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TMI Blog2020 (9) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... nd disallowance of bonus or credit provided to subscribers including sales promotion expenses. Disallowance of year end provisions was made by assessee in respect of expenses - whether TDS is deducted in the subsequent years pursuant to bills received and payments made - HELD THAT:- No merit in the argument of the assessee that TDS provisions are not applicable when year-end provisions are made without crediting to respective parties account. To this extent, we are fully subscribed to the findings recorded by the learned AO as well as learned CIT(A). As regards to the claim of the assessee that in subsequent Financial Year year-end provisions have been either reversed or paid subject to deduction of TDS, does not alter the legal position in so far as disallowance of expenses under section 40(a)(ia) for non-deduction of Tax at source. The law is very clear as per which TDS is required to be deducted when credit or payment whichever is earlier. There is no error in findings recorded by the lower authorities in disallowing year-end provisions for non-deduction of TDS under respective provisions of the Act. Accordingly, we reject the ground taken by the assessee. Disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the AY 2009-10 and 2010-11 vide different orders dated 31.12.2011 and 06.02.2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first common issue in these two appeals of assessee for AYs 2009-10 and 2010-11 in ITA Nos. 3214 3215/Mum/2014 is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of discount and various other expenses like discount on sale of set-top box and hardware, discount on sale of recharge coupon vouchers, disallowance of bonus or credit provided by the assessee to subscribers, disallowance of sale promotion expenses and disallowance of channel support expenses for non-deduction of TDS by invoking the provision of section 40(a)(ia) of the Act. 3. The facts and circumstances of both the years are identical as admitted by Ld. Senior Counsel for the assessee as well by Ld. CIT-DR. Hence, we will take the facts from AY 2009-10 and decide the issues raised by the assessee in this year. For this, assessee has raised the following grounds in AY 2009-10: - 1. On the facts and in the circumstances of the case and in law, the Hon ble Commissioner of Income-tax (Appeals) -13. Mumbai [C1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 332 ITR 253) and Intervet India (P.) Ltd (49 taxmann.com 14/3M ITR 238). Ld. Counsel filed a chart before us in regard to the issues decided by the Tribunal, which reads as under: - Summary chart for AY 2009-10 Ground No. Grounds of appeal Reference in the order of the Mumbai Tribunal in the Appellant s own case under section 201 of the Act. 1 Disallowance of discount on sale of Set-top box hardware aggregating to ₹ 23,50,5 1,772 (₹ 13,38,81,648 and ₹ 10111,70,124 respectively) under section 40(a)(ia) of the Act The Mumbai Tribunal at para 34 (page 23) has specifically mentioned about the Appellant giving discount on the sale of Set-top box and recharge coupon vouchers. The Tribunal at para 39 (page 30) has held that such discount is not in the nature of commission 2 Disallowance of discount on the sale of recharge coupon vouchers of ₹ 38,80,61,901 under Section 40(a)(ia) of the Act. 3 Disallowance of bonus or credit provided by the Appellant to subscribers of ₹ 1,54,24,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Counsel for the assessee. Accordingly, it was argued that disallowance of discount given to the customers under section 40(a)(ia) of the Act is unwarranted. However, the AO as well as CIT(A) has inadvertently considered that the discount/bonus given directly to its subscribers as the discount given to the distributors. However, even in such case, having regard to the decision of the Mumbai Tribunal in the Assessee's own case, the discount given to the customers cannot be subject to deduction of tax at source under section 194H of the Act and accordingly, disallowance of discount given to the customers under section 40(a)(ia) of the Act is unwarranted. 6. The learned Counsel for the assessee stated that the issue is squarely covered by Tribunal s decision in ITA No. 6923 to 6926/Mum/2012 in assessee s own case for AYs 2009-10 to 2012-13 order dated 12.10.2018, wherein, while adjudicating the appeal under section 201(1) and 201(1A) of the Act, whether the assessee is liable for TDS, he stated that the Tribunal vide Para 39 has categorically held that the assessee should not be visited with the liability to deduct TDS under section 201(1) and 201(1A) of the Act. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble jurisdictional High Court as mentioned hereinabove are also in favour of the assessee. Hence, there is no question of taking a contrary view following the other high courts. The remarks of the ld. CIT(A) on the jurisdictional High Court decision are totally uncalled for, neither permissible nor sustainable. 40. Hence, in the background of the aforesaid discussion and precedent, we hold that the assessee was not liable to deduct the tax at source on the impugned amounts in this case. 7. When the same was confronted to the learned CIT DR, he could not controvert the above except filing of following case laws: - 1. CIT vs. Idea Cellular Ltd. (2020) 189 Taxman 118 (Delhi) 2. Idea Cellular Ltd. vs. ACIT (2014) 51 taxmann.com 50 (Hyderabad-Trib.) 3. Tata Teleservices Ltd. vs. DCIT (2013) 29 taxmann.com 261 (Bangalore Trib.) 4. Bharti Cellular Ltd. vs. ACIT (2011) 12 taxmann.com 30 (Calcutta). He also filed written note dated 14.03.2018. He submitted that the issue is covered in favour of Revenue and against assessee by the case laws of ITAT, Hon ble High Courts and Supreme Court to support and strengthen the Department's case which are direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome within the ambit of the definition of commission as defined under section 194H of the Act. Therefore, we are of the considered view that the assessee is not required to deduct TDS on discount allowed on sale of Set Top Box and hardware, recharge coupons vouchers and disallowance of bonus or credit provided to subscribers including sales promotion expenses. Hence, by following the decision of ITAT in assessee s own case in the proceeding under section 201(1) and 201(1A) in ITA No. 6923 to 6926/Mum/2012 direct the Assessing Officer to delete the addition towards disallowances under section 40(a)(ia) of the Act on discount of sale of STB hardware, recharge coupon vouchers disallowance of bonus or credit provided to subscribers, sales promotion expenses and distribution channel support expenses for failure to deduct TDS u/s 194H of the IT Act, 1961. This issue of assessee s appeal is allowed. 9. Similar is the facts in respect of this ground for AY 2010-11 in ITA No. 3215/Mum/2014 hence, in that year also the disallowance is deleted on this account. 10. The next issue in ITA No. 3214/Mum/2014 for AY 2009-10 of assessee s appeal is against the order of CIT(A) confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the A Y 20 10-11, the said provision has been reversed and/ or appropriate tax has been deducted and deposited on such expenses. Thus, the assessee claimed that such expenses are to be allowed in FY 2010-11. In this connection, the assessee was asked to provide the details of tax deducted and paid on such amount. 5.4.3) The assessee submitted the details of TDS vide letter dated 04.02.2013. The submission of the assessee is considered and verified The assessee is allowed the deduction of the expense of₹ 56.97,54, 762/-. It is therefore argued that the verification in the present case has already been carried out. However, considering the judicial precedents of the Gujarat High Court and the Mumbai Tribunal, the deduction for year-end provision ought to be allowed in AY 2009-10, and consequently, deduction of the same cannot be granted in the subsequent assessment year (i.e. AY 2010-11). 13. The learned DR on the other hand strongly supported the order of the CIT(A) and submitted that as per the provision of chapter XVII-B of the Act, TDS is required to be deducted either at the time of payment or at the time of credit including even a credit in the suspense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been either reversed or paid subject to deduction of TDS, does not alter the legal position in so far as disallowance of expenses under section 40(a)(ia) of the Act for non-deduction of Tax at source. The law is very clear as per which TDS is required to be deducted when credit or payment whichever is earlier. As regards various case laws referred by the assessee, we find that all those cases are contrary to the provisions of chapter XVII-B r.w.s.40(a)(ia) of the Act, and hence are not followed. Therefore, considering facts and circumstances of the case, we are of the considered view that there is no error in findings recorded by the lower authorities in disallowing year-end provisions for non-deduction of TDS under respective provisions of the Act. Accordingly, we reject the ground taken by the assessee. 16. Similar is the facts in respect of this ground for AY 2010-11 in ITA No. 3215/Mum/2014 hence, the ground taken by assessee challenging disallowance of year end provisions u/s 40(a)(ia) of the Act for non-deduction of TDS is rejected. 17. The next common issue in these two appeals of assessee for AYs 2009-10 2010-11, is as regards disallowance of interest expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said ground, the Bench had requested for a reason for receipt of share capital. In this connection, Ld Counsel for the assessee argued that there is no requirement set out in law to specify the reason for the issue of share capital. Nevertheless, the assessee wishes to point out that it had obtained the license to provide the DTH services from the Central Government of India in 2006. It was explained that the DTH industry is capital intensive and the assessee being in its initial years of operations required significant amount of long term equity funds for its business operations. Accordingly, the assessee has raised share capital of ₹ 517.92 crores in AY 2009-10 ₹ 276.87 crores in AY 2010-11, which were utilized for the purpose of its DTH business. 20. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below along with case laws cited by the learned counsel for the assessee. The facts borne out from record indicate that during the AY 2009-10 and AY 2010-11, the Assessee had Capital Work-in-progress ('WIP') of ₹ 51.87 crores and ₹ 55.09 crores respectively. Further, assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wances of interest for both assessment years. 21. The only common issue in these two appeals of Revenue in ITA Nos. 3971 3972/Mum/2014 for AYs 2009-10 and 2010-11 respectively, is as regards to the order of CIT(A) deleting the disallowance under section 14A of the Act amounting to ₹90,67,986/-. For this, Revenue has raised exactly identical grounds in both Assessment Years the i.e. AYs 2009-10 and 2010-11, hence, we will take the grounds from Assessment Year 2009-10 and will decide the issue. For this, assessee has raised the following grounds: - (i) the learned CIT(A) has erred on facts and in law in deleting the disallowance under section 14A of the Act of ₹90,67,986/- made by the Assessing Officer without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer. (ii) The learned CIT(A) has erred on the facts and in law in not appreciating the fact that even through during the year no tax free income was earned, investment has been made by the assessee in assets which can yield tax free income and hence the disallowance was correctly made by the Assessing Officer. 22. Briefly stated, the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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