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2017 (10) TMI 1316 - AT - Income TaxPenalty levied u/s. 271C - assessee in default - deduction of tds u/s 194J or 194C on services provided - bonafide belief - Held that:- Assessee in fact deducted tax at 2% under the provisions of Section 194C on the reason that the agreements entered were ‘contractual in nature’ and not for providing technical services. By virtue of the amendment brought to Section 201(1) by insertion of proviso w.e.f. 01-07-2012, demands u/s. 201(1) cannot be raised, if the deductee has satisfied that it has included the income and remitted the taxes. Therefore, whether it is deduction u/s. 194C or 194-J since the deductee has admitted the incomes and paid taxes thereon, the question of short deduction or non-remittance of tax does not arise in this case. In fact there were no demands u/s. 201(1) so as to levy penalty u/s. 271C. The provisions of Section 273B are applicable as assessee has a reasonable cause for non-deduction of tax at 10% as against 2% it has deducted. In fact, the opinion of the AO has not yet become final as the issue of levy of interest u/s. 201(1A) itself is being restored to the file of AO for fresh examination in appeals (2017 (11) TMI 191 - ITAT HYDERABAD). Considering all we can only say that the CIT(A) did not err in deleting the penalties. - Decided in favour of assessee
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