ITAT deletes Income Tax Addition on Lease Line Charges

BMC - Software - ITAT - Income - Tax - Addition - Lease - Line - Charges - TAXSCAN

The Income Tax Appellate Tribunal (ITAT), Pune Bench deleted Income Tax Addition on lease line charges thereby granting relief to BMC Software India Pvt Ltd.

The ground of appeal pertains to disallowance of Primary Rate Interface (PRI) line charges paid to telecom companies amounting to Rupees 1,18,04,423on account of non-withholding of taxes. After considering the submissions of the assessee, the Assessing Officer held that the assessee,BMC Software India Pvt Ltd is engaged in the software development and production of software products.

Telephone with high quality of network is required for such work. Therefore, it is technical service and hence TDS has to be deducted under Section 194J of the Act. The Assessing Officer has also observed that similar addition was confirmed by the Dispute Resolution Panel in assessee’s own case for the assessment years 2014-15 and 2015-16. The Assessing Officer held therefore, that it is a technical service and TDS has to be deducted under Section 194J of the Act.

The Tribunal relied on the judgments in the case of Lee &Murihead (P) Ltd and the decision of Supreme Court in the case of CIT vs. Kotak Securities Ltd while providing relief to the assessee

Allowing the appeal, a Division Bench of the Tribunal consisting of R S Syal, Vice President and ParthaSarathi Chaudhary, Judicial Member held that “In view of the judicial pronouncement where the addition on lease line charges have been deleted, respectfully following the same, on the same parity of reasoning this ground of appeal of the assessee is allowed and the Assessing Officer/Transfer Pricing Officer is directed to delete addition on lease line charges from the hands of the assessee.”

Madhur Agarwal appeared for the appellant and Kalika Singh appeared for the respondent.

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BMC Software India P. Ltd. vs The Dy. C.I.T. tp-1

Counsel for Appellant:   Shri Madhur Agarwal

Counsel for Respondent:   Shri Kalika Singh