Ushodaya Enterprises Private Limited, Hyderabad, R.R.Dist v. DCIT, TDS, Circle-2(1), Hyderabad, Hyderabad

ITA 546/HYD/2017 | 2008-2009
Pronouncement Date: 29-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 54622514 RSA 2017
Assessee PAN AAACU2690P
Bench Hyderabad
Appeal Number ITA 546/HYD/2017
Duration Of Justice 8 month(s) 5 day(s)
Appellant Ushodaya Enterprises Private Limited, Hyderabad, R.R.Dist
Respondent DCIT, TDS, Circle-2(1), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 29-11-2017
Assessment Year 2008-2009
Appeal Filed On 24-03-2017
Judgment Text
ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN ACCOUNTANT MEMBER ITA NOS.546 & 547/HYD/2017 (ASSESSMENT YEAR: 2008-09) M/S. USHODAYA ENTERPRISES PRIVATE LIMITED HYDERABAD PAN: AAACU 2690 P VS DCIT ( TDS ) CIRCLE 2(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR FOR REVENUE : SHRI P. SOMASEKHAR REDDY DR O R D E R PER SMT. P. MADHAVI DEVI J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.Y 2008-09. IN ITA NO.546/HYD/2017 THE ASSESSEE IS CHALLENGING TH E ORDER OF THE CIT (A) IN CONFIRMING THE INTEREST LEVIED BY TH E AO U/S 201(1A) OF THE I.T. ACT WHILE IN ITA NO.547/HYD/2017 THE ASSESSEE IS CHALLENGING THE ORDER OF THE CIT (A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271C OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY ENTERED INTO A NON-COMPETE AGREEMENT FOR A PERIOD O F FIVE YEARS WITH RAMOJI RAO (HUF) ON 30.01.2008 FOR A TOTAL CON SIDERATION OF RS.670 CRORES. THE AO NOTICED FROM THE ORDER OF THE ITAT DATED 22.10.2014 IN THE ASSESSEES OWN CASE FOR THE A.Y 2 008-09 THAT DATE OF HEARING: 27.09.2017 DATE OF PRONOUNCEMENT: 2 9 . 1 1 .2017 ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 2 OF 10 THE ASSESSEE HAS EXECUTED THE NON-COMPETE AGREEMENT FOR A PERIOD OF 5 YEARS. ON VERIFICATION OF FORM NO.26AS OF SHRI RAMOJI RAO (HUF) FOR THE A.Y 2007-08 THE AO NOTICED THAT NO TDS WAS DEDUCTED ON THE NON-COMPETE FEE OF RS.670 CRORES PA ID BY THE ASSESSEE TO SHRI RAMOJI RAO (HUF). BY VIRTUE OF THE ABOVE DEFICIENCY NOTICED THE AO OBSERVED THAT THE ASSESS EE COMPANY WAS LIABLE FOR PROCEEDINGS U/S 201 & 201(1A) OF THE I.T. ACT. THEREFORE A SHOW-CAUSE NOTICE DATED 15.12.2014 WAS ISSUED TO THE ASSESSEE AS TO WHY THE ASSESSEE SHOULD NOT BE T REATED AS AN ASSESSEE IN DEFAULT AND LEVIED THE INTEREST U/S 20 1(1A) OF THE ACT. VIDE LETTER DATED 19.12.2014 THE ASSESSEE FILED WR ITTEN SUBMISSIONS ALONG WITH THE COPIES OF THE NON-COMPET E AGREEMENT DATED 30.01.2008 THE RETURN OF INCOME FILED BY SHR I RAMOJI RAO (HUF) THE ASSESSMENT ORDER FOR THE A.Y 2008-09 PAS SED U/S 143(3) DATED 24.12.2010 BY THE AO AND THE LEDGER EX TRACT OF RAMOJI RAO (HUF) IN THE BOOKS OF M/S. USHODAYA ENTE RPRISES PVT. LTD FOR THE FINANCIAL YEAR 2007-08. FROM THE ABOVE DOCUMENTS THE AO OBSERVED THAT THE AMOUNT OF NON-COMPETE FEE OF RS.670 CRORES WAS PAID TO SHRI RAMOJI RAO (HUF) ON 28.02.2 008 BY CREDITING HIS ACCOUNT IN THE BOOKS OF M/S. USHODAYA ENTERPRISES PVT. LTD AS VERIFIED BY THE LEDGER FOLIO FILED BY T HE ASSESSEE COMPANY. IN THE SAID LETTER THE ASSESSEE ALSO TOOK THE OBJECTION THAT THE ACTION OF THE DCIT IN ISSUING THE NOTICE D ATED 15.12.2014 FOR TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAUL T IS TIME BARRED. ACCORDING TO THE ASSESSEE UNDER SUB-SECTIO N (3) OF SECTION 201 OF THE I.T. ACT THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE. HE SUB MITTED THAT THIS PERIOD WAS INCREASED TO SIX YEARS BY THE FINAN CE ACT OF 2009 ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 3 OF 10 W.E.F. 1.4.2010 AND THE FINANCE ACT OF 2014 HAS INC REASED THE PERIOD TO SEVEN YEARS W.E.F. 1.4.2014. THEREFORE A CCORDING TO THE ASSESSEE THE ACTION TAKEN BY THE AO IS TIME BARRED AND THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAU LT NOR CAN THE INTEREST BE LEVIED U/S 201(1A) OF THE ACT. THE AO H OWEVER OBSERVED THAT THE TIME LIMIT PRESCRIBED BY THE AMEN DED PROVISIONS OF SECTION 201(3) ARE ONLY PROCEDURAL AND THEREFORE ARE APPLICABLE RETROSPECTIVELY. THE AO ALSO OBSERVED THAT U/S 28(V A) OF THE I.T. ACT THE PAYMENT OF NON-COMPETE FEE WAS CHARGEABLE TO TAX AND THE ASSESSEE OUGHT TO HAVE MADE TDS U/S 194J OF THE ACT. THE AO ACCORDINGLY HELD THAT THE ASSESSEE IS A DEFAULTE R U/S 201(1) OF THE ACT. THEREAFTER THE AO OBSERVED THAT THE PAYEE IS RAMOJI RAO (HUF) PAID TAX ON THE RECEIPT OF NON-COMPETE FEE AN D THEREFORE AS PER THE JUDGMENT OF THE HON'BLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCO COLA BEVERAGES LTD (REPORTED IN 2007 ) 293 ITR 0226 THE ASSESSEE CANNOT BE TREATED AS A DEFAULTER FOR THE PURPOSE OF SECTION 201(1) OF THE I.T. ACT. THE AO THEREAFTER PROCEEDED TO CONSIDER WHETHER INTEREST IS CHARGEABL E U/S 201(1A) OF THE ACT. HE OBSERVED THAT THE NATURE OF THE INTE REST CHARGED U/S 201(1A) IS CLEARLY COMPENSATORY IN NATURE AND THERE FORE HAS TO BE CHARGED FROM THE DATE OF DEDUCTIBILITY TO THE DATE OF PAYMENT OF TAX BY THE PAYEE. ACCORDINGLY HE COMPUTED AND CHAR GED THE INTEREST AT RS.6 07 28 800. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER O F THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE ASSESSEE HAS FILED THE ORIGINAL GROUNDS OF A PPEAL WHICH ARE AS UNDER: ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 4 OF 10 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8 HYDERABAD DATED 06-03-2017 IS ERRONEOUS CONTRARY TO LAW AND FACTS OF THE CASE. 2. COMMISSIONER INCOME TAX (APPEALS)-8 GROSSLY ERRED IN HOLDING THAT THE CONTENTION OF THE APPELLANT THAT THE TIME LIMIT OF 4 YEARS FOR COMPLETION OF PROCEEDINGS U/S.201 (1) AND 201 (1A) OF THE ACT IS REQUIRED TO BE COUNTED FROM THE DATE OF OCCURRENCE OF DEFAULT IS NOT BASED ON INTERPRETATION OF STATUTE. COMMISSIONER OF INCOME TAX (APPEALS)-8 OUGHT TO HAVE SEEN THAT NO TIME LIMIT WAS PROVIDED IN THE ACT FOR COMPLETION OF PROCEEDINGS U/S.201 (1) & 201 (1A) AT THE RELEVANT TIME WHEN THE ALLEGED DEFAULT HAD OCCURRED. IT IS ONLY LATER THAT A PROVISION WAS INTRODUCED IN SEC.201 PROVIDING TIME LIMIT FOR COMPLETION OF PROCEEDINGS U/S.201 (1) & 201 (1A) AND EVEN SUCH PERIOD HAD EXPIRED IN APPELLANT'S CASE BY THE TIME PROCEEDINGS WERE INITIATED U/S.201 (1) & 201 (1A). HENCE COMMISSIONER OF INCOME TAX (APPEALS)-8 IS NOT JUSTIFIED IN HOLDING THAT INTEREST LEVIED U/S.201 (1A) IS WITHIN THE TIME LIMIT. 3. COMMISSIONER OF INCOME TAX (APPEALS)-8 IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT PREVENTED BY A REASONABLE CAUSE IN COMPLYING WITH THE PROVISIONS OF SEC.194J(D) IN NOT DEDUCTING TAX FROM NON-COMPETE FEE. COMMISSIONER OF INCOME TAX (APPEALS)-8 OUGHT TO HAVE SEEN THAT THE RECIPIENT OF NON-COMPETE FEE DID NOT HAVE TAXABLE INCOME EVEN AFTER CONSIDERING NON-COMPETE FEE AS INCOME AND THEREFORE APPELLANT WAS REQUESTED BY THE RECIPIENT OF NON-COMPETE FEE NOT TO DEDUCT TAX FROM NON-COMPETE FEE WHICH IS A REASONABLE CAUSE. HENCE COMMISSIONER OF INCOME TAX (APPEALS)-8 IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT DID NOT PROVE THAT THERE WAS REASONABLE CAUSE FOR NOT DEDUCTING TAX AT SOURCE IN RESPECT OF NON-COMPETE FEE. ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 5 OF 10 4. COMMISSIONER OF INCOME TAX (APPEALS)-8 OUGHT TO HAVE SEEN THAT INTEREST U/S.201 (1A) IS LEVIABLE FOR THE PERIOD FROM 07-02-2008 (DATE ON WHICH TAX WAS DEDUCTIBLE ON NON-COMPETE FEE) TO 30-09-2008 (DATE OF FURNISHING RETURN OF INCOME). IN FACT THE RETURN OF INCOME OF SRI RAMOJI RAO (HUF) WAS E-FIIED ON 30-09-2008 ITSELF AND IT IS ONLY A HARD COPY OF RETURN THAT WAS FILED BEFORE THE ASSESSING OFFICER ON 1310-2008. HENCE COMMISSIONER OF INCOME TAX (APPEALS)-8 IS NOT JUSTIFIED IN HOLDING THAT INTEREST IS LEVIABLE UPTO 13-10-2008. FURTHER THE COMMISSIONER OF INCOME TAX (APPEALS)-8 OUGHT TO HAVE SEEN THAT DUE DATE FOR DEDUCTING TAX FROM NON-COMPETE FEE CREDITED ON 30-01-2008 IS 07-02-2008. HENCE APPELLANT SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS)-8 IS NOT JUSTIFIED IN HOLDING THAT INTEREST IS LEVIABLE FOR THE PERIOD 30-01-2008 TO 13-10-2008. FURTHER APPELLANT SUBMITS THAT SUCH DIRECTION AMOUNTS TO ENHANCEMENT OF INTEREST LEVIABLE U/S.201 (1A) WITHOUT GIVING NOTICE TO THE APPELLANT AND IS THEREFORE NOT JUSTIFIED. 5. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING IT IS MOST RESPECTFULLY PRAYED THAT THIS HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL BY CANCELLING ORDER PASSED U/S.201 (1A) AND SUSTAINED/ENHANCED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-8 IN THE INTEREST OF JUSTICE. 4. AS A SUBSTITUTE TO THE ABOVE THE CONCISE GROUND S OF APPEAL WERE FILED BY THE ASSESSEE. BUT THE LEARNED DR SUBMITTED THAT THE CONCISE GROUNDS OF APPEAL ARE ENLARGING TH E ORIGINAL GROUNDS OF APPEAL AND ARE NOT ARISING OUT OF THE CI T (A)S ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE THEN SUBMITTE D THAT THE ASSESSEE DOES NOT WISH TO PRESS THE CONCISE GROUNDS OF APPEAL. ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 6 OF 10 THEREFORE THE ORIGINAL GROUNDS OF APPEAL FILED BY THE ASSESSEE ONLY ARE CONSIDERED AND ADJUDICATED AS UNDER:- 5. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 6. AS REGARDS GROUND OF APPEAL NO.2 WE FIND THAT I T IS ON THE QUESTION OF TIME LIMIT FOR INITIATION OF PROCEE DINGS U/S 201(1) OF THE ACT. WE FIND THAT SUB-SECTION (3) OF SECTION 201 OF THE ACT PROVIDED FOR THE TIME LIMIT FOR DEEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA. PRIOR TO 1.4.2010 THE TIME LIMIT PRESCRIBED U/S 201(3) WAS 4 YEARS FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE OR CREDIT IS GIVE N. BY THE FINANCE ACT OF 2012 IT WAS AMENDED WITH RETROSPECT IVE EFFECT FROM 1.4.2010 INCREASING THE PERIOD TO 6 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE OR CRED IT IS GIVEN AND A PROVISO THERETO PROVIDED THAT SUCH ORDER FOR A FI NANCIAL YEAR COMMENCING ON OR BEFORE 1 ST OF APRIL 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE 31.3.2011. THUS WHILE AMENDING T HE PROVISIONS OF SECTION 201(3) BY THE FINANCE ACT 2012 THE LEGI SLATURE IN ITS WISDOM HAS SOUGHT TO RETAIN THE PERIOD OF 4 YEARS FOR AN ORDER U/S 201(1) OF THE ACT TO BE PASSED FOR A FINANCIAL YEAR COMMENCING ON OR BEFORE 1 ST DAY OF APRIL 2007 AS THE PERIOD OF 4 YEARS THEREFROM WOULD END ON 31.3.2011. FINANCIAL Y EAR BEFORE US IS 2007-08 I.E. COMMENCING ON 1.4.2007 RELEVANT TO THE A.Y 2008- 09. THE PAYMENT HAS BEEN MADE TO SHRI RAMOJI RAO (H UF) BY THE ASSESSEE ON 28.02.008 FALLING WITHIN THE FINANCIAL YEAR 2007-08 ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 7 OF 10 WHICH ENDS ON 31.3.2008. THEREFORE AS PER THE PROV ISO TO SECTION 201(3) AN ORDER TREATING THE ASSESSEE AS AN ASSES SEE IN DEFAULT HAS TO BE PASSED BEFORE 31 ST DAY OF MARCH 2011. IN THE INSTANT CASE THE SHOW-CAUSE NOTICE FOR TREATING THE ASSESS EE AS ASSESSEE IN DEFAULT HAS BEEN ISSUED ONLY ON 15.12.2014 I.E. BEYOND 31.3.2011 AND EVEN BEYOND THE PERIOD OF 6 YEARS EVE N IF THE PROVISION AS AMENDED BY THE FINANCE ACT 2012 IS TAK EN INTO CONSIDERATION. THE PERIOD OF 7 YEARS HAS BEEN BROUG HT IN BY THE FINANCE ACT 2014 W.E.F. 1.10.2014 AND THEREFORE C ANNOT BE APPLIED TO THE CASE ON HAND AS ANY AMENDMENT TO THE DETRIMENT OF AN ASSESSEE CANNOT BE APPLIED RETROSPECTIVELY. T HEREFORE IN VIEW OF THE PROVISO TO SUB-SECTION 3 OF SECTION 201 (1) WHICH WAS IN FORCE TILL 1.10.2014 WE ARE OF THE OPINION THAT THE ORDER OF THE AO TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT IS CLEARLY BARRED BY LIMITATION AND GROUND OF APPEAL NO.2 IS A LLOWED. 7. EVEN OTHERWISE THE AO HAS NOT TREATED THE ASSES SEE AS AN ASSESSEE IN DEFAULT BECAUSE THE PAYEE/RECIP IENT HAS INCLUDED THE SAID NON-COMPETE FEE IN HIS RETURN OF INCOME AND HAS PAID TAX THEREON. THEREFORE THE ASSESSEE HAS C LEARLY NOT BEEN TREATED AS AN ASSESSEE IN DEFAULT. 8. GROUND NO.3 IS AGAINST CHARGING OF INTEREST U/S 201(1A) OF THE ACT. WE FIND THAT THE PROVISIONS OF SUB-SECTION (3) OF SECTION 201(1) WILL NOT APPLY TO CHARGING OF INTERE ST U/S 201(1A) OF THE ACT AS SUB-SECTION 3 CLEARLY REFERS TO ONLY AN ORDER UNDER SUB-SECTION (1) BUT AND DOES NOT REFER TO AN ORDER U/S 201(1A) OF THE ACT AS A RESULT THE TDS TO BE MADE FROM THE PA YMENT CANNOT ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 8 OF 10 BE RECOVERED FROM THE ASSESSEE. BUT THE LIABILITY OF THE ASSESSEE TO MAKE TDS HAS NOT BEEN ABSOLVED. IN THE CASE BEFO RE US BECAUSE THE TAX HAS BEEN PAID BY THE PAYEE THE ASS ESSEE IS NOT TREATED AS A DEFAULTER. THE HON'BLE SUPREME COURT I N THE CASE OF HINDUSTAN COCO COLA BEVERAGES LTD (CITED SUPRA) HAS CLEARLY HELD THAT THE INTEREST U/S 201(1A) IS COMPENSATORY IN NA TURE AND THAT EVEN IF THE PAYEE HAS PAID THE TAX ON THE RECEIPT THE PAYER IS LIABLE TO PAY INTEREST U/S 201(1A) OF THE ACT FROM THE DATE OF DEDUCTIBILITY TO THE DATE OF PAYMENT OF TAX BY THE PAYEE. IT IS THEREFORE HELD THAT THE ASSESSEE IS LIABLE TO PAY THE INTEREST U/S 201(1A) OF THE ACT. AS REGARDS THE PERIOD FOR WHICH THE INTEREST U/S 201(1A) IS PAYABLE THE SAME IS NOT PRESSED BY THE ASSESSEE AND THEREFORE IS REJECTED. 9. AS REGARDS GROUND NO.3 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RECIPIENT OF NON-COMPET E FEE DID NOT HAVE TAXABLE INCOME EVEN AFTER CONSIDERING THE NON- COMPETE FEE AND THEREFORE THE ASSESSEE IS JUSTIFIED IN NOT MAK ING TDS. HOWEVER WE FIND THAT THIS CONTENTION IS NOT SUBSTA NTIATED BY ANY EVIDENCE. EXCEPT FOR AN ORAL STATEMENT IN THE GROUN DS OF APPEAL THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDE NCE IN SUPPORT OF SUCH A CONTENTION. IN FACT THE AO HAS C LEARLY BROUGHT OUT ON RECORD THAT THE RECIPIENT SHRI RAMOJI RAO (H UF) HAS TAXABLE INCOME AND THAT AFTER TAKING INTO CONSIDER ATION THE NON- COMPETE FEE RECEIVED BY HIM THE ASSESSEE HAS BEEN ASSESSED TO TAX AT RS.108 47 26 715. THE LEARNED COUNSEL FOR TH E ASSESSEE HAS NOT BEEN ABLE TO REBUT THIS FINDING OF THE AO E XCEPT TO STATE THAT THE TDS WAS REQUIRED TO BE EFFECTED ON NON-COM PETE FEE WHICH IS TAXABLE AS BUSINESS INCOME AND IN VIEW OF THE CARRY ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 9 OF 10 FORWARD BUSINESS LOSS NOTHING REMAINS TO BE TAXED. THEREFORE WE ARE NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE UNDER HAD A REASONABLE CAUSE TO DEDUCT THE TAX AT SOURCE. THEREFORE GROUND OF APPEAL NO.3 IS ALSO RE JECTED. 10. IN THE RESULT APPEAL IN ITA NO.546/HYD/2017 IS ONLY PARTLY ALLOWED. ITA NO.547/HYD/2017 11. IN THIS APPEAL THE ASSESSEE IS CHALLENGING THE CONFIRMATION OF PENALTY U/S 271C OF THE ACT. THE PE NALTY U/S 271C IS LEVIED FOR NON-DEDUCTION OF TAX AT SOURCE U /S 194J OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT THE REVENU E HAS ALWAYS TREATED THE PAYMENT OF NON-COMPETE FEE AS A SHAM TR ANSACTION AND THEREFORE THE AO COULD NOT HAVE RECORDED A SAT ISFACTION THAT THE ASSESSEE IS LIABLE TO MAKE TDS ON SUCH NON-COMP ETE FEE. 12. THE LEARNED DR ON THE OTHER HAND SUBMITTED TH AT THE ASSESSEE HAS ALWAYS CONTENDED THAT IT HAS PAID THE NON-COMPETE FEE AND THUS IS A BUSINESS EXPENDITURE AND IN SUCH CIRCUMSTANCES THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE AND FOR FAILURE TO DO SO THE PENALTY U/S 271C IS J USTIFIED. 13. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD WE FIND THAT THE REQUIREMENT TO MAKE THE PAYMENT AND THE GENUINENESS OF THE PAYMENT OF NON-COMPETE FEE B Y THE ASSESSEE TO SHRI RAMOJI RAO (HUF) HAS BEEN ADJUDICA TED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y 2008-09 AND THE ITA NOS 546 AND 547 OF 2017USHODAYA ENTE RPRISES P LTD HYDERABAD. PAGE 10 OF 10 CONTENTION OF THE ASSESSEE THAT THE NON-COMPETE FEE IS THE BUSINESS EXPENDITURE OF THE ASSESSEE HAS BEEN UPHEL D. THE ASSESSEE HAS ALWAYS CONTENDED THAT IT IS ITS BUSINE SS EXPENDITURE AND THEREFORE IT WAS REQUIRED TO DEDUCT THE TAX AT SOURCE U/S 194J OF THE ACT. FOR FAILURE TO DEDUCT THE TAX INSP ITE OF BEING LIABLE TO DO SO THE PENALTY U/S 271C IS CLEARLY LEVIABLE. THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANC E ON VARIOUS CASE LAW WE FIND THAT THESE CASES ARE DISTINGUISHA BLE ON FACTS. IN VIEW OF THE SAME WE DO NOT SEE ANY REASON TO INTER FERE WITH THE PENALTY ORDER CONFIRMED BY THE CIT (A). 14. IN THE RESULT APPEAL IN ITA NO.547/HYD/2017 IS DISMISSED. 15. TO SUM UP ITA NO.546/HYD/2017 IS PARTLY ALLOWE D AND ITA NO.547/HYD/2017 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 29 TH NOVEMBER 2017. VINODAN/SPS COPY TO: 1 M/S. USHODAYA ENTERPRISES P LTD EENADU BUILDING RAMOJI FILM CITY ANAZPUR VILLAGE RANGA REDDY DISTT 501 512 2 DCIT (TDS) CIRCLE 2(1) HYDERABAD 3 CIT (A) - 8 HYDERABAD 4 CIT TDS HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER