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2013 (1) TMI 424 - AT - Income TaxNon deduction of TDS on distributed chit dividends to subscribers - assessee company is engaged in the business of running chit funds - CIT(A) deleted the order of default u/s 201 & 201(1A) - Held that:- As decided in Delhi High Court in the case of Sahib Chits(Delhi)(P)ltd. [2009 (7) TMI 75 - DELHI HIGH COURT], and CIT V/s. Bilahari Investment Pvt. Ltd.(2006 (6) TMI 59 - MADRAS HIGH COURT) as affirmed by the Apex Court [2008 (2) TMI 23 - SUPREME COURT] held that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS under S.194A and not liable to interest u/s. 201(1) and 201(1A) - against revenue. Following the consistent view taken by the decision in similar matters by the ratio of the decision of the Madras High Court in the case of CIT V/s. L.G.Ramamurthy and Others [1976 (10) TMI 18 - MADRAS HIGH COURT] the provisions of S.40(a)(ia) of the Act are not attracted, and accordingly the CIT(A) was justified in deleting the addition made by the assessing officer by resorting to disallowance in terms of S.40(a)(ia). Expenditure incurred on purchase of various items - whether partake the character of payments under the works contract and tax was deductible u/s 194C which was not deducted - Held that:- Relying on decision in the case of CIT Vs. Glenmark Pharmaceuticals Ltd. (2010 (3) TMI 289 - BOMBAY HIGH COURT) wherein the Bombay High Court took note of the amendment to sec. 194C (w.e.f. 01/10/2009 and held that work does not include manufacture and supply of products according to specification of customers by using materials purchased from third parties. Expenditure towards advertisement charges - demand raised by the AO u/s 201(1) - the CIT(A) deleted the same, however sustained the interest u/s 201(1A) - Held that:- CIT(A) relying on the decision of Hindustan Coca Cola Beverage (P) Ld. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA)referring to the CBDT Circular No. 275/201/95-IT(B), dated 29/01/1997 wherein held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source. The Apex Court also . However, this will not alter the liability to charge interest, therefore, confirm the order of the CIT(A) for charging of interest till the date of payment of tax by the assessee - against revenue.
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