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2010 (12) TMI 272 - AT - Income TaxNon deduction of TDS - TDS on remuneration paid to directors - On the strength of letters given by the payees, the payer cannot be absolved from the liability to deduct the tax - If this is allowed to become the precedence then whenever payer is required to deduct the tax under the provisions of Chapter XVII-B, then the payer would easily get absolved from his statutory responsibility and the provisions relating to TDS would become otiose and tax will only be realized through advance-tax Section 209(1)(d) really provides that advance-tax would be paid out of tax payable in the Financial Year after reducing there from tax deductible and the tax collectible at source during Financial Year under any provisions of the Act -The words used in this provision is deductible or collectible, it does not use the word deducted or collected. In other words the tax deductible at source or collectible at source can be reduced by the assessee from the tax liability payable during F.Y. Thus if tax is not deducted or not collected by the payer then still assessee has a right to claim the deduction of the TDS deductible or collectible. Regarding penalty u/s 271C - Even though it is not disputed that levy of penalty is not automatic but where a cause is shown which results in making the entire provisions of deduction of tax redundant, and would create a precedence for enabling the payers not to deduct taxes cannot be said to be satisfactory. An explanation for default is highly individualistic should confine to the facts and circumstances of that case and should be seen as satisfactory only in the factual matrix of that case. It is an explanation in personem not an explanation in rem. Any explanation in rem like in the present case and which has very wide repercussion against statutory scheme cannot be accepted as satisfactory.
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