By K. B. Bhujle, Advocate
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CIT vs. India Capital Markets P. Ltd.; 387 ITR 510 (Bom):
For the A. Y. 2006-07, the
Assessing Officer disallowed the payment made to Bloomberg being data services
charges of Rs. 4.74 lakh on account of non-deduction of tax at source u/s
40(a)(ia) of the income-tax act, 1961. The Assessing Officer was of the view
that the payment made by the assessee to Bloomberg was in the nature of
consultative services and so the assessee was liable to deduct tax at source. The
Commissioner (appeals) found that the payment made to Bloomberg was essentially
a subscription for a financial e-magazine and was not liable to deduction of
tax at source and accordingly there would be no occasion to invoke section
40(a)(ia) of the act. He therefore deleted the addition. The tribunal upheld
the decision of the Commissioner (appeals).
On appeal by the revenue, the
Bombay high Court upheld the decision of the tribunal and held as under:
“i) The
Commissioner (appeals) and the tribunal had reached a concurrent finding
of fact that payments made to Bloomberg
were for subscription
to e-magazines and therefore, there was no occasion to deduct tax under
the act. Thus, section 40(a)(ia) could
not have been invoked.
ii) The
submission on behalf of the revenue that B’s magazines/information was
backed by solid research carried out by its employees and made available on the
website would not by itself result in B rendering any consultative services. It
was not the case of the Revenue that specific queries raised by the asessee
were answered by B as part of the consideration of rs. 4.34 lakh. The
information was made available to all subscribers to e-magazines/journal of B.
therefore, in no way could the payments made to B be considered to be in the
nature of any consultative/professional services rendered by B to the assessee.
iii) The Tribunal was justified
in deleting the disallowance made by the Assessing Officer u/s. 40(a)(ia) of
the act.”
