1

[TS-5021-SC-2016-O]

Reverses HC-ruling on stock-exchange fees; 'Specialized, exclusive' attributes distinguish service from facility

SC lays down law on 'technical services' definition u/s 9(1)(vii),distinguishes 'service' from a 'facility'; Holds that transaction charges paid by stock exchange members to BSE do not qualify as FTS and TDS u/s 194J is inapplicable.

2

[TS-5038-SC-2016-O]

Hotel tips not salary absent reference to employment contract, TDS inapplicable

SC holds that TDS u/s 192 on salaries inapplicable on payment of tips by assessee-hotel to its staff/waiters; Observes that tips are voluntary payment which may or may not be paid by the customers for services rendered and therefore, does not qualify as salary u/s 15(b), holds that "Section 15(b) necessarily has reference to the contract of employment between employer and employee, and salary paid or allowed must therefore have reference to such contract of employment".

3

[TS-5158-HC-2016(MADRAS)-O]

Up-front charges for acquiring leasehold rights not ‘rent’; TDS u/s194I inapplicable

Madras HC holds that payment for one-time non-refundable upfront charges for acquiring leasehold rights in land for long duration (i.e. 99 years), not 'rent', lessee not liable to deduct TDS u/s 194I; Pursuant to entering into MoU with the State Govt. undertaking, assessee was appointed as a ‘co-developer’ for establishing SEZ on land belonging to the State Govt. (‘lessor’) and thereafter lease-deeds in land were executed in assessee’s favour upon payment of upfront charges.

4

[TS-5369-HC-2016(Madras)-O]

No TDS on salaries to priests/nuns where church-authorities are ultimate beneficiaries

Madras HC holds that assessee (a catholic school employing religious Priests/nuns) not liable to deduct TDS on salaries to priests/nuns; Accepts assessee’s submission that since the ultimate beneficiary of the income were the tax- exempt church authorities (i.e. Congregation) and not priests/nuns, there was no liability on assessee to deduct TDS.

5

[TS-5172-HC-2016(DELHI)-O]

Allows TDS-refund to deductor regarding NR interest payment; Quashes CBDT’s refund rejection

Delhi HC quashes CBDT order rejecting refund to assessee-deductor in respect of TDS on penal interest paid to non-resident holding it to be non-exempt u/s 10(15)(iv)(c), holds that penal interest was imposed as part of conditions of agreement for term loan facility and could not be said to be for breach of terms of agreement; Holds that definition of term 'interest' u/s 2(28A) encompasses all kinds payment in respect of money borrowed and debt incurred and thus, penal interest being payable under the agreement which stipulated for waiver of defaults was exempt u/s 10(15)(iv)(c).

6

[TS-5226-HC-2016(Andhra Pradesh)-O]

Contractor sub-contracting majority work irrelevant for TDS credit , Dismisses Revenue's 'no real-work' plea

AP and Telangana HC allows assessee’s writ, grants TDS credit to assessee (a Joint venture company) for tax deducted by Govt. on contract payments made to assessee; Rejects Revenue’s contention that since no real work was done by assessee, TDS credit should be given to subcontractor and not to assessee as per Rule 37(b)(2(i) (which provides that if the income on which tax was deducted is assessable in the hands of person other than deductee , credit shall be given to that other person).

7

[TS-5086-HC-2016(KARNATAKA)-O]

Upholds Sec. 40(a)(ia) disallowance for TDS default, rejects ITAT’s reliance on Vector Shipping ruling

Karnataka HC sets-aside ITAT order, upholds Sec 40(a)(ia) disallowance for TDS default on rent, professional charges and contractual payments to transporters made by assessee (a co-operative sugar factory); ITAT had relied on Allahabad HC ruling in Vector Shipping and remitted matter back to examine whether any amounts were remaining payable at the year-end.

8

[TS-722-HC-2014(KAR)-O]

Sim card distribution = sale of 'right to service',  Sec. 194H Commission TDS inapplicable

HC sets-aside Tribunal's order which held assessee (telecom service provider) was liable to deduct TDS u/s 194H on payments to channel partners /distributors; Observes that assessee sold SIM cards to distributors, which amounted to sale of 'right to service' not sale of service; Holds that "by such sale no income accrues in the hands of the distributor and he is not under any obligation to pay any tax as no income is generated in his hands".

9

[TS-5113-HC-2016(DELHI)-O]

Software payments by ‘reseller’, not ‘royalty’, TDS inapplicable ; Relies on Infrasoft ruling

Delhi HC upholds ITAT order, software purchase payments by assessee [a Value Added Reseller (‘VAR’) of software in India] under VAR agreements, not royalty, Sec 195/194J TDS inapplicable; Assessee entered into VAR agreements with various foreign and Indian software companies (‘parties’) pursuant to which assessee purchased software from these parties and resold to various end-users in India.

10

[TS-54-HC-2015(BOM)-O]

Doctors not “employees" inspite fixed pay; “Master-servant" relationship test to prevail

HC upholds ITAT order, no "master-servant" relationship exist between assessee (a charitable trust running hospital) and consultant doctors, TDS u/s 194J applicable on doctors remuneration and not u/s 192; Referring to ITAT observations that doctors were not entitled to PF or any terminal benefits, they were free to carry their own private practices, holds them as independent professionals.

11

[TS-5668-HC-2015(DELHI)-O]

Allows TDS credit though corresponding income assessable in sister-concern’s hands

HC holds that assessee was entitled to TDS credit without offering corresponding income to tax u/s 199; Assessee's sister concern executed the work for a vendor but the vendor had mistakenly entered assessee's PAN & hence TDS was reflected in assessees Form no 26AS (TDS credit statement).

12

[TS-5374-HC-2016(Gujarat)-O]

Interest on enhanced land compensation not hit by Sec 145A; 2009-amendment

Gujarat HC holds that interest on enhanced compensation doesn’t fall within the ambit of the expression “interest” as envisaged u/s 145A (which provides that interest received on compensation/ enhanced compensation shall be taxable in the year of receipt); Revenue had rejected assessee’s NIL TDS certificate application made u/s 197(1) on the ground that interest on enhanced compensation (received u/s 28 of the Land Acquisition Act) is taxable as income from other sources in terms of Sec 145A.

13

[TS-424-HC-2011(BOM)-O]

Constitutional validity of Sec 194LA upheld

Constitutional validity of TDS u/s 194LA on payment of compensation for acquisition of immovable property upheld; TDS applicable in the year of payment & not in the year of award.

14

[TS-5803-HC-2015(KARNATAKA)-O]

Upholds ITAT order; No TDS u/s 194LA on development rights absent monetary consideration

HC upholds ITAT order, assessee (a municipal authority) not liable to deduct TDS u/s 194LA on land acquired through 'voluntary surrender' by land-owners in lieu of development rights; Revenue had invoked Sec 194LA on issuance of certificate of development rights ('CDR') on the ground that CDRs were in lieu of money for land surrendered which could be valued u/s 50C; Observes that conditions stipulated u/s 194LA namely, 'payment of any sum of money as consideration on account of compulsory acquisition' were not satisfied in present case, therefore Sec 194LA inapplicable.

15

[TS-5308-ITAT-2016(DELHI)-O]

Lays down law on 'process' u/s 9; Inter-connect charges neither 'royalty' nor 'FTS'

Delhi ITAT rules that payment of Inter-connect Usage Charges (‘IUC’) by Bharti Airtel (‘assessee’) to Foreign Telecom Operators (‘FTO’) in connection with its International Long Distance (‘ILD’) telecom service business, neither FTS nor royalty (including process royalty) u/s 9(1)(vi)/(vii) of the Act, Sec 195 TDS inapplicable; ITAT applies the principle laid down by Delhi HC in assessee’s own case (subsequently affirmed by SC) that there should be an involvement/ presence of human element to conclude that 'technical services' were rendered and also notes several other Tribunal rulings wherein upon examination of detailed process, similar conclusion was arrived at.

16

[TS-5606-ITAT-2016(Mumbai)-O]

TV channels subscription payments subject to TDS u/s 194C, not Sec 194J

Mumbai ITAT rules that TDS u/s 194C and not Sec 194J applicable on subscription payments made by assessee (engaged as a Multi System Operator in Indian Cable industry) to TV channels for redistribution of TV Channels through cable operators for AY 2007-08, rejects Revenue’s stand that payment was made for use or right to use of equipment provided to assessee and hence was covered under the ambit of ‘royalty’ as per explanation 2 to Sec 9(1)(vi); Taking note of pre-amended Sec 194C (as relevant for subject AY) wherein the scope of ‘work’ included broadcasting and telecasting etc., holds that “when a particular situation is covered in a specific provision of law then its inclusion in the general provisions of the law is ruled out.”

17

[TS-6957-ITAT-2013(Delhi)-O]

Upholds full TDS credit for airline sales agent following industry modus operandi

Upholds full TDS credit to Jet Air Pvt. Ltd., a General Sales Agent (GSA) for airlines; GSA followed standard modus operandi of industry; Airlines withheld TDS u/s 194H on commission paid to GSA and agents also deducted TDS u/s 194C, both in compliance with law.

18

[TS-6090-ITAT-2015(BANGALORE)-O]

Quarterly expense-provision through suspense attracts TDS de hors income-charge u/s. 4(1)

ITAT dismisses assessee’s appeal challenging the levy of interest u/s 201(1A), holds liability to deduct tax at source (‘TDS’) arises on quarterly expense provisions entries through credit in suspense account as per global group accounting policy; Rejects assessee’s argument that invoice for underlying expenses not received at the time of making provision, and there was no accrual of expenditure nor identification of payee.