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2016 (2) TMI 412 - HC - Income TaxTDS u/s 194A - non deduction of tds - provisions of Sections 201 and 201[1] attracted - whether no income accrued to the payees? - Held that:- Section 194A of the Act mandates the tax deductor to deduct 'income tax' on 'any income by way of interest other than income by way of interest on securities'. The phrase 'any income' and 'income tax thereon' if read harmoniously, it would indicate that the interest which finally partakes the character of income, alone is liable for deduction of the income tax on that income by way of interest. If the said interest is not finally considered to be an income of the deductee, as per reversal entries of the provision in the present case, Section 194A[1] of the Act would not be made applicable. In view of the admitted fact that interest being not paid to the payees [suppliers] being reversed in the books of accounts, we are of the considered opinion that there would be no liability to deduct tax as no income accrued to the payees [suppliers]. The provision of law existing on the relevant date of passing of the order by the TDS Officer would establish that Sections 201 and 201[1A] of the Act were not applicable to the appellant's case. In the circumstances, the Assessee falls outside the scope of Section 194A read with Section 200 of the Act during the relevant assessment years. Thus, the consequential provisions of Section 201(1) and Section 201(1A) are not attracted. - Decided in favour of assessee
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