Income Tax Appellate Tribunal Mumbai Pidilite Industries Ltd, Mumbai vs Ito Tds 2(5), Mumbai on 31 January, 2018 1 Pidilite Industries Ltd IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "C",MUMBAI Before Shri Mahavir Singh(JUDICIAL MEMBER) AND Shri G Manjunatha (ACCOUNTANT MEMBER) I.T.A No.2174/Mum/2014 (Assessment year: 200809) & I.T.A No.3564/Mum/2014 (Assessment year: 200809) M/s Pidilite Industries Ltd, 7th vs ITO (TDS)2(5), Mumbai Floor, Regent Chambers, Jamnalal Bajaj Marg, 208, Nariman Point, Mumbai21 PAN : AAACP4156B APPELLANT RESPONDENT Appellant by Shri Ronak Doshi / Ms Ritu Punjabi Revenue by Shri Rajat Mittal Date of hearing 13112017 Date of pronouncement 31012018 ORDER Per G Manjunatha, AM : These appeals filed by the assessee are directed against separate but identical orders of the CIT(A)14, Mumbai dated 27012014 and 21 032014 for the assessment year 200809. Since facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed of by this common order. ITA No.2714/Mum/2014 2. The assessee has raised the following grounds of appeal: 2 Pidilite Industries Ltd GROUND NO. I: 1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Income Tax Officer (TDS) 2(5) ("the AO") in treating the Appellant as "assessee in default" u/s. 201 (!)/(! A) of the Act without establishing and proving that whether the recipient had not paid taxes or not discharged the tax liability on the income received from the Appellant as required u/s. 191 of the Act. 2. The Appellant prays that the order passed by the AO be quashed / annulled and AO be directed to examine whether the taxes have been paid by the recipient on their income. GROUND II: TDS ON SOFTWARE EXPENSES OF RS. 13.49.952/ AND PURCHASE OF SOFTWARE OF RS. 16,39,419/ 1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Income Tax Officer (TDS) 2(5) ("the AO") in treating the software expenditure of Rs. 13,49,952/ as in the nature of professional services and thereby hold that tax is required to be deducted at source u7sT194jj)tih& Act without appreciating the fact that the Appellant has correctly, deducted TDS u/s. 194C of the Act. ^ 2. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in treating the expenses incurred on purchase of software of Rs. 16,39,419/ as in the nature of royalty and thereby hold that tax is required to be deducted at source u/s. l94J of the Act. 3. The Appellant prays that the impugned order of the AO be set aside. 4. Without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in directing the AO to charge interest u/s, 201(1A) of the Act without appreciating the fact that recipients of the income would have paid taxes by way of advance tax or filed loss return and hence, in such cases there is no loss to the revenue. 5. The Appellant prays that the AO be directed not to charge interest u/s. 201(1 A) of the Act if the recipients of the income had filed or have paid taxes by way of advance tax. GROUND III: TDS ON PAYMENT MADE TOWARDS PURCHASE OF TECHNICAL KNOWHOW AND COPUR1GHT AMOUNTING TO RS. 5.20,00,0007 1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in treating the Appellant as 'assessee in default' for the alleged non deduction of tax at source u/s. 194J of the Act on payment made towards purchase of copy right and technical knowhow amounting to Rs. 5,20,00,0007 without appreciating the facts that TDS is not required to be deducted on ouinght purchase. 2. xxxxxxxxxxxxxxxxxxxx 3. Without prejudice to the above, the CIT(A) erred in not adjudicating the legal plea of the Appellant that since the recipients of the income have filed Return of Income and appropriately accou