CIT vs. Hewlett-Packard India Sales Pvt. Ltd (Karnataka High Court)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: February 16, 2016 (Date of pronouncement)
DATE: March 1, 2016 (Date of publication)
AY: 2007-08
FILE: Click here to download the file in pdf format
CITATION:
No s. 40(a)(ia) disallowance for short-deduction TDS default (i.e. deduction u/s 194H instead of u/s 194H)

The CIT passed an order u/s 263 on the ground that the Assessing Officer has not disallowed the expenditure under Section 40a(ia) of the Act as per the audit report submitted by the statutory auditors in Form 3-CD wherein it was specifically made clear that the assessee has not considered CBDT Circular No.715 in respect of Section 194C of the Act pertaining to deduction of TDS on advertisement contract with M/s TLG India Pvt. Ltd. After hearing the parties, the Commissioner set-aside the assessment order holding that the provisions of Section 40a(ia) of the Act is applicable. Being aggrieved by the said order, the assessee preferred appeal before the Tribunal. The Tribunal having considered the explanation furnished by the assessee before the Assessing Officer which forms part of the assessment records, has come to a conclusion that the assessee has deducted TDS under Section 194H of the Act and the provisions of Section 194C of the Act are not applicable to the present case. On law, it followed the Judgment of the Calcutta High Court reported in S. K. Tekriwal [2014] 361 ITR 432 (Cal). As regards the binding nature of the CBDT Circular, the Tribunal has followed the Judgment of the Apex Court in Hindustan Aeronautics Limited reported in 243 ITR 808. The Tribunal has also followed a co-ordinate Bench decision of this Court in Dhaanya seeds Private Limited reported in ITA No.1523/Bang/2012 dated 27.09.2013. Thus, Tribunal having considered the case on facts and law, has come to a conclusion that the Commissioner had no jurisdiction to invoke the provisions of Section 263 of the Act as the twin conditions which are mandatorily required to be satisfied for invoking the provisions of Section 263 of the Act i.e., (i) order to be revised is erroneous and (ii) prejudicial to the interest of the revenue are not satisfied. On appeal by the department to the High Court HELD dismissing the appeal:

We have carefully considered the arguments addressed by both the parties and perused the material on record in the light of the Judgments referred to by the Tribunal in arriving at the conclusion. An identical question regarding Section 40(a)(ia) of the Act was considered by the Calcutta High Court in S. K. Tekriwal [2014] 361ITR 432 (Cal) and the findings given by the Calcutta High Court has been followed by the Tribunal. Similarly, as regards the binding nature of the CBDT, the Tribunal has followed the Judgment of the Apex Court in HAL (supra). In view of both the decisions cited supra, no substantial questions of law arises for our determination in this appeal.

Note: See the contra view in CIT vs. PVS Memorial Hospital 234 TM 46 (Ker)

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