Cyberstar Infocom LLP Vs ITO (ITAT Bangalore)
Summary: The assessee, CYBERSTAR INFOCOM LLP (formerly M/s. Cyberstar Infocom Pvt Limited), was engaged in trading networking cables and equipment. For AY 2014-15, it filed its return on 29.11.2014 declaring total income of NIL after claiming current-year loss of Rs.1,28,63,377. The assessment was selected for scrutiny and the Assessing Officer noticed purchases from the India Branch Office of M/s. Panduit International Cooperation, a US company. Since the branch office constituted a Permanent Establishment in India and the assessee had made payments towards purchases without deducting tax at source under section 195 of the Income-tax Act, 1961, the Assessing Officer, by order dated 13.10.2016 under section 143(3), disallowed Rs.14,99,56,916 under section 40(a)(i). The learned CIT(A) upheld the disallowance, leading to the appeal before the Tribunal.
The principal issue before the ITAT concerned the applicability of the second proviso to section 40(a)(i), where the payee had furnished its return of income and had taken the payment into account. The assessee submitted that it could not be treated as an “assessee in default” because the India Branch Office of M/s Panduit International Cooperation had furnished its return and the relevant accountant’s certificate in Annexure A to Form 26A. The Revenue contended that the complete Form 26A had not been filed and that the payee had filed a NIL return and therefore had not paid tax on the amount received.
