ITA No. 2021 & 2019/MUM/2024

Parties Involved

Facts Summary

The Assessee was subjected to a survey under Section 133A of the Act and it was discovered that the Assessee had made payments of INR 110 Crores without deducting tax at source. The Assessing Officer noted that the Assessee had entered into a development agreement with Mohan Entertainment Company Limited (MECL) for a plot of land. Disputes arose between the shareholders, leading to civil and criminal litigation. As part of the settlement, the Assessee made payments of INR 50.84 Crores and INR 59.16 Crores to the Reddy Group during the Financial Years 2011-12 and 2012-13. The Assessing Officer concluded that the payments fell within the ambit of Section 28(va)(b) of the Act and that the Assessee had short-deducted tax at source under Section 194J(1)(d) of the Act. However, the CIT(A) overturned the findings of the Assessing Officer and held that the payments did not fall within the ambit of Section 28(va)(b) of the Act and therefore, the tax withholding provision contained in Section 194J(1)(d) of the Act were not attracted.…

Legal Issues

• 1. Whether the CIT(A) erred in allowing the appeal of the assessee and deleting the default u/s.201(1)/201(1A) of the Act to the tune of Rs.6,21,01,601/- without appreciating the lease agreement in the name of M/s. Mohan Entertainment Company Ltd. in which the directors of Reddy Group were paid Rs.50.84 crores for giving up their 40% of commercial license rights in the plot of land in which the Reddy Group was not the owner but had the license of right only to develop the plot as per lease agreement.
• 2. Whether the CIT(A) erred in allowing the appeal of the assessee and deleting the default u/s.201(1)/201(1A) of the Act to the tune of Rs.6,21,01,601/- without appreciating the fact that the nature of payment made is towards non-sharing of license, resulting into TDS liability on part of assessee company under provisions of Section 194J(1)(d) r.w.s. 28(va)(b) of the Act.
• 3. Whether the CIT(A) erred in relying on decision of Hon'ble ITAT in assessee's own case ITA No.1208/Mum/2018 dated 31.5.2019 for AY 2012-13 wherein the question of law was with regard to the nature of income/expenditure and not the applicability of TDS provisions.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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