to payee is to capture complete details of the transaction viz. nature of payments, quantum of payments, details of payee and payer by Income-tax Department so that reporting mechanism is created with income-tax data base as well audit trail is created to bring the transaction to income-tax so that there is no leakages of revenue or escapement of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1 % of such sum. In order to reduce the compliance burden on the small taxpayers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakh rupees. This amendment will take effect from 1st June, 2013. Thus, in the memorandum explaining provision of Finance Bill, 2013, it is clearly stipulated that insertion of Section 194IA is an measure to widen tax base and is an anti tax avoidance measure. Both the rival parties did not brought to our notice, judgment of Hon ble jurisdictional High Court on this issue. Coming back to the instant appeal before us, the details of appeals in assessee s own case for earlier years wherein tribunal had decided this issue in favour of the assessee are as under: 1. Hindustan Thompson Associates P. Ltd. v. AC1T [ITA No. 6184, 1302, 6185/Mum./2011 - Assessment Year 2005-06, 2006-07, 2007-08, Order dated 25th May, 201 ..... 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