Search Results For: TDS disallowance


Mitsubishi Corporation India Pvt. Ltd vs. DCIT (ITAT Delhi)

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DATE: May 26, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2010-11
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CITATION:
S. 40(a)(i): As there is no requirement in the Act to deduct TDS on purchases made from Indian residents, imposing such a condition while making payments to non-residents violates the non-discrimination provision in Article 24 of the DTAA

Article 24 provides in unequivocal terms that for the purposes of determining the taxable profits of an Indian enterprise, any disbursements made to a Japanese enterprise shall be deductible in the same manner as if it had been made to an Indian resident. When we examine the TDS provisions, it is noticed that no provision under the Chapter XVII of the Act stipulates for deduction of tax at source from payment made for the purchases made from an Indian resident. This position when contrasted with purchases made from a non-resident, imposes liability on the purchaser for deducting tax at source under section 195, subject to the fulfilment of other conditions. When we compare an Indian enterprise purchasing goods from an Indian party vis-a-vis from a Japanese party, there is possibility of an obvious discrimination in terms of disallowance of purchase consideration under section 40(a)(i) in so far as the purchases from a Japanese enterprise are concerned. It is this discrimination which is sought to be remedied by para 3 of Article 24

Ballabh Das Agarwal vs. ITO (ITAT Kolkata)

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DATE: May 22, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 40(a)(ia) second proviso was inserted by FA 2012 to rectify the unintended consequence of disallowance in the hands of the payer even if the payee has paid tax. It is curative and retrospective in operation. Assessee's claim of having obtained declarations u/s 197A from the payees should not be disbelieved without evidence. Assessee is not expected to go into the correctness of the declarations filed by the payees

The second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is curative in nature and intended to supply an obvious omission, take care of an unintended consequence and make the section workable. Section 40(a)(ia) without the second proviso resulted in the unintended consequence of disallowance of legitimate business expenditure even in a case where the payee in receipt of the income had paid tax. It has for long been the legal position that if the payee has paid tax on his income, no recovery of any tax can be made from the person who had failed to deduct the income tax at source from such amount

CIT (TDS) vs. Maharashtra State Electricity Distribution Co Ltd (Bombay High Court)

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DATE: May 8, 2015 (Date of pronouncement)
DATE: May 9, 2015 (Date of publication)
AY: -
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CITATION:
S. 194-I/ 194-J: Meaning of expression "rent" and "fees for technical services" explained in the context of transmission & wheeling charges paid by electricity company

The expression rent would also entail an element of possession. In each of the instances contemplated by the explanation to Section 194-I, we see in them an element of possession, be it land, building (including factory building), land appertaining to a building, plant, equipment, furniture or fittings. The person using it has some degree of possessory control, at least momentarily, although it cannot entrust the user title to the subject matter of the charge. Even the mere right to “use” is vested with an element of possessory control over the subject matter

Jitendra Mansukhlal Shah vs. DCIT (ITAT Mumbai)

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DATE: March 4, 2015 (Date of pronouncement)
DATE: March 31, 2015 (Date of publication)
AY: 2005-06, 2006-07
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CITATION:
S. 40(a)(ia): Merilyn Shipping 136 ITD 23 (SB) should be followed in view of approval by Allahabad HC and dismissal of SLP by Supreme Court. In any event as two views are possible, view in favour of assessee should be followed. Amounts already paid without TDS cannot be disallowed

Though there are contrary decisions of the other Hon’ble High Courts, i.e. Hon’ble Calcutta High Court and Hon’ble Gujarat High Court, in the light of the decision of the Hon’ble Allabahad High Court it can be said the there can be two views possible in this matter in which event the one which is in favour of the assessee has to be followed in the light of the decision of the Hon’ble Supreme Court in the case of Vegetable Products Ltd. 88 ITR 192

Rushi Builders and Developers vs. ACIT (ITAT Mumbai)

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DATE: March 4, 2015 (Date of pronouncement)
DATE: March 31, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 271(1)(c): Disallowance of expenditure for failure to deduct TDS does not attract penalty

The disallowance of expenditure was attracted due to non-deduction of TDS and it cannot be said to be a case of concealment of income or furnishing of inaccurate particulars of income. The levy of penalty u/s.271(1)(c) of the Act is not attracted

ACIT vs. Ajit Ramakant Phatarpekar (ITAT Panaji)

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DATE: March 16, 2015 (Date of pronouncement)
DATE: March 23, 2015 (Date of publication)
AY: 2010-11
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CITATION:
S. 40(a)(ia): If an amount becomes taxable due to a retrospective amendment, payments prior to the amendment cannot be disallowed for want of TDS

This is a fact that the retrospective amendment brought by the Finance Act, 2010 was not in existence at the time when the Assessee had made the payments. The Assessee cannot be penalized for performing an impossible task of deducting TDS in accordance with the law which was brought into the statute book much after the point of time when the tax deduction obligation was to be discharged

ACIT vs. Bhavook Chandraprakash Tripathi (ITAT Pune)

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DATE: March 18, 2015 (Date of pronouncement)
DATE: March 23, 2015 (Date of publication)
AY: 2010-11
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CITATION:
S. 40(a)(ia): Merilyn Shipping 136 ITD 23 (SB) cannot be followed but Q whether the second proviso to s. 40(a)(ia) is retrospective or not requires to be considered by the AO

The legal argument that the second proviso to section 40(a)(ia) of the Act (which was inserted by the Finance Act, 2012 w.e.f 01.04.2013 to provide that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act) is retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers requires to be restored to the file of the Assessing Officer

IDBI Capital Market Services Ltd vs. DCIT (ITAT Mumbai)

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DATE: February 18, 2015 (Date of pronouncement)
DATE: March 16, 2015 (Date of publication)
AY: 2008-09
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CITATION:
(i) Mark-to-market loss on interest rate swap contracts is not a notional loss, (ii) Benefit against s. 40(a)(ia) disallowance conferred in Kotak Securities 340 ITR 333 (Bom) has to be extended to cases where ROI was filed pre-delivery of the verdict

The Hon’ble High Court further observed that in these circumstances if both the parties for nearly a decade proceeded on the footing that section 194J is not attracted, then in the assessment year in question, no fault can be found with the assessee in not deducting tax at source under section 194J of the Act and consequently, no action could be taken under section 40(a)(ia) of the Act. As the Return of income for the year under consideration was filed on 14/08/2009 and this decision of the Hon’ble was pronounced on 21/10/2011. Thus, the assessee had already filed the return of income and the time period for deducting tax at source was also lapsed. Considering these peculiar facts, in our considered opinion no disallowance on this account should be made for the year under consideration

AT & S India Pvt. Limited vs. DCIT (ITAT Kolkata)

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DATE: January 29, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 9(1)(vii): Reimbursement of expenditure under cost-sharing agreement does not constitute "income" and there is no obligation to deduct TDS u/s 195

A perusal of the decision of the Supreme Court in Tejaji Farasram Kharawalla Limited (1967) 67 ITR 95 (SC) clearly shows that Supreme Court has categorically held that the reimbursement of the actual expenses would not be taxable in the hands of the person receiving the reimbursements

Gera Developments Pvt. Ltd vs. JCIT (ITAT Pune)

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DATE: December 31, 2014 (Date of pronouncement)
DATE: January 7, 2015 (Date of publication)
AY: 2009-10
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CITATION:
(i) S. 40(a)(ia) disallowance cannot be made if the assessee has not claimed a deduction. (ii) S. 80-IB(10) deduction cannot be denied on the ground that the completion certificate has not been issued by the Municipality if the assessee has completed construction before the due date

Explanation (ii) to section 80IB(10)(a) of the Act prescribes that the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority

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