9911796707
TMI Blog2023 (7) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... after audit of the company, levies penalty on the assessee - HELD THAT:- We find that this issue is already settled in favour of the assessee by decision of this Tribunal in assessee s own case for AY 2015-16 [ 2023 (7) TMI 232 - ITAT DELHI] held that payment made towards penalty for violation of KYC norms would not fall within the ambit of Explanation 1 to section 37(1) of the Act. Decided in favour of assessee. TDS u/s 194H - Disallowance of expenditure u/s 40(a)(ia) - assessee sells the pre-paid SIM Card with available talk time worth Rs. 100/- at a discounted price of Rs 70 to the distributors - HELD THAT:- As decided in assessment year 2015-16 own case [ 2023 (7) TMI 232 - ITAT DELHI] provisions of section 194H are not attracted to the discounts given to distributors. Hence, section 40(a)(a) would not be applicable. Decided in favour of assessee. - ITA No. 6547/Del/2019 And ITA No. 6548/Del/2019 - - - Dated:- 19-7-2023 - Shri M. Balaganesh, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Appellant : Mr. P. Praveen Sidharth, CIT-DR For the Respondent : Mr. Anil Bhalla And Mr. Vinay Meena, CAs ORDER PER M. BALAGANESH AM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition made on account of disallowance u/s 40(a)(ia) of the I.T.Act, 1961 amount to Rs. 83,46,72,606/-. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forgo any grounds(s) of appeal at any time before or during the hearing of this appeal. 2. As identical issues are involved in both these appeals, hence they are taken up together and disposed of by this common order for the sake of convenience. The appeal of the Revenue for AY 2013- 14 is taken up for adjudication and the decision rendered thereon shall apply with equal force for AY 2014-15 also in view of identical facts except with variance in figures. 4. The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in deleting the disallowance made on account of amortization of variable licence fee and allowing the same as revenue expenditure u/s 37(1) of the Act. 5. We have heard the rival submissions and perused the material available on record. The assessee company is engaged in the business of Cellular phone and landline servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount paid for violation of any law in force and thereby it attracts the provision of Explanation to section 37(1) of the Act. Accordingly, the Ld. AO proceeded to disallow the same in terms of Explanation to section 37(1) of the Act. The assessee pleaded that this payment is made as part and parcel of contractual obligation and that it was not paid for breach of any law for the time being in force. Further, it was submitted that the very same issue was covered in favour of the assessee by the order of the Ld. CIT(A) in Assessment Years 2012-13 and 2015-16, wherein it was held that the penalty levied due to omission in verification of subscribers data without infringement of law is to be treated as compensatory in nature. Accordingly, the Ld. CIT(A) following the precedents and decision of various High Courts, deleted the disallowance. 8. We find that this issue is already settled in favour of the assessee by decision of this Tribunal in assessee s own case for AY 2015-16 in ITA No. 3522/Del/2019 dated 16/06/2013 wherein it was held as under: 10. We have considered rival submissions, decisions relied upon and materials on record. Undisputedly, the disallowance of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal liability or prosecution. As per the license agreement, for violation of any terms of the agreement including KYC norms, the assessee is to be visited with penalty of various amounts. As already discussed, such penalty is imposed as a deterrent measure and not for any offense or due to prohibition of law. It is further necessary to observe, the penalty arises because of breach of certain terms and conditions of the license agreement, hence, in regular course of business. . Pertinently, in case of Mangal Keshav Securities Ltd. vs. ACIT (2016) 46 ITR(T)458 (Mumbai), the coordinate Bench, while dealing with more or less identical issue of penalty levied by Stock Exchange for violation of KYC norms, has held that payment made towards penalty for violation of KYC norms would not fall within the ambit of Explanation 1 to section 37(1) of the Act. Thus, in our view, in the facts of assessee's case, the exceptions provided under Explanation 1 to section 37(1) of the Act will not get attracted. Thus, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the disallowance. Ground raised is dismissed. 8.1. Respectfully following the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted tax at source while allowing such discounts/margins to the distributors, the Assessing Officer disallowed an amount of Rs. 14,37,08,678/- by invoking provisions of section 40(a)(ia) of the Act. Assessee contested the aforesaid disallowance by filing an appeal before Id. Commissioner (Appeals). Noticing that identical issue has been decided in favour of the assessee by the Hon'ble Gauhati High Court, learned Commissioner (Appeals) deleted the disallowance. 16. Before us, it is a common point between the parties that the issue stands squarely covered in favour of the assessee by decisions of various Benches of the Tribunal as well as Hon'ble Gauhati High Court. 17. Having considered rival submissions, we find, while dealing with identical issue in assessee's own case for earlier assessment years, various Benches of the Tribunal have held that the provisions of section 194H are not attracted to the discounts given to distributors. Hence, section 40(a)(a) would not be applicable. Pertinently, the Hon'ble Rajasthan High Court has decided the issue in favour of the assessee in earlier assessment years. In fact, in the latest order passed for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
