The assessee, Dish TV India Limited is a resident corporate assessee, who was assessed for year under consideration under section 143(3) wherein the assessee was saddled with disallowance of Rs.6783.90 Lakhs on account of customer support charges and another disallowance of Rs.5648.42 Lakhs on account of commission charges. During the year, the assessee operated as direct-to-home (DTH) operator i.e. distribution of television channels via satellite.
During the course of assessment proceedings, it transpired that the assessee paid customer support charges of Rs.6741.90 Lakhs and other charges like SMS charges for Rs.42 Lakhs. The customer support charges were in the nature of call-center charges paid by the assessee. Against both these payments, tax was deducted at source (TDS) at the rate of 2% under section 194C.
The CIT(A) deleted the disallowance of Rs.6783.90 Lacs representing customer support charges.
The two-member bench of C.N. Prasad and Manoj Kumar Aggarwal found no infirmity or illegality in the order of the CIT(A) in holding that provisions of Section 40(a)(ia) will not be applicable in the case of the assessee as there was nothing in the section to treat the assessee as defaulter where there is a shortfall in deduction of TDS.Subscribe Taxscan AdFree to view the Judgment