Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 865 - AT - Income TaxLiability to deduct TDS u/s 194J of the Act – Payment made to Managing Director of the Company – Held that:- There was an oral agreement as on 01.02.2006 whereby the assessee agreed to pay Rs.5 crores to Shri G.N. Mohan Raju, for Shri G.N. Mohan Raju agreeing to offer 74% of economic interest in any new business initiative in the field of telecommunication, digital media and convergence that may be undertaken by digital media and convergence that may be undertaken by Shri G.N. Mohan Raju during his lifetime - the payments made by the assessee go to show that the oral agreement pleaded by the assessee is true - The assessee has credited Shri G.N. Mohan Raju in its books of accounts with regard to the liability of Rs.5 crores as on the date of oral agreement. The liability to deduct tax at source u/s. 194J of the Act will have to be tested as on the date of credit of the amount to the account of the payee and not on the date of payment because the date of credit in the books of accounts of the Assessee is earlier in point of time - the law as on 01.02.2006 as contained in section 194J of the Act has to be seen - prior to 13.07.2006, neither royalty or non-compete fee u/s. 28(va) of the Act was covered by the provisions of section 194J of the Act - there was no obligation to deduct tax at source u/s. 194J of the Act on the part of the assessee - payments made by the assessee were after 13.07.2006 cannot fasten any obligation on the part of the assessee u/s. 194J of the Act because the obligation arises only at the time of credit of sum to the account of the payee or at the time of payment, whichever is earlier - the provisions of section 194J were not applicable to the payment of Rs.5 crores made by the assessee – the orders passed by the revenue authorities treating the assessee as ‘assessee in default’ and also levying interest u/s. 201(1A) of the Act are found to be unsustainable and are cancelled – Decided in favour of Assessee.
|