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2013 (11) TMI 926 - AT - Income TaxAssessee in default u/s 201 - TDS u/s 194C or 194J - Assessee deducted Tax u/s 194C - Technical service - Default u/s 201(1) - Onus to prove - Held that:- The assessee company needs gas as 'feed-stock [i.e. the raw material] for manufacturing the chemical fertilizers [urea] and for purchasing gas it has entered into a gas-sales-and-transmission-contract dated 23.6.2008 with GAIL as 'seller' and Chambal Fertilizers and Chemicals Ltd as 'buyer' for sale and purchase/transmission of natural gas. Thus the assessee company is a 'buyer' of natural gas and GAIL is a 'seller'. It is found that the GAIL is not at all a contractor for execution of any works-contract but it is a seller of gas simpliciter. The assessee has produced necessary proof of filing the return and payment of Tax and filing of return and payment of tax by GAIL - A principal officer of a company can be deemed to be an assessee in default u/s 201(1) of the Act only when he does not deduct whole or any part of the tax and such tax has not been paid. The GAIL and IOCL have already deposited tax due on their total income as is evidenced from the copies of its acknowledgment of return available on record - Tax deduction at source is transitory tax and it is a mode of collection and recovery of tax under Chapter XVII. Tax deducted at source by buyer is to be allowed credit in the hands of the payee. Explanation to clarify the doubts so raised has been inserted by the Finance Act, 2008 w.r.e.f 1.6.2003 in section 191 of the Act and its plain reading makes it abundantly clear that the deductee can be treated as an assessee deemed to be an assessee in default u/s 201(1) of the Act if the recipient fails to pay such tax directly. A contract, which is intended to be a contract for sale of goods [for delivery], cannot be construed as anything else but a contract of sale. Accordingly, no duty is cast, in the facts and circumstances of the case, on the assessee company to deduct any TDS either u/s 194C or 194J of the Act. Therefore, interest charged u/s 201(1A) of the Act for alleged short deduction of tax has been correctly set aside by the ld. CIT(A). The fact that the assessee was deducing TDS u/s 194C was stated to be on account of abundant caution taken by the assessee. This conduct of the assessee, being taken to be on the safer side, cannot be treated adversary to its interest as has been canvassed by the department - Following decision of Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979 (8) TMI 186 - SUPREME COURT OF INDIA], Skycell Communications v. DCIT [2001 (2) TMI 57 - MADRAS High Court] and Hindustan Coco Cola v. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] - Decided against Revenue.
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