Commissioner of Income Tax (International Taxation-3), New Delhi v. Samsung Heavy Industries Company Limited

1. FACTS OF THE CASE

For AY 2012-13, Samsung deducted 2% under section 194C on electrification and interior payments to Arjun Engineering Pvt. Ltd. and Builcraft Interior Pvt. Ltd. Revenue asserted section 194J required 10%. CIT(A)’s 19 December 2016 order retained disallowances of Rs.2,81,90,744 and Rs.4,20,03,868. ITAT deleted them on 22 December 2023 in ITA 873/DEL/2017, holding section 40(a)(ia) inapplicable to short deduction.

Source: Paragraphs 1–4; PDF pp.1–5

2. DISCUSSION BY THE COURT

The Court upheld the Tribunal’s reliance on S.K. Tekriwal and the favourable-construction approach attributed to Vegetable Products, despite the contrary Kerala ruling in PVS Memorial Hospital. Revenue sought deferment because Civil Appeals 10915–10916/2018 concerning that Kerala ruling were reportedly pending. The Court instead found no infirmity in the Tribunal order and no substantial question for admission.

Source: Paragraphs 5–11; PDF pp.5–8

3. JUDICIAL DECISION

The appeal was refused admission and dismissed. Revenue was expressly permitted to approach the Court if the identified Supreme Court civil appeals were decided in its favour and the Kerala High Court order was upheld.

Source: Paragraphs 10–12; PDF p.8

4. OUTCOME

The deletion of the two section 40(a)(ia) disallowances survived, subject to the expressly stated liberty. The judgment does not report any later Supreme Court outcome or later exercise of that liberty.

Source: Paragraphs 8–12; PDF pp.6–8

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Relief against disallowance is not approval of the lower TDS rate

The dispute was treated as admitted short deduction, and the issue decided was whether section 40(a)(ia) applied to it. The Court did not separately classify each contract as section 194C work rather than section 194J services. Accordingly, the expense relief cannot itself establish complete withholding compliance or extinguish liabilities under provisions not adjudicated here.

Source: PDF p.3 · PDF p.4 · PDF p.5 · PDF p.6

The competing High Court views remain part of the reasoning

The judgment adopts the taxpayer-favourable approach in the stated conflict between S.K. Tekriwal and PVS Memorial Hospital. The Tribunal quotation also mentions Future First Info Services. It does not say that the Kerala ruling had already been reversed or rely on unspecified Karnataka and Gujarat authorities. The source’s actual precedential path matters when assessing its reach.

Source: PDF p.4 · PDF p.5 · PDF p.6 · PDF p.7

The reserved liberty qualifies the final result

Revenue’s request to await the Supreme Court was not accepted as a reason to defer this appeal. Dismissal was accompanied by a specific right to approach the Court if the identified civil appeals favoured Revenue and upheld Kerala. That conditional route is not automatic revival, and the present record alone establishes neither its trigger nor any later application.

Source: PDF p.7 · PDF p.8