Income Tax Appellate Tribunal - Kolkata
Mpr Marketings Pvt. Ltd., Kolkata vs Department Of Income Tax on 14 March, 2013
आयकर अपीलीय अधीकरण, Ûयायपीठ - "बी ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "B", KOLKATA
[(सम¢) ौी पी.
पी.के.बंसल लेखा सदःय, एवं ौी जाज[ माथन Ûयायीक सदःय]]
[Before Hon'ble Sri P.K.Bansal, AM & Hon'ble Sri George Mathan, JM]
आयकर अपील संÉया /ITA No.1514/Kol/2012
िनधॉरण वषॅ/Assessment Year : 2009-2010
(अपीलाथȸ/APPELLANT ) -वनाम- (ू×यथȸ/RESPONDENT)
I.T.O., Ward-8 (1) M/s.MPR Marketings Pvt. Ltd.
Kolkata -versus- Kolkata
(PAN: AADCM 4377 R)
अपीलाथȸ कȧ ओर से/ For the Appellant: Shri A.K.Mahapatra,
CIT(DR)
ू×यथȸ कȧ ओर से/For the Respondent: Shri Soumitra
Chowdhury, Advocate.
सुनवाई कȧ तारȣख/Date of Hearing : 14.03.2013
घोषणा कȧ तारȣख/Date of Pronouncement : 14.03.2013
आदे श/ORDER
Per Bench This is an appeal filed by the Revenue against the order of ld. C.I.T.(A)-VIII, Kolkata in Appeal No.278/CIT(A)-VIII/Kol/11-12 dated 25.07.2012 for the Assessment year 2009-10.
2. Shri A.K.Mahapatra, CIT(DR) represented on behalf of the Revenue and Shri Soumitra Chowdhury, Advocate represented on behalf of the assessee.
3. In the Revenue's appeal the Revenue has raised the following grounds :-
"1. That, on the facts and in circumstances of the case and in law, the CIT(Appeals) has erred in deleting the disallowance of Rs.34,95,411/- u/s 40(a)(ia) of the Income Tax Act, 1961 made by A.O., whereas, as per the requirement of the section 194J of the Income Tax Act, 1961, tax was deductible; failure for which, claim of deduction on such payments were disallowable u/s 40(a)(ia) of the Income Tax Act, 1961.
2. That, on the facts and in circumstances of the case and in law, the CIT(Appeals) has erred in deleting the disallowance of Rs.5 lacs claimed by the assessee company as allowable business expenditure u/s 37(1) of the Income Tax Act, 1961; whereas, such expenditure claimed was on account of settlement fee paid for settlement of civil suit for ITA No.1514/Kol/2012 2 infringement of statutory provisions. Therefore, the same was penal in nature and not allowable as per the provisions of section 37(1) of the Income Tax Act, 1961."
4. In respect of ground No.1 the ld. DR submitted that in page 3 of the assessment order the AO had categorically pointed out that though the assessee had paid Rs.34,95,441/- to the faculty members being professionals for their services and TDS had not been made u/s 194J of the Act. It was the submission that the assessee had treated the said payment as salary. It was the submission that as the assessee had not deducted TDS u/s 194J of the Act the AO had invoked the provision of section 40(a)(ia) of the Act and disallowed the same. It was the submission that the ld. CIT(A) erred in holding that what is paid to the faculty members was salary and the TDS was not liable to be deducted u/s 194J of the Act.
4.1. In ground no.2 it was the submission that in the course of assessment it was noticed by the AO that the assessee had paid Rs.5 lakhs as assessee's share of the legal settlement due to Microsoft for violation of copyright Act. As the same is penal in nature, it was the submission that the AO has disallowed the same. It was the submission that the ld. CIT(A) treated the payment as business expenditure. It was the submission that the order of ld. CIT(A) was liable to be reversed.
5. In reply the ld. AR drew our attention to pages 7 to 13 of the paper book which were the details of the salaries paid as also Form No.16 issued to some of the employees. It was the submission that even Form No.16 issued to the employees clearly show that the amounts have been paid towards the salary. Secondly the TDS was not liable to be deducted u/s 194J of the Act. The ld. AR vehemently supported the order of ld. CIT(A).
5.1. In respect of Ground No.2 the ld. AR drew our attention to compromise petition filed before the Hon'ble High Court of Delhi where in para 10 the assessee is marked as Defendant No.4 and in para 11 Microsoft has agreed to forego the claims for damages, delivery up, rendition of accounts of profits and cost. It was the submission that the compromise petition clearly show that the amounts paid was a compromise and was not a penalty at all. The ld. AR vehemently supported the order of ld. CIT(A).
ITA No.1514/Kol/2012 36. We have considered the rival submissions. In regard to ground no.1 a perusal of the assessment order clearly shows that the assessee has categorically submitted that the assessee is paying salary. A perusal of Form NO.16 clearly shows that what is paid by the assessee is only salary and a perusal of order of CIT(A) clearly show that he has taken into consideration that the employees are regular in the employment of the assessee and the assessee company has also deducted professional tax while disbursing the salary. Once it is shown that the assessee has only paid salaries to the person just because the teachers, are part time teachers, the same cannot be termed as professional fees for the purpose of invoking the provision of section 194J Of the Act. In the circumstances we are find no error in the finding of ld. CIT(A) and consequently the same stands confirmed.
6.1. In regard to ground no.2, being the payment of Rs.5 lakhs to Microsoft , a perusal of para 11 of compromise petition filed before Hon'ble Delhi High Court clearly show that it is a compromise in respect of the contractual liability and the compromise is in no way on account of penalty. In any case this payment of Rs.5 lakhs has been made to Microsoft and obviously Microsoft under no circumstances can levy penalty on the assessee's Explanation to section 37(1) of the Act is a penalty for violation or law or a statute. In the circumstances we are of the view that the finding of the ld. CIT(A) on this issue deleting this addition is on the right footing and does not call for any interference. In the circumstances the appeal of the Revenue is dismissed.
7. In the result the appeal of the Revenue is dismissed.
Order pronounced in the open court on 14.03.2013.
Sd/- Sd/-
[ौी पी.के.बंसल, लेखा सदःय ] [ौी.जाज[ माथन, Ûयायीक सदःय ]
[P.K.Bansal] [ George Mathan ]
Accountant Member Judicial Member
(तारȣख)
तारȣख)Date: 14.03.2013.
R.G.(.P.S.)
ITA No.1514/Kol/2012 4
आदे श कȧ ूितिलǒप अमेǒषतः-
Copy of the order forwarded to:
1. M/s.MPR Marketings Pvt. Ltd., 20A, Lindsay Street, Humayun Court, Kolkata-
700087.
2 The I.T.O., Ward-8)1), Kolkata.
3. CIT Kolkata 4. CIT(A)- VIII, Kolkata.
5. DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, Deputy /Asst. Registrar, ITAT, Kolkata Benches