Income Tax Appellate Tribunal - Mumbai
Metro Shoes Ltd, Mumbai vs Ito (Tds) 2(2), Mumbai on 31 July, 2017
Page |1
Metro Shoes Ltd. Vs. ITO
A.Y's. 2009-10 to 2012-13
IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI
BEFORE SHRI G.S. PANNU, AM AND SHRI RAVISH SOOD, JM
आयकर अपील सं ./ I.T.A(s). No. 1460 to 1462/Mum/2014
&
I.T.A. No. 3528/Mum/2015
(निर्धारण वर्ा / Assessment Year: 2009-10 to 2012-13)
Metro Shoes Ltd. Income Tax officer (TDS)-2(2)
Metro House, 3 floor,
rd
बिधम/ Mumbai
Shahid Bhagat Singh Marg, Vs.
Colaba Causeway, Colaba,
Mumbai-400 001
स्थायीलेखासं ./जीआइआरसं ./ PAN/GIR No. AAACM4754E
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
आमकय अऩीर सं./I.T.A (s). No. 1263 to 1265/Mum/2014
&
I.T.A. No.4015/Mum/2014
(ननधधायण वषा / Assessment Year: 2009-10 to 2012-13)
DCIT (TDS)1(3) M/s Metro Shoes Ltd.,
R. No. 703, 7 Floor,
th
बिधम/ Metro House, 3rd Floor,
Smt. K.G. Mittal Ayurvedic Vs. S.B.S Road, Colaba Causeway
Hospital Bldg, Charni Road, Mumbai: 400 001
Mumbai- 4000 02
स्थधमीरेखधसं ./ जीआइआयसं ./ PAN/GIR No. AAACM4954M
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
अपीलाथी की ओर से /Appellant by : Shri V. Vidhyadhar (D.R)
प्रत्यथी की ओर से / Respondent by : Shri D.V. Lakhani (A.R.)
सुनवाई की तारीख/
: 04/07/2017
Date of Hearing
घोषणा की तारीख /
: 31/07/2017
Date of Pronouncement
Page |2
Metro Shoes Ltd. Vs. ITO
A.Y's. 2009-10 to 2012-13
आदे श / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER
The present cross appeals filed by the assessee and the revenue are directed against the orders passed by the CIT(A)-14, Mumbai for A.Y. 2009- 10 to A.Y. 2011-12, dated 10.12.2013, 18.12.2013 and 18.12.2013, respectively and the order passed by the CIT(A)-59, Mumbai for A.Y. 2012- 13, dated 13.04.2015, which in itself arises from the respective orders passed by the A.O u/s. 201(1)/201(1A) of the Income tax Act, 1961 (for short „Act‟). That as certain common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed of by way of a consolidate order. We first take up the appeal of the assessee for A.Y. 2009-10, wherein the latter assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
"1. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 is applicable and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for web hosting charges amounting to Rs. 2.07,500/-. The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
2. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for renewal of SAP licence of Rs. 2,23,004/-. The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
3. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the levy of interest u/s 201(1A) of Income Tax Act, 1961. The Learned Commissioner of Income Tax (Appeals) has erred confirming the levy of interest u/s. 201(1A) for a period of 39 months in respect of the tax determined u/s. 201 in respect of the two items referred to the Ground No. 1 & 2 Page |3 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 above. The appellant prays that the levy of interest as computed by the Assessing Officer is not justified and be deleted.
4. The appellant craves leave to add, alter or amend the grounds of appeal which are without prejudice to one other".
2. Briefly stated, the facts of the case are that the assessee company is engaged in the business of sale of shoes, bags and other leather products. The assessee company which has a countrywide network of exclusive metro showrooms at more than 72 locations across 32 cities in India, procures goods from various parties which are sold after labelling and packaging the same.
3. That survey action u/s. 133A of the „Act‟ was carried out on 04.08.2011 at the premises of the assessee company, viz. Metro House, 3rd floor, S.B.S. Road, Colaba Causeway, Mumbai, in order to verify the compliance of the TDS provisions by the latter. That during the course of the survey proceedings it was observed that the assessee company had either failed to deduct or had short deducted tax at source in respect of certain amounts. The A.O thereafter on the basis of the information gathered during the course of the survey proceedings, therein holding the assessee as being in default in respect of the aforesaid failure to deduct and/or short deduction of tax at source, held the latter as being in default in respect of certain transactions, which are briefly culled out as under:-
Sr. Particulars Nature of Default Demand towards Interest No. (As per A.O) tax u/s.201(1) u/s 201(1A) 1 Amount returned by banks Failure to deduct Rs.10,69,228/- Rs.3,84,921/-
for providing facility of sales TDS u/s. 194H through „credit cards‟ 2 Short deduction of tax at Short deduction of Rs.2,10,874/- Rs.82,241/-
source on payments made TDS on account of
towards AMC of computer rate difference
software, A.C. and pest (194J (-) 194C) at
control etc, wrongly made the rate of 8%.
by the assessee u/s.194C,
as against Section 194J
3 Short deduction of TDS on Short Deduction of Rs.20,66,550/- Rs.8,05,955/-
payments made towards TDS on account of
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Metro Shoes Ltd. Vs. ITO
A.Y's. 2009-10 to 2012-13
„hoarding charges‟ wrongly rate difference (194
made by the assessee u/s. I (-) 194C at the
194C, as against Section rate of 8%.
194I.
4 Deduction of tax at source Short deduction of Rs.1,87,514/- Rs.73,130/-
on payments made towards TDS on account of
retainership fees paid to rate difference
M/s. Makani creative Pvt. (194J (-) 194C) at
Ltd. wrongly made by the the rate of 8%.
assessee u/s. 194C as
against Section 194J. ( The
assessee due to payment of
taxes by the payee was
thus not held to be in
default as regards „tax‟
u/s.201(1))
The A.O thus deliberating on the aforesaid defaults on the part of the assessee for having failed to deduct and/or carried out short deduction of tax at source, therein raised an additional demand aggregating to Rs.47,92,899/- u/s. 201(1)/201(1A) in the hands of the assessee company.
4. The assessee being aggrieved with the order of the A.O passed u/ss. 201(1)/201(1A), therein assailed the same before the CIT(A). The CIT(A) after deliberating on the contentions raised by the assessee before him in the backdrop of the facts of the case, therein concluded in respect of the various issues before him, as under:-
(A). TDS on commission paid to bank for 'Credit Card' sales facility:-
The CIT(A) taking support from the order passed by a coordinate bench of the ITAT, Mumbai in the case of M/s Kotak Securities Ltd. in ITA No. 6657/Mum/2011, dated 03.02.2012 for A.Y. 2004-05, wherein the Tribunal had observed as under:-
"In the case before us, there is no principal agent relationship between the bank issuing the bank guarantee and the assessee. When bank issues the bank guarantee, on behalf of the assessee, all it does is to accept the commitment of making payment of a specified amount to, on demand, the beneficiary and it is in consideration of this commitment, the bank charges Page |5 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 a fees which is customarily termed as 'Bank Guarantee Commission. While it is termed as "guarantee commission" it is not the nature of commission' as it is understood in 'common 'business parlance and in the context of the section 194H. This transaction, in our considered view, is not a transaction between principal and agent so as to attract the tax deduction requirements u/s.194H. We are, therefore, of the considered view that the CIT(A) indeed, erred in holding that the assessee was indeed under obligation to deduct tax at source u/s 194H from payments made by the assessee to various banks. As we have held that the assessee was not required to deduct tax at source u/s. 194H, the question of levy of interest u/s. 201(1A) cannot arise. In view of the above discussion, we quash the impugned demands u/s. 201(1) and 201(1A) r.w.s.194H. We therefore also see no need to deal with other peripheral legal issues raised by the assessee".
, thus being of the considered view that as similar facts were involved in the case of the assessee company, therefore concluded that the assessee was not required to deduct tax at source in respect of payments made to the acquiring bank for the facility of its credit card internet gateway provided to the assessee company. The CIT(A) thus on the basis of his aforesaid conviction held that the assessee could not be considered as being in default u/s. 201(1), and resultantly deleted the aggregate demand of Rs.14,54,149/- raised by the A.O in the hands of the assessee company u/ss. 201(1)/201(1A).
(B). As regards deduction of tax at source in respect of payment on Annual maintenance contracts, (AMC):-
(i). The CIT(A) being of the considered view that while for the „Web Hosting Charges‟ of Rs. 2,07,500/-(out of total amount of Rs.3,97,476/-) were paid by the assessee to a person who was technically qualified, therefore, the same was inescapably covered within the meaning of „fees for technical services‟ as provided in Explanation 2 of Section 9(1)(vii). The CIT(A) in the backdrop of her aforesaid observations concluded that the A.O had rightly held that the assessee was liable to deduct tax at source u/s. 194J in respect of the aforesaid payments, and thus upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of the payments made towards web hosting charges.
(ii) The CIT(A) further observed that as the balance payment of Rs.1,84,236/- was made by the assessee for purchase of computer parts, Page |6 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 therefore, there was no obligation on its part to have deducted tax at source in respect of the said amount. The CIT(A) thus on the basis of her aforesaid observations set aside the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of the aforesaid payments.
(iii) That as regards the amount of Rs.2,23,004/-paid by the assessee for renewal of SAP Licence, it was observed by the CIT(A) that as the same was clearly in the nature of payment towards technical services/royalty, therefore, the A.O had rightly held that the assessee was under a statutory obligation to deduct tax at source u/s. 194J in view of the meaning of the term „fees for technical services‟/„royalty‟ provided in Explanation 2 of Section 9(1)(vii)/Section 9(1)(vi) of the „Act‟. The CIT(A) thus on the basis of her aforesaid observations upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of the aforesaid payments.
(iv) That as regards the amount paid by the various retail dealers of the assessee company towards computer AMC, it was observed by the CIT(A) that as each of the respective payment was found to be lower than Rs.20,000/-, therefore, the assessee remained under no obligation for deducting tax at source in respect of the said amounts. The CIT(A) thus on the basis of her aforesaid observations set aside the order of A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of payments made by the retail outlets for computer AMC.
(v) That the CIT(A) referring to the payments made by the assessee company in respect of AMC for pest control, therein observed that as the same could not be categorized as professional or technical services, but were definitely in the nature of a contract work, therefore, the assessee had rightly deducted tax at source u/s. 194C and was under no obligation to have carried out the deduction u/s. 194J. The CIT(A) thus on the basis of her aforesaid observations set aside the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of short/deficit deduction of tax at source in respect of the aforesaid payments.
Page |7 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13
(vi) That as regards the amount paid by the assessee company in respect of the AMC for air conditioners, it was observed by the CIT(A) that as the same was clearly backed by a composite contract for supply of spare parts and services, therefore, the assessee had rightly deducted the tax at source u/s. 194C and was under no statutory obligation to have taken recourse to deduction of tax at source u/s. 194J. The CIT(A) on the basis of her aforesaid observations thus set aside the order of the A.O holding the assessee company as being in default in respect of short/deficit deduction of tax at source u/ss. 201(1)/201(1A) in respect of the aforesaid payments.
(C) TDS on 'Hoarding Charges':
The assessee submitted before the CIT(A) that as the payments for advertisements on Hoardings/Bill boards aggregating to Rs.1,09,50,477/-, were made pursuant to contracts with the respective parties, viz. individuals or society/owner of building/land for providing the right of display on the hoarding sites, and were not for use of any land or building, therefore, the payments made therein could not be characterized as being in the nature of amounts paid towards rent for taking on lease, sub-lease, tenancy or any other agreement or arrangement for in respect of land or building, pursuant whereto no obligation was cast upon it to deduct tax at source u/s. 194I. It was submitted by the assessee before the CIT(A) that as the respective payments were made to the parties for facilitating display of advertisements on such hoarding/bill boards, therefore, the assessee company had rightly deducted tax at source u/s. 194C.
5. The CIT(A) after deliberating on the contentions raised by the assessee before her in the backdrop of the facts of the case, therein referring to CBDT Circular No. 715, dated 08.08.1995, which clearly provided that as the contract for putting up of a hoarding was in the nature of an advertising contract, therefore, the provisions of Section 194C would be applicable in respect of the amounts paid towards hoarding/bill board charges. The CIT(A) further observed that the aforesaid CBDT Circular No. 715 (supra) further provided that if there was a sub-letting of hoarding by the assessee, Page |8 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 then the latter would remain under a statutory obligation to deduct tax at source u/s. 194I. The CIT(A) in the backdrop of the aforesaid settled position of law, therein being of the considered view that as the assessee had not indulged in sub-letting of hoarding rights acquired by it, therefore concluded that the payments made by the assessee were towards a works contract, and the tax was liable to be deducted u/s.194C. The CIT(A) on the basis of her aforesaid observations therein set aside the order of the A.O treating the assessee company as being in default u/ss. 201(1)/201(1A) for short/deficit deduction of tax at source in respect of the payments made towards hoarding charges, and resultantly set aside the aggregate demand of Rs.28,72,505/- raised by the A.O in the hands of the assessee company on the said count.
(D). TDS on retainership fees paid to M/s. Makani Creative Pvt. Ltd :
That the assessee assailed before the CIT(A) the order of the A.O treating it as being in default u/ss. 201(1)/201(1A) for having carried out short/deficit deduction of tax at source in respect of retainership fees paid to M/s Makani Creative Pvt. Ltd., by wrongly carrying out the deduction under Sec 194C, as against Sec. 194J. The assessee submitted before the CIT(A) that as the payment to the aforesaid concern, viz. M/s. Makani Creative Pvt. Ltd. (supra) was in respect of the work which was actually executed by them, and the assessee company had not availed any professional or technical services of the said concern, therefore, the deduction of tax at source was rightly made under Section 194C, while for the applicability of Section 194J stood clearly excluded.
6. The CIT(A) after giving a thoughtful consideration to the contentions raised by the assessee before her in the backdrop of the facts of the case, therein concluded that as the aforesaid concern, viz. M/s Makani Creative Pvt. Ltd., (supra) had provided professional services to the assessee company in respect of various activities, viz. art work, advertisement, visual merchandiser, therefore, it was clearly established that the assessee was availing the professional services of the aforesaid concern. The CIT(A) further Page |9 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 observed that even the „bill‟ raised by the said concern, viz. M/s Makani Creative Pvt. Ltd. (supra) on the assessee company was in respect of retainership fees. The CIT(A) thus concluded that the A.O was principally right in concluding that the assessee was liable to deduct tax at source u/s. 194J, and as such was to be treated as being in default u/ss. 201(1)/201(1A) for the short/deficit deduction of tax at source u/s. 194C.
7. The CIT(A) however finding herself to be in agreement with the contention of the assessee that as the aforesaid payee, viz. M/s. Makani Creative Pvt. Ltd. (supra) had paid the tax in respect of the amount received from the assessee company, therefore, the latter in the backdrop of the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd. (Supra) Vs. CIT (2007) 293 ITR 226 (SC) was therefore not to be treated as being in default in respect the tax liability u/s. 201(1). It was however observed by the CIT(A) that the assessee would continue to be liable for interest u/s. 201(1A) from the date on which such tax was deductible, till the date on which such tax was paid by the payee.
8. That the assessee being aggrieved with the order of the CIT(A) partly sustaining the order of the A.O treating the assessee as being in default u/ss.201(1)/201(1A) for short/deficit deduction of tax at source, had therein carried the matter in appeal before us.
9. That the Authorized Representative (for short A.R.) for the assessee at the very outset of the hearing of the appeal submitted that the CIT(A) had erred in sustaining the order of the A.O holding the assessee as being in default u/ss. 201(1)/201(1A), for the reason that the latter had failed to deduct tax at source u/s. 194J in respect of the payments made towards „Web Hosting Charges‟ amounting to Rs.2,07,500/- (out of expenses aggregating to Rs. 3,97,476/- booked by the assessee under the head „Purchase of Computer parts & accessories‟). It was submitted by the ld. A.R that the CIT(A) had wrongly concluded that „Web Hosting Charges‟ came within the purview of the definition of „fees for technical services‟ contemplated in the Explanation 2 of Section 194J, therein rendering the P a g e | 10 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 assessee liable for deduction of tax at source under the aforesaid statutory provision. The ld. A.R. in order to drive home his contention that the payments made towards „Web Hosting Charges‟ did not call for any deduction of tax at source under Sec. 194J, therein relied on the following judicial pronouncements:-
1. DDIT Vs. Saavis Communication Corporation (69 taxmann.com 106) (Mumbai, ITAT).
2. ITO Vs. Right Florists (P.) Ltd. (32 taxmann.com 99) (Kolkata, ITAT).
3. Yahoo India (P.) Ltd. Vs. DCIT (11 taxmann.com 431) (Mumbai ,ITAT)
4. Pinstorm Technologies (P.) Ltd. Vs. ITO (24 taxmann.com 345) (Mumbai).
The ld. A.R. taking support of the aforesaid judicial pronouncements, therein submitted that the order of the lower authorities holding the assessee as being in default u/ss. 201(1)/201(1A) for having failed to deduct tax at source u/s. 194J in respect of the payments made towards „Web Hosting Charges‟ could not be sustained and was liable to be vacated. Alternatively, it was averred by the ld. A.R that as an amount of only Rs. 17,292/- out of the total „Web Hosting Charges‟ of Rs.2,07,500/- pertained to the year under consideration, therefore, even otherwise the liability as regards deduction of tax at source was liable to be restricted to the latter amount, viz. Rs. 17,292/-. Per contra, the ld. Departmental Representative (for short D.R.) placed reliance on the orders of the lower authorities, and therein submitted that as the payments made by the assessee towards „Web Hosting Charges‟ squarely fell within the scope and gamut of „technical services‟, therefore, the assessee was liable to deduct tax at source u/s. 194J. It was thus averred by the ld. D.R that the assessee having failed to deduct tax at source under Sec. 194J, had thus rightly been held by the lower authorities as being in default u/ss. 201(1)/201(1A).
10. We have heard the Authorized Representatives for both the parties on the aforesaid issue under consideration, perused the orders of the lower authorities and the material produced before us. We find that the term „fees P a g e | 11 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 for technical services‟ defined in Explanation 2 of Section 9(1)(vii), therein reads as under:-
"Explanation [2].--For the purposes of this clause, "fees for technical services"
means any consideration (including any lump sum consideration) f or the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".
Thus, a perusal of the aforesaid definition of the term „fees for technical services‟ clearly reveals that any consideration (including any lump sum consideration) paid by an assessee for the rendering of any managerial, technical or consultancy services (including provision of services of technical or other personnel) had been brought within the sweep of the aforesaid term. We find that the assessee during the year had incurred the aforesaid charges for facilitating hosting of its ecommerce website on the partner servers (i.e cloud based server hosting), and as stands gathered from a perusal of Page 88 of „APB‟, had made the aforesaid payment to M/s Infoton Systems & Services (P) Ltd, Mumbai. We find that our indulgence in the present case had been sought for adjudication of the issue as to whether or not the amount paid by the assessee towards „Web Hosting Charges‟ could be characterized as payments made towards „fees for technical services‟, therein casting a statutory obligation on the assessee to deduct tax at source u/s. 194J. We are of the considered view that the adjudication of the aforesaid issue would require understanding of the scope and gamut of the term „technical services‟. We find that the term „technical services‟ had been deliberated upon and adjudicated by the Hon'ble High Court of Madras in its landmark judgment passed in the case of Skycell Communication Ltd. and another Vs. DCIT and Others (2001) 251 ITR 53 (Mad). The Hon‟ble High Court on the basis of a conjoint reading of Section 194J r.w.s. Section 9(i)(vii), Explanation 2 had observed that the legislature in all its wisdom had not set out with precision as to what would constitute "technical" service to render it "technical service". The High Court observed that the popular meaning associated with "technical" is "involving or concerning applied and industrial science", but however mere collection of a fee for use of standard P a g e | 12 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 facility provided to all those willing to pay for it does not amount to the fee having been received for technical services. That demonstrating the aforesaid view on the basis of an exemplary situation, it was observed by the High Court that where a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree to is to pay for the use of airtime for which he pays a charge. The fact that the telephone service provider had installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, does not on that score, make it provision of a technical service to the subscriber. What applies to cellular mobile service is also applicable in fixed telephone service, and neither of the said services could be categorized as „technical service‟ for the purpose of Section 194J. We thus find that the Hon‟ble High Court after deliberating on the scope of the term „technical service‟ had therein concluded that collection of fees by a person for use of a standard facility which is provided by him to all those willing to pay for it, irrespective of the fact that the provision of such services involved usage of technical equipment on the part of said person to facilitate providing of the services, cannot be characterized as availing of „technical service‟ on the part of the consumer.
11. We have given a thoughtful consideration to the facts of the case in the backdrop of the settled position of law. We are of the considered view that though the provision of „Web Hosting Charges‟ by the service provider would involve installation of sophisticated equipment on his part to facilitate rendering of such services to the customers, however the collection of a fee by him for use of such standard facility provided to all those willing to pay for it cannot be characterized and therein brought within the sweep of the term „fee for technical services‟. We further find that a coordinate Bench of the Tribunal, viz. ITAT, Mumbai Bench „D‟ in the case of Pacific Internet (India) Pvt. Ltd. Vs. ITO (2009) 125 TTJ 966 (Mum), relying on the aforesaid judgment of the Hon‟ble High Court of Madras in the case of Skycell Communication Ltd. (supra) had also held that mere collection of a P a g e | 13 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 fee for use of standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services. We thus are of the considered view that as „Web Hosting Charges‟ can safely be construed as a facility which is provided to facilitate hosting of a website, therefore, the fee provided by the assessee for availing such service cannot be characterized as a „as a fee for technical service‟. We thus in the backdrop of our aforesaid observations are of the considered view that now when web hosting cannot be held to be in the nature of „technical service‟, therefore the amount paid by the assessee as regards the same would not be liable for deduction of tax at source u/s. 194J. We thus set aside the order of the CIT(A), wherein the latter had upheld the order of the A.O treating the assessee as being in default for having failed to deduct tax at source u/s. 194J. The Ground of appeal No.1 raised by the assessee is allowed.
12. The ld. A.R had further assailed before us the order of the CIT(A), wherein the latter had upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of the amounts of Rs.2,23,004/- paid towards renewal of SAP Licence. It was averred by the ld. A.R that the CIT(A) had wrongly concluded that the payment by the assessee towards renewal of SAP Licence was in the nature of payment towards „technical services‟/„royalty‟, as provided in Explanation 2 of Section 9(1)(vii)/Section 9 (1)(vi), and thus rendered the assessee liable for deduction of tax at source u/s. 194J. The ld. A.R. in support of his aforesaid submissions placed reliance on the following judicial pronouncements:-
(i) SMC Demag (P.) Ltd. V. DCIT (38 SOT 496) (ITAT, Delhi)
(ii) DIT Vs. Infrasoft Ltd. (39 taxmann.com 88) (High Court of Delhi).
(iii) DIT Vs. Ericsson A.B., New Delhi (16 taxmann.com 371) (High Court of Delhi).
(iv) DIT Vs. Nokia Networks OY (25 taxamann.com 225) (High Court of Delhi).
(v) ADIT Vs. Baan Global BV (71 taxmann.com 213) (ITAT Mumbai).
Per contra, the ld. D.R submitted that a statutory obligation was cast upon the assessee to deduct tax at source under Sec. 194J at the time of making the payments towards renewal of SAP licence, failing which the lower P a g e | 14 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 authorities had rightly held the assessee as being in default u/ss. 201(1)/201(1A) in respect of the aforesaid amount.
13. We have given a thoughtful consideration to the facts of the case and are of the considered view that as per the Explanation 4 of Section 9(1)(vi), as had been made available on the statute vide the Finance Act, 2012, w.r.e.f 01.06.1976, it has been clarified that „royalty‟ takes within its sweep any amount paid in lieu of transfer of all or any rights in respect of any right, property or information, which shall include and has always included transfer of all or any „right for use‟ or „right to use‟ a computer software (including granting of a licence), irrespective of the medium through which such right is transferred. We find that the assessee had during the year under consideration made a payment towards renewal of SAP licence for two years, but however had not deducted tax at source in respect of the same. We find that the fees paid by the assessee for renewal of the SAP licence for a period of two years, therein only vested with it the rights which were limited to those necessary to enable it to use the software only for its own business, for the aforesaid period of two years, and in no way vested with it any right to loan/rent/sale/sub-licence or transfer the copy of software to any third party. Thus to be brief and explicit, the grant of the aforesaid licence to the assessee specifically prohibited the latter from copying, decompiling, de-assembling or reverse engineering the software. That all the incorporeal rights in respect of the software remained with the owner and were not transferred to the assessee. We have deliberated on the issue under consideration and are of the considered view that the assessee while making the payment towards renewal of SAP licence, had only acquired a copy of the copyrighted article, whereas the copyright remained with the owner. We are of the considered view that as the assessee company by making the payment towards renewal of licenses fees had merely acquired a computer programme for being used in its business, and no right is granted to it to utilize the copyright in respect of the aforesaid programme, therefore, what had been acquired by the assessee cannot be characterized as being in the nature of „royalty‟. We have given a thoughtful consideration to the issue P a g e | 15 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 before us, and are of the view that pursuant to the payment of the aforesaid amount for renewal of SAP licence, what is transferred to the assessee is neither the copyright in the software, nor the use of the copyright in the software, but what is transferred is the right to use the copyrighted material or article, which is clearly distinct from the rights in a copyright. Thus, now when the right that is transferred to the assessee company is not a right to use the copyright, but is only limited to the right to use the copyrighted material, therefore, the same cannot be characterized as a payment towards „royalty‟ by the assessee company. We find that our aforesaid view stands fortified by the judgment of the Hon'ble High Court of Delhi in the case of DIT Vs. Infrasoft Ltd. (2013) 39 taxmann.com 88 (Del).
14. We further find that the coordinate bench of ITAT, Mumbai, in the case of DDIT Vs. Reliance Industries Ltd. [ITA(s). Nos.1980 - 1982,1884,1986,2523,2529/Mum/2008, dated 26.05.2016, had further observed that as the Explanation 4 of Section 9(1)(vi) had been inserted by the Finance Act, 2012 w.r.e.f 01.06.1976, vide which consideration paid for the right for use or right to use a computer software (including granting of a licence) is to be deemed to fall within the sweep of the term „royalty‟ u/s. 9(1)(vi) of the „Act‟, being clarificatory in nature is to be taken as had always been available on the statute, however, the fact that the aforesaid position of law was not available at the time when the assessee had made the payments towards purchase of the software, nor there was any such judgment of any Court on the basis of which a payment made by an assessee towards purchase of software could be construed as „royalty‟ u/s. 9(1)(vi) and subjected to deduction of tax at source, therefore, the assessee who remained under a bonafide belief that no tax at source was deductible in respect of the said amount, thus could not be held as being in default for having failed to have deducted tax at source u/s. 194J at the time of making of the aforesaid payment. We respectfully follow the aforesaid judgment of the Hon'ble High Court of Delhi in the case of Infrasoft Ltd. (supra), and finding ourselves as being in agreement with the aforesaid view arrived at by the coordinate bench of Tribunal in the case of Reliance Industries Ltd.
P a g e | 16 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 (supra), are thus of the considered view that the amount paid by the assessee towards renewal of SAP licence for a period of two years, can neither be characterized as a payment for transfer of a copyright, nor the assessee be held as being in default for having failed to deduct tax at source as per Explanation 4 of Sec. 194J, which was not available at the time of making of the said payment. We thus in light of our aforesaid observations set aside the order of the CIT(A), wherein the latter had upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) for having failed to deduct tax at source in respect of payment made towards renewal of SAP licence. The Ground of appeal no. 2 raised by the assessee before us is allowed.
15. The ld. A.R had further averred before us that the CIT(A) had erred in confirming the levy of interest u/s. 201(1A) in respect of tax deductible at source on „Web Hosting Charges‟ and „fees paid for renewal of SAP license‟ for a period of 39 months. We are of the considered view that as we have already held that the assessee was under no obligation to deduct tax at source u/s 194J, in respect of payment made towards „Web Hosting Charges‟ and fees for renewal of SAP license fee, therefore, the present ground of appeal would be rendered as infructuous. The Ground of appeal no. 3 is dismissed as having been rendered as infructuous. The Ground of appeal No. 4 being general in nature is thus dismissed.
16. The appeal of the assessee for A.Y. 2009-10, marked as ITA No. 1460/Mum/2014, is partly allowed in terms of our aforesaid observations.
ITA No. 1263/Mum/2014A.Y. 2009-10
17. We now advert to the appeal of the revenue for A.Y. 2009-10, wherein the latter had assailed the setting aside by the CIT(A) of the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) for having failed to deduct or carrying out short/deficit deduction of tax at P a g e | 17 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 source, in respect of certain payments. The revenue had raised before us the following grounds of appeal:-
"1 Grounds of appeal:
(i) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred by holding that provisions of sec. 194C are applicable and not the provisions of section 194H as held by the A.O without appreciating the fact that such payments made for the use of the credit card is squarely covered by the definition of "Commission or brokerage"
given in explanation (i) below the third proviso to section 194H of the I.T. Act, and thereby erred in deleting the short deduction u/s.201(1).
(ii) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating the fact that Annual maintenance contract for Computer software, air conditioner and pest control require technical skill and human element and are subjected to TDS u/s. 194J and not u/s. 194C of the Act.
(iii) On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in deleting the short deduction on hoarding charges u/s.194I of the Act and not considering the same as "rent" but a "work contract"
u/s. 194C of the Act.
(iv) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the interest u/s 201(1A) of the I.T. Act, 1961, determined by the A.O as the tax determined has already been deleted by her and interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground Nos. (i), (ii) & (iii).
2. The appellant craves leave to add, amend, alter or modify any ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the CIT(A) being erroneous be set aside and A.O's order be restored".
18. The ld. D.R had assailed before us the order of the CIT(A), wherein the latter had set aside the order of the A.O holding the assessee as being in default u/ss. 201(1)/201(1A) for having failed to deduct tax at source u/s. 194H in respect of the amount of Rs.1,03,80,808/- retained by the banks for facilitating sale of goods through „credit cards‟ during the year under consideration. It was averred by the ld. D.R. that the amounts retained by the respective banks for providing the facility of use of credit card internet P a g e | 18 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 gateway to the assessee was squarely covered by the definition of „commission‟ or „brokerage‟ contemplated in Explanation (i) of the 3rd proviso to Section 194H. Per contra, the ld. A.R relied on the order of the CIT(A) and therein submitted that the latter had rightly held that the amounts retained by the respective banks for facilitating use of credit card internet gateway could not be characterized as „commission‟ or „brokerage‟, and thus the assessee remained under no obligation to deduct tax at source u/s. 194H. The ld. A.R in support of his aforesaid contention relied on an order passed by a coordinate bench of ITAT, Hyderabad, Bench 'B', in the case of DCIT, Hyderabad Vs. M/s. Vah Magna Retail (P) Ltd., Hyd (ITA No. 905/Mum/2011, dated 10.04.2012, wherein the Tribunal upholding the order of the CIT(A), had therein concurred with the latters view that the assessee was not liable for deduction of tax at source u/s. 194H in respect of the commission retained by the Credit Card company, and observed as under:-
"1.8 On going through the nature of transactions, I find considerable merit in the contention of the appellant that co mm iss ion p aid to the credit c ard co mp an ie s canno t be considered as falling within the purview of S.194H. Even though the definition of the term "commission or brokerage" used in the said section is an inclusive definition, it is clear that the liability to make TDS under the said section arises only when a person acts behalf of another person. In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on behalf of the merchant establishment or that even the merchant establishment conducts the transaction for the bank. The sale made on the basis of a credit card is clearly a transaction the merchants establishment only and the credit card company only facilitates the electronic payment, for a certain charge. The commission retained by the credit card company is therefore in the n a t u r e o f n o r m a l b a n k c h a r g e s a n d n o t i n t h e n a t u r e o f co mmis s io n/ broker age f or a c tin g on beh alf of the merchant establis hmen t. Accordingly, concluding th at there w a s n o require ment f or making TDS on the 'Commission retained by the credit card companies, the disallowance of R s . 1 6 , 3 4 , 0 0 0 / - i s deleted......."
19. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and the material placed on record in respect of the issue under consideration. We find that the CIT(A) by drawing an analogy from the order of a coordinate bench of the Tribunal viz. ITAT, Mumbai in the case of M/s. Kotak Securities Ltd. (supra), had P a g e | 19 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 therein concluded that on the footing that an assessee remained under no obligation to deduct tax at source u/s. 194H in respect of Bank Guarantee Charges, it could therefore safely be concluded that no such liability was also cast on the assessee in respect of the amounts retained by the Credit Card company/Banks for facilitating the use credit card internet gateway to the assessee. We have given a thoughtful consideration to the issue under consideration and find that the same is squarely covered by the order of the coordinate bench of the ITAT, Hyderabad in the case of M/s Vah Magna Retail (P) Ltd. (supra). We thus finding ourselves to be in agreement with the view taken by the Tribunal in the aforesaid case, and finding no infirmity in the order of the CIT(A) on the issue under consideration thus dismiss the Ground of appeal no. 1(i) raised by the department before us.
20. The ld. D.R. further submitted that the CIT(A) had erred in concluding that the payments made by the assessee towards annual maintenance contract (AMC) for computer software, air conditioner and pest control had rightly been subjected to deduction of tax at source u/s. 194C, and no obligation was cast upon it to have carried out the said deduction by taking recourse to Section 194J. Per contra, the ld. A.R relied on the order of the CIT(A) and therein submitted that the latter had rightly concluded that the assessee was liable for a deduction of tax at source u/s. 194C and the applicability of the provisions of Section 194J stood excluded.
21. We have heard the authorized Representatives for both the parties, perused the orders of the lower authorities and the material produced before us in respect of the issue under consideration. We have given a thoughtful consideration to the contention raised by the respective parties as regards the payments made by the assessee towards AMC charges in respect of computer software, air conditioner and pest control, and record our observations as regards the same, as under:-
(i) AMC for computers:-
P a g e | 20
Metro Shoes Ltd. Vs. ITO
A.Y's. 2009-10 to 2012-13
We find that the CIT(A) observing that as each of the respective payments made by the various retail dealers of the assessee company in respect of computer AMC was lower than Rs.20,000/-, therefore, no liability was cast upon it for deducting tax at source. That during the course of the hearing of the appeal nothing was submitted before us by the ld. D.R to dislodge the aforesaid factual observations of the CIT(A). We thus, finding no infirmity with the order of the CIT(A) on the issue under consideration, therefore, uphold the same.
(ii) AMC for Pest control:-
We find that the CIT(A) being of the considered view that the payments made by the assessee towards AMC for pest control did not involve any professional or technical services, but as definitely there was a contract of work, therefore, the assessee had rightly deducted tax at source u/s. 194C, and could not be brought within the sweep of Section 194J. The ld. D.R could not controvert the aforesaid observations of the CIT(A). We find no infirmity in the aforesaid observations of the CIT(A) and are persuaded to be in agreement with him. We thus uphold the order of the CIT(A) in respect of the aforesaid issue under consideration and therein hold that the assessee could not be held to be in default in respect of short/deficit deduction of tax at source in respect of the payments made towards AMC for pest control.
(iii) AMC for Air conditioners:-
We find that the CIT(A) had observed that as the payments made towards the AMC for air conditioners was backed by a composite contract of supply of spare parts and services, therefore, the case of the assessee was squarely covered by the provisions of Section 194C and could not be brought within the sweep of Section 194J. That during the course of the hearing of the appeal the ld. D.R. could not dislodge the validity of the aforesaid observations. We have given a thoughtful consideration to the issue before us, and are of the considered view that now when the AMC charges for air conditioners paid by the assessee were in term with the contents of the P a g e | 21 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 composite contract for supply of spare parts and services, therefore, as observed by the CIT(A), the assessee had rightly deducted tax at source u/s. 194C and could not be held to be liable for deduction or tax at source u/s. 194J. We thus finding no infirmity in the order of the CIT(A), thus uphold the same in respect of the issue under consideration.
22. We thus in light of our aforesaid observations, finding ourselves as being in agreement with the view taken by the CIT(A) in respect of the aforementioned respective payments, viz. AMC for Computers, Pest control and Air conditioners, thus uphold his order. The Ground of appeal no. 1(ii) of the revenue is dismissed.
23. That the revenue had further assailed before us the setting aside by the CIT(A) of the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) for short/deficit deduction of tax at source under Section 194C in respect of „hoarding charges‟ paid by it, as the same attracted the provisions of Section 194I. That at the very outset of the hearing of the appeal on the issue under consideration, the ld. A.R drew our attention to the copy of the CBDT Circular no. 715, dated 08.08.1995 (Page 1-3 of APB), wherein the CBDT had held that an assessee would be liable to deduct tax at source in respect of „hoarding charges‟ u/s. 194C and not u/s. 194I of the „Act‟. The ld. A.R. drew our attention to Question no.6 reproduced in the aforesaid CBDT Circular No. 715 (supra), which reads as under:-
"Question 6: Whether a contract for putting up a hoarding would be covered under section 194C or 194I of the Act?
Answer: The contract for putting up a hoarding is in the nature of advertising contract and provisions of section 194C would be applicable. It may, however, be clarified that if a person has taken a particular space on rent and thereafter sub lets the same fully or in part for putting up a hoarding, he would be liable to TDs under section 194I and not under section 194C of the Act".
It was further submitted by the ld. A.R that the CBDT in its aforesaid circular had further observed that if in case the assessee had further sub-let P a g e | 22 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 his right towards the hoarding, it was only then the provisions of Section 194I would be attracted. Per contra, the ld. D.R. though relied on the order of the A.O, but could not controvert the aforesaid contentions of the assessee. We find that the CIT(A) while adjudicating the aforesaid issue had specifically referred to and relied upon the CBDT circular No. 715 (supra), and therein observing that as the assessee had not sub-let the hoarding rights acquired by it, had therefore held that the assessee was not liable for deduction of tax at source under Section 194C.
24. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We are not oblivious of the fact that the benevolent circulars issued by the CBDT are binding on the department, and there can be no escape on the part of the department to give effect to the same. We thus are of the considered view that now when the CBDT itself had held that the assessee would be liable for deduction of tax at source in respect of „hoarding charges‟ under Sec. 194C, with the sole exception that where such „hoarding rights‟ are sub-let by the assessee, the deduction of tax at source in such cases would be under Sec. 194I. We are of the considered view that now when the assessee had paid the „hoarding charges‟ in respect of advertisements carried out in respect of its products, and had at no stage sub-let its „hoarding rights‟, therefore, the case of the assessee does not fall in the aforesaid exception and it would remain liable for deduction of tax at source in respect of the payments made towards „hoarding charges‟ u/s. 194C. We thus finding no infirmity in the order of the CIT(A), thus uphold the same. The Ground of appeal No. 1(iii) raised by the revenue is dismissed.
25. That the revenue had further by way of raising Ground of appeal No. 1(iv) assailed the order of the CIT(A), on the ground that the latter had erred in deleting the interest u/s. 201(1A) determined by the A.O. It was averred by the Ld. D.R. that now when the tax liability determined u/s. 201(1) had already been deleted by the CIT(A), therefore, deletion of interest charged u/s. 201(1A) would merely be consequential in nature. We are unable to P a g e | 23 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 agree with the aforesaid contention so raised before us, as we find that it is only where the CIT(A) had deleted the demand towards „tax‟ raised in the hands of the assessee u/s. 201(1), that a further direction for deletion of the consequential interest charged u/s. 201(1A) had been given by her. We are of the considered view that the CIT(A) had separately given a „direction‟ for deletion of interest u/s. 201(1A) for the reason that while giving effect to her order, the office of the A.O may not restrict the relief only with respect to the demand raised towards „tax‟ u/s. 201(1). We find no infirmity in the aforesaid findings of the CIT(A) in issuing a clear and specific direction for deletion of interest u/s. 201(1A), because in case the demand towards „tax‟ liability raised u/s. 201(1) would be revived at any stage, then the charge of the interest u/s. 201(1A), being consequential in nature, would also stand revived. We thus dismiss the Ground of Appeal No. 1(iv) raised by the revenue.
26. The Grounds of appeal no. 2 and 3 raised by the revenue are general in nature, therefore, the same are treated as not pressed. The appeal of the revenue is thus dismissed.
27. That while for the appeal of the assessee for A.Y. 2009-10, marked as ITA No. 1460/Mum/2014 is partly allowed, the appeal of the revenue, marked as ITA No. 1263/Mum/2014 is dismissed.
A.Y. 2010-11 ITA No. 1461/Mum/2014
28. We now advert to the appeal of the assessee for A.Y. 2010-11. The assessee had assailed before us the order of the CIT(A), wherein the latter had upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of certain payments. The assessee assailing the order of the CIT(A), had therein raised before us the following grounds of appeal:-
"1. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 is applicable and treating the appellant as assessee in default by invoking the provisions of P a g e | 24 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 Section 194J in respect of the payment for web posting charges amounting to Rs.6,88,535/-. The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
2. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for renewal of SAP license of Rs. 4,13,764/-. The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
3. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the levy of interest u/s 201(1A) of Income Tax Act, 1961. The Learned Commissioner of Income Tax (Appeals) has erred confirming the levy of interest u/s. 201(1A) for a period of 39 months in respect of the tax determine u/s. 201 in respect of the two items referred to the Ground No. 1 & 2 above. The appellant prays that the levy of interest as computed by the Assessing Officer is not justified and be deleted.
4. The appellant craves leave to add, alter or amend the grounds of appeal which are without prejudice to one other".
29. That at the very outset of the hearing of the appeal it was averred by the ld. A.R that the Grounds of appeal no. 1 to 4 raised in the present appeal of the assessee; therein involved the same issues as had been raised by the assessee in its appeal for A.Y. 2009-10, marked as ITA No. 1460/ Mum/2014, vide Grounds of appeal no. 1 to 4 raised in the said appeal. The ld. D.R had not controverted the aforesaid factual position.
30. We have perused the records and find that as the issues involved in the present appeal of the assessee are the same as those involved in its appeal for A.Y. 2009-10, marked as ITA No. 1460/Mum/2014, therefore, the order passed by us while disposing of the „Grounds of appeal no. 1 to 4‟ in the appeal of the assessee for A.Y. 2009-10, marked as ITA No. 1460/Mum/2014, shall apply mutatis mutandis in the present appeal. That in terms of our aforesaid observations, the P a g e | 25 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 Ground of appeal no. 1 is allowed, Ground of appeal no. 2 is allowed, Ground of appeal no. 3 is dismissed as being rendered infructuos and the Ground of appeal no. 4 being general in nature is dismissed.
31. The appeal of the assessee is partly allowed in terms of our aforesaid observations.
A.Y.2010-11 ITA No. 1264/Mum/2014
32. We now take up the appeal filed by the revenue for A.Y. 2010-11. The revenue being aggrieved with the order of the CIT(A) setting aside the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A), in respect of certain amounts, had therein carried the matter in appeal before us. The revenue assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
"1. Grounds of appeal
(i) On the facts and circumstances of the case and in law, the Id.
CIT(A) has e rre d by ho ld ing th a t p rov is io ns of sec. 1 94 C ar e ap p lic ab le and no t th e provisions of section 194H as held by the A.O without appreciating the fact that such payments made for the use of the credit card is squarely covered by the definition of "Commission or brokerage" given in explanation (i) below the third proviso to section 194H of the I.T. Act, and thereby erred in deleting the short deduction u/s.201(1).
(ii) On the facts and circumstances of the case and in law, the Id.
CIT(A) has erred in not appreciating the fact that Annual maintenance contract for Computer sof tware, air conditioner and pest control require technical skill and human element and are subjected to TDS u/s. 194J and not u/s. 194C of the Act.
(iii) On the facts and circumstances of the case and in law, the Id.
CIT(A) has erred in deleting the short deduction on hoarding charges u/s.194I of the Act and not considering the same as "rent" but a "work contract" u/s. 194C of the Act.
(iv) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the interest u/s 201(1A) of the I.T. Act, 1961, determined by the A.O as the tax determined has P a g e | 26 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 already been deleted by her and interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground Nos. (i), (ii) & (iii).
2. The appellant craves leave to add, amend, alter or modify any ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the CIT(A) being erroneous be set aside and A.O's order be restore".
33. That it was submitted by the ld. authorized representatives for both the parties that the „Grounds of appeal No. 1 to 3‟ raised by the revenue in the present appeal were the same as were involved in the appeal of the revenue for A.Y. 2009-10, marked as ITA No. 1263/Mum/2014.
34. We have perused the records and find that as the issues involved and the „Grounds of appeal No. 1 to 3‟ raised before us in the present appeal of the revenue are the same as were there before us in the appeal filed by the revenue for A.Y. 2009-10, therefore, the order passed by us while disposing of the Grounds of appeal No. 1(i) to (iv), Ground of appeal No.2, and Ground of appeal no. 3, shall apply mutatis mutandis for adjudicating the respective grounds of appeal involved in the appeal of the revenue for A.Y. 2010-11,marked as ITA No. 1264/Mum/2014. Thus the Grounds of appeal No. 1(i) to (iv), Ground of appeal No. 2 and Ground of appeal No 3 raised by the revenue before us in the present appeal are dismissed.
35. The appeal of the revenue for A.Y. 2010-11, marked as ITA No. 1264/Mum/2014 is dismissed in terms of our aforesaid observations.
36. That the appeal of the assessee for A.Y. 2010-11, marked as ITA No. 1461/Mum/2014 is partly allowed, the appeal of the revenue, marked as ITA No. 1264/Mum/2014 is dismissed.
A.Y.2011-12 ITA No. 1462/Mum/2014 P a g e | 27 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13
37. We now take up the appeal of the assessee for A.Y. 2011-12. The assessee assailing the order of the CIT(A), wherein the latter had upheld the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of certain amounts, had therein carried the matter in appeal before us. The assessee being aggrieved with the order of the CIT(A) had raised before us the following grounds of appeal:-
"1. On facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 is applicable and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for web posting charges amounting to Rs. 5,28,850/-. The appellant prays that the conclusion reached by the learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
2. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of income Tax Act, 1961 and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for renewal of SAP license of Rs. 5,27,240/- . The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
3. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment for SAP Resource Deployment charges amounting to Rs. 25,000/-. The appellant prays that the conclusion reached by the Learned Assessing Officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment of annual maintenance contracts.
4. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the levy of interest u/s 201(1A) of Income Tax Act, 1961. The Learned Commissioner of Income Tax (Appeals) has erred confirming the levy of interest u/s. 201 (1A) for a period of 39 months in respect of the tax determine u/s. 201 in respect of the two items referred to the Ground No. 1,2 &3 above. The appellant prays that the levy of interest as computed by the Assessing Officer is not justified and be deleted.
5. The appellant craves leave to add, alter or amend the grounds of appeal which are without prejudice to one other".
P a g e | 28 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13
38. We find that the Ground of appeal no.1, Ground of appeal no.2, Ground of appeal No. 4 and Ground of appeal no.5 raised by the assessee in its present appeal for A.Y 2011-12, marked as ITA No. 1462/Mum/2014, are the same as were raised by the assessee as Ground of appeal no. 1, Ground of appeal no. 2, Ground of appeal no. 3 and Ground of appeal No. 4, respectfully, in its appeal filed before us for A.Y. 2009-10, marked as ITA No. 1460/mum/2014. That in light of the aforesaid factual position, our order passed while disposing of Ground of appeal no. 1, Ground of appeal no. 2, Ground of appeal no. 3 and Ground of appeal No. 4, in the appeal of the assessee for AY: 2009-10, marked as ITA No. 1462/Mum/2014, shall apply mutatis mutandis for adjudicating the Ground of appeal no. 1, Ground of appeal no. 2, Ground of appeal No. 4 and Ground of appeal No. 5, respectively, in the present appeal of the assessee for A.Y. 2011-12, marked as ITA No. 1462/Mum/2014. That in terms of our aforesaid observations, the Ground of appeal no. 1 is allowed, Ground of appeal no. 2 is allowed, Ground of appeal No. 4 is dismissed as infructuous and the Ground of appeal no. 5 being general in nature is dismissed.
39. The assessee vide Ground of appeal no. 3 raised in the present appeal, had assailed the order of the CIT(A), wherein the latter had sustained the order of the A.O treating the assessee as being in default u/s. 201(1) in respect of the payment made for SAP resource deployment charges. It had been averred by the ld. A.R that as the payment made towards SAP resource deployment charges amounted to Rs.25,000/-, therefore, it was not liable for deduction of any tax at source in respect of the aforesaid amount u/s. 194J.
40. We have given a thoughtful consideration to the aforesaid contention so raised by the ld. A.R. We are of the considered view that now when we have allowed the „Ground of appeal No. 2‟ raised by the assessee before us, and therein concluded that it was not liable for deduction of tax at source under Sec. 194J in respect of the fee paid for renewal of SAP license, therefore, the aforesaid „Ground of appeal no. 3‟ raised by the assessee P a g e | 29 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 would be rendered as academic. We thus holding that the „Ground of appeal No. 3‟ raised by the assessee before us is rendered as academic in nature, therefore, refrain from adjudicating the same. The Ground of appeal No. 3 is dismissed in terms of our aforesaid observations.
41. The appeal of the assessee for A.Y. 2011-12, marked as ITA No. 1462/Mum/2014 is partly allowed, in terms of our aforesaid observations .
A.Y. 2011-12 ITA No. 1265/Mum/2014
42. We now take up the appeal of the revenue for A.Y. 2011-12, marked as ITA No. 1265/Mum/2014. The revenue being aggrieved with the order of the CIT(A), wherein the latter had set aside the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of certain amounts, had therein carried the matter in appeal before us. The revenue had raised before us the following grounds of appeal:-
"1. Grounds of appeal:-
(i) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred by holding that provisions of sec. 194C are applicable and not the provisions of section 194H as held by the A.O without appreciating the fact that such payments made for the use of the credit card is squarely covered by the definition of "Commission or brokerage"
given in explanation (I) below the third proviso to section 194H of the I.T. Act, and thereby erred in deleting the short deduction u/s 201(1).
(ii) On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in not appreciating the fact that Annual maintenance contract for Computer software, air conditioner and pest control require technical skill and human element and are subjected to TDS u/s. 194J and not u/s. 194C of the Act.
(iii) On the facts and circumstances of the case and in law, the Id. CIT (A) has erred in deleting the short deduction on hoarding charges u/s.1941 of the Act and not considering the same as "rent" but a "work contract"
u/s.194C of the Act.
(iv) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the interest u/s 201(1A) of the I.T. Act, 1961, determined by the A.O as the tax determined has already been deleted by her and interest deletion is consequential to the P a g e | 30 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 quantum deletion for which further appeal has been recommended vide ground Nos. (i), (ii) & (iii).
2. The appellant craves leave to add, amend, alter or modify any ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the CIT(A) being erroneous be set aside and A.O's order be restored".
43. We find that the „Grounds of appeal no. 1 to 3 raised by the revenue before us in the present appeal for A.Y. 2011-12, marked as ITA No.1265/Mum/2014 involves the same issues as were raised before us by the revenue in its appeal for A.Y. 2009-10, marked as ITA No. 1263/Mum/2014. Thus in light of the aforesaid factual position, we herein direct that our order passed while disposing of the Ground of appeal No. 1(i) to (iv), Ground of appeal no. 2 and Ground of appeal no.3 in the appeal of the revenue for A.Y. 2009-10, marked as ITA No. 1263/Mum/2014, shall apply mutatis mutandis for disposing of the present appeal of the revenue for A.Y. 2011-12. The Ground of appeal 1(i) to (iv), Ground of appeal no.2 and Ground of appeal no. 3 raised by the revenue before us are dismissed.
44. The appeal of the revenue for A.Y. 2011-12, marked as ITA No. 1265/Mum/2014 before us is dismissed.
45. That the appeal of the assessee for AY: 2011-12, marked as ITA No. 1462/Mum/2014 is partly allowed, the appeal of the revenue, marked as ITA No. 1265/Mum/2014 is dismissed. A.Y. 2012-13 ITA No. 3528/Mum/2015
46. We shall now take up the appeal of the assessee for A.Y. 2012-13, marked as ITA No. 3528/Mum/2015, wherein the latter had assailed before us the order of the CIT(A) upholding the order passed by the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of certain P a g e | 31 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 payments. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
"1. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming that the provisions of Section 201(1) of Income Tax Act, 1961 is applicable and treating the appellant as assessee in default by invoking the provisions of Section 194J in respect of the payment of annual maintenance charges . pn maintenance of software amounting to Rs.9,91,912/ -. The appellant prays that the conclusion reached by the Learned Assessing officer is erroneous as the appellant was not liable to deduct tax at source u/s 194J on the payment for renewal of annual maintenance charges on maintenance of software.
2. Without prejudice to ground No.1, the appellant prays that the provisions of Section 201(1) of the income tax, 1961 may not be invoked, as the recipient of the amount has paid the tax on the payments made to them and following the ratio of the Hon'ble Supreme court decision in the case of Hindustan Coca Cola v/s. CIT, no liability be cast upon the appellant u/s. 201(1).
3. On the facts & circumstances of the case the Learned Commissioner Of Income Tax (Appeals) has erred in confirming the levy of interest u/s. 201(1A) of the Income Tax Act, 1961. The learned Commissioner Of Income Tax (Appeals) has erred in confirming the levy of interest u/s. 201(1A) for a period of 36 months in respect of the tax determined u/s.201 in respect of the ground no. 1 above. The appellant prays that the levy of interest as computed by assessing officer is not justified and be deleted.
4. On the facts & circumstances of the case the Learned commissioner of income tax (Appeals) has erred in conf irming that the payments made M/s. Makani Creatives Pvt. Ltd. are in the nature of retainership fees liable to deduction of tax under Section 194J. The appellant prays that all the payments made to M/s. Makani Creatives Pvt. Ltd. including monthly lump sum payments are in the nature of contractual payments and are not professional fees. The appellant further prays that conclusion reached by Learned Assessing Officer is erroneous and contrary to the facts.
5. On the facts & circumstances of the case the Learned commissioner of income tax (Appeals) has erred in confirming the levy of interest at Rs.12,53,145/- u/s 201(1A) of Income Tax Act, 1961 by invoking the provisions of Section 194J. The appellant prays that the demand raised by Learned Assessing Officer levying the interest may be deleted.
6. On the facts & circumstances of the case and without prejudice to the claim that appellant is not liable to deduct tax at source u/s.194J and pay interest u/s 201(1A), the Commissioner of income tax (Appeals) has erred in confirming levy of interest for 18 months amounting to Rs.12,53,145/- in respect of payment to M/s. Makani P a g e | 32 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 Creatives Pvt. Ltd. The appellant prays that levy of interest is not justified and be deleted.
The appellant craves leave to add, alter or amend the grounds of appeal which are without prejudice to one other".
47. The A.O treating the assessee as being in default u/ss. 201(1)/201(1A) for having carried out short/deficit deduction of tax at source in respect of payments made towards AMC of computers by wrongly resorting to the provisions of Section 194C, as against the statutory obligation cast upon it to deduct tax at source u/s. 194J, had thus held the latter as being in default in respect of payments of Rs.9,91,912/- (out of total payment of Rs. 19,97,978/-). The assessee being aggrieved with the order of the A.O, carried the matter in appeal before the CIT(A). The Assessee submitted before the CIT(A) that as it had made payments towards AMC of computers pursuant to a composite contract, which included supply of material and services, therefore, it was liable to deduct tax at source u/s. 194C and did not fall within the purview of Section 194J, as held by the A.O. Alternatively, it was submitted before the CIT(A) that even otherwise as the respective payees had paid the taxes on the aforesaid amounts received from the assessee company, therefore, in light of the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. (supra), the assessee could not be treated as being in default u/s. 201(1) in respect of the aforesaid amount of Rs.9,91,912/- (supra) so paid by it towards AMC of computers. The ld. CIT(A) however did not find himself to be in agreement with the submissions of the assessee and upheld the order of the A.O on the issue under consideration.
48. The assessee being aggrieved with the order of the CIT(A) had therein carried the matter in appeal before us. That at the very outset it was submitted by the assessee that as it had made payments towards AMC for computers on the basis of a composite contract for supply of spare parts and services, therefore, it was liable for deduction for tax at source u/s. 194C, and the applicability of the provisions of Section 194J stood clearly excluded. Alternatively, it was submitted by the ld. A.R that even otherwise P a g e | 33 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 as the respective payees to whom payments had been made towards AMC charges had duly included the same in their „return of income‟ and paid taxes on the same, therefore, in light of the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd.(supra), the said tax liability could not once again be recovered from the assessee company. Per contra, the ld. D.R. relied on the orders of the lower authorities and therein submitted that as the assessee had failed to deduct tax at source u/s. 194J, therefore, it had rightly been held as being in default in respect of short/deficit deduction of tax at source.
49. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the CIT(A) after reproducing the statements of the assessee, had however failed to adjudicate the issue under consideration by way of a speaking order, and had rather summarily dismissed the appeal of the assessee on the issue under consideration. We are of the considered view that the CBDT in its Circular No. 715, dated 08.08.1995, had therein held as under:-
"Question 29: Whether a maintenance contract including supply of spares would be covered under Section 194C or 194J of the Act:
Answer:- Routine, normal maintenance contracts which include supply of spares will be covered under Section 194C. However where technical services are rendered, the provision of section 194J will apply in regard to tax deduction at source".
We thus in the backdrop of the aforesaid view taken by the CBDT, are thus of the considered view that in case the assessee had made payments towards AMC for computers on the basis of normal maintenance contracts, which includes supply of spares, then in that situation its case would be covered by the provision of Section 194C. However, in case the payments are made by the assessee in lieu of „technical services‟ so rendered to it, then it shall stand liable for deduction of tax at source u/s. 194J. That as the AMC contract for the computers entered into by the assessee, on a perusal of which alone the fact that as to whether the same was in the nature of normal maintenance contract including supply of spares, or otherwise, P a g e | 34 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 could be discerned, is not available before us, we therefore in all fairness restore the matter to the file of the A.O to readjudicate the liability of the assessee after duly taking cognizance of the parameters contemplated by the CBDT in its aforesaid Circular No. 715, dated 08.08.1995. Needless to say, the A.O while re-adjudicating the aforesaid issue shall afford reasonable opportunity of being heard to the assessee, who shall remain at a liberty to adduce additional evidence to substantiate its contention.
50. We find that the ld. A.R had further averred before us that as the payees who were in receipt of the AMC charges had included the same in their respective „returns of income‟ and paid taxes on it, therefore, the assessee cannot be held to be in default u/s. 201(1) in respect of the said tax liability. We are of the considered view that in light of the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. (supra), the aforesaid contention of the assessee is found to be well placed. We thus direct the A.O to verify the factual position as to whether the payees (supra) had paid the taxes in respect of the AMC charges received from the assessee company, and if that be so, the assessee company would not be held as being in default in respect of the corresponding tax liability u/s. 201(1). It may however be clarified that in case the assessee is principally held liable towards „tax‟ liability determined u/s 201(1) in respect of the aforesaid payments, then the latter would continue to remain liable in respect of interest liability u/s. 201(1A) pertaining to the aforesaid tax liability, for the period starting from the date on which the tax was liable to be deducted, till the date of payment of tax by the payees. The Grounds of appeal no. 1 and 2 so raised by the assessee before us are thus allowed for statistical purposes.
51. The ld. A.R had further averred before us that the CIT(A) had erred in confirming the levy of interest u/s. 201(1A) for a period of 36 months in respect of the tax determined u/s. 201(1) pertaining to the payments made by the assessee towards AMC for computers. We find that as the said contention of the assessee can only be adjudicated after referring to the P a g e | 35 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 facts available on record, which are not there before us, therefore, now when we have pursuant to our aforesaid directions called upon the A.O to carry out a fresh adjudication in respect of the liability of the assessee as regards deduction of tax at source u/s 194J, as well as directed him to verify the liability of the assessee towards „tax‟ u/s. 201(1), in the backdrop of the claim raised before us that the payee‟s had already paid the taxes on the aforesaid amount, we therefore further direct the A.O to also verify the aforesaid contention of the assessee that interest u/s. 201(1A) had wrongly been levied u/s 201(1A) for a period of 36 months, in respect of the aforesaid payments. The Ground of appeal no. 3 raised by the assessee before us is allowed for statistical purposes.
52. The ld. A.R had further assailed before us the order of the CIT(A) holding the assessee as being in default u/ss. 201(1)/201(1A) for short/deficit deduction of tax at source by taking recourse to the provisions of Section 194C, as against its statutory obligation of having deducted the same u/s. 194J, in respect of the payments made to M/s. Makani Creative Pvt. Ltd. It was averred by the ld. A.R that as the payments made to M/s Makani Creative Pvt. Ltd. (supra) were in respect of the work executed by them, and no professional or technical services of the said latter concern had been availed by the assessee, therefore, it had rightly deducted tax at source u/s.194C and the applicability of the provisions of Section 194J stood clearly excluded. The ld. A.R had further averred that even otherwise the CIT(A) had erred in confirming the levy of interest in the hands of the assessee company u/s. 201(1A) for a period of 18 months. Per contra, the ld. D.R relying on the orders of the lower authorities submitted that as the payments made to M/s. Makani Creative Pvt. Ltd.(supra) were clearly in respect of the latters professional services, therefore, the assessee was liable for deduction of tax at source u/s. 194J.
53. We have heard the authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find from record that the assessee was availing multiple services P a g e | 36 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 of M/s Makani Creative Pvt. Ltd. (supra), which can be briefly culled out as under:-
(i) Shoot Production.
(ii) Advertising Campaign.
(iii) Media Releases.
We further find that even the „bills‟ raised by M/s. Makani Creative Pvt. Ltd (supra) on the assessee company were clearly in respect of „retainership fees‟. We thus in light of the aforesaid facts, are thus of the considered view that the assessee was clearly availing the professional services of the aforesaid concern, viz. M/s Makani Creative Pvt. Ltd.(supra). We find that the nature of services rendered by M/s. Makani Services Pvt. Ltd.(supra) as elaborated by us hereinabove, squarely falls within the sweep of the definition of „Professional services‟ as stands contemplated in the Explanation (A) of Section 194J of the „Act‟. We thus in light of our aforesaid observations are not persuaded to accept the contention of the ld. A.R. that it was under no obligation to deduct tax at source u/s 194J in respect of payments made to the aforesaid concern, viz. M/s Makani Creative (P) Ltd., and being of the considered view that the assessee had availed the professional services of M/s Makani Creative Pvt. Ltd. (supra), therefore, hold that the latter was liable for deduction of tax at source u/s. 194J. We though are not oblivious of the fact that the CIT(A) had held that as the aforesaid concern, viz. M/s Makani Creative Pvt. Ltd (supra) had paid the tax on the amounts received from the assessee company, therefore, the assessee cannot be held as being in default as regards the „tax‟ determined u/s 201(1), and had allowed the consequential relief to the latter on the said count. However, the assessee had not been principally absolved by the CIT(A) of its statutory obligation for deducting tax at source under Sec.194J, as a result whereof, the latter remains liable for interest u/s 201(1A) for the said tax liability, i.e from the date the assessee was liable to deduct tax at source, till the date of depositing of the tax by the aforesaid payee, viz. M/s Makani Creative Pvt. Ltd.(supra). We thus in light of our aforesaid observations, finding ourselves as being in agreement with the view arrived P a g e | 37 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13 at by the CIT(A), therefore, uphold the same. The Grounds of appeal No. 4 and 5 raised by the assessee before us are dismissed.
54. The ld. A.R had further submitted before us that the CIT(A) had erred in confirming the levy of interest u/s. 201(1A) of Rs.12,53,145/- in respect of payments made to M/s. Makani Creative Pvt. Ltd (supra), by calculating the same for a period of 18 months. We are of the considered view that as the aforesaid issue can only be adjudicated after referring to the records, which are not before us, we therefore restore the same to the file of the A.O with a direction to verify the factual position. That in case if the claim of the assessee is found to be in order, the A.O shall give effect the same. Needless to say, the A.O while adjudicating the aforesaid issue shall afford reasonable opportunity of being heard to the assessee. The Ground of appeal no. 6 is allowed for statistical purposes.
55. That as the Ground of appeal no. 7 raised by the assessee before us is general in nature, therefore, the same is dismissed as not pressed.
56. The appeal of the assessee for A.Y. 2012-13, marked as ITA No. 3528/Mum/2015 before us is partly allowed for statistical purposes, in terms of our aforesaid observations.
A.Y. 2012-13 ITA No. 4015/Mum/2015
57. The revenue assailing the order of the CIT(A), wherein the latter had set aside the order of the A.O treating the assessee as being in default u/ss. 201(1)/201(1A) in respect of certain amounts, had therein filed an appeal before us, raising the following grounds of appeal:-
"1. Grounds of appeal :
(i) On the facts and circumstances of the case and in law, the Id. CIT(A) has erred by holding that provisions of sec. 194C are applicable and not the provisions of section 194H as held by the A.O without appreciating the fact that such payments made f or the us e of the credit c ard is sq uarely covered by th e def in itio n of "Commission or brokerage" given in explanation P a g e | 38 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13
(i) below the third proviso to section 194H of the I.T. Act, and thereby erred in deleting the short deduction u/s. 201(1) of the/.
(ii) On the facts and circumstances of the case and in law, the Id.
CIT(A) has erred in not appreciating the fact that Annual maintenance contract for air conditioner and pest control requires technical skill and human element and are subjected to TDS u/s. 194J and not u/s. 194C of the Act.
(iii) On the facts and circumstances of the case and in law, the Id.
CIT(A) has erred in deleting the short deduction on hoarding charges u/s.1941 of the Ac t and not considering the same as "rent" but "work contract" u/s. 194C of the Act.
(iv) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the interest u/s 201(1A) of the I.T. Act, 1961, determined by the A.O as the tax determined has already been deleted by her and interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground Nos. (i), (ii) & (iii).
2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary at the time of the hearing of the case or thereafter.
3. The order of the CIT(A) being us be set aside and Ld. A.Os order be restored".
58. We find that the Ground of appeal No. 1(i) to (iv), Ground of appeal no. 2 and Ground of appeal no. 3 raised in the present appeal of the revenue for A.Y. 2012-13, marked as ITA No. 4015/Mum/2015, are the same as were involved in the appeal of the revenue for A.Y. 2009-10, marked as ITA No. 1263/Mum/2014, therefore, our order passed while disposing of the aforesaid Ground of appeal No. 1(i) to (iv), Ground of appeal No. 2 and Ground of appeal No. 3 in A.Y. 2009-10, shall apply mutatis mutandis for adjudicating the Ground of appeal No. 1(i) to (iv), Ground of appeal No. 2 and Ground of appeal No. 3 in the present appeal of the revenue for A.Y. 2012-13. We thus in terms of our aforesaid observations dismiss the Ground of appeal no. 1(i) to (iv), Ground of appeal no. 2 and Ground of appeal No. 3 raised by the revenue before us.
59. The appeal of the revenue for A.Y. 2012-13, marked as ITA No. 4015/Mum/2015 is dismissed.
P a g e | 39 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13
60. The appeal of the assessee for A.Y. 2012-13, marked as ITA No. 3528/Mum/2015 is partly allowed, and the appeal of the revenue, marked as ITA No. 4015/Mum/2015 is dismissed.
Order pronounced in the open court on 31/07/2017
Sd/- Sd/-
(G.S. Pannu) (Ravish Sood)
रेखध सदस्म / Accountant Member न्मधनमक सदस्म / Judicial Member
भंफईMumbai; ददनधंकDated : 31.07.2017
PS. Rohit Kumar
आदे श की प्रनिलरपऩ अग्रेपषि/Copy of the Order forwarded to :
1. अऩीरधथी / The Appellant
2. प्रत्मथी / The Respondent
3. आमकय आमक्ि(अऩीर) / The CIT(A)
4. आमकय आमक्ि / CIT- concerned
5. पवबधगीम प्रनिननधध,आमकय अऩीरीम अधधकयण, भंफई / DR, ITAT, Mumbai
6. गधर्ा पधईर /Guard File आदे शधनसधय/BY ORDER, उऩ/सहधमक ऩंजीकधय(Dy./Asstt.Registrar) आमकय अऩीरीम अधधकयण, भंफई/ ITAT, Mumbai P a g e | 40 Metro Shoes Ltd. Vs. ITO A.Y's. 2009-10 to 2012-13