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2018 (6) TMI 1760 - AT - Income TaxDisallowance u/s.40(a) (i) in respect of non-deduction of TDS on software expenses - impossibility of performance - HELD THAT:- It is not impossible for the assessee to deduct the tax at source at the time of making the payment in the assessment year under consideration as law interpreted by the Hon'ble jurisdictional High Court in. [2009 (9) TMI 526 - KARNATAKA HIGH COURT] was holding the field at the relevant time and thereafter, subsequent decision was holding the field w.e.f. 15.10.2011. Further the assessee can always deduct the tax in the subsequent payment made by the assessee to the same party in terms of proviso to Section 40(a)(i) of the Act. Therefore it will not be fair on the part of the CIT(A) or the assessee to say that there was impossibility of performance. The decision of coordinate bench and Judgment (supra) relied upon by the Ld. AR, are not applicable as none of these aspects were considered or brought to notice of the Tribunal. We do not find that the case of the assessee falls within the four corners of the doctrine of impossibility of performance because- a) The judgment of the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] and the return of income was filed by the assessee on 30.11.2011. It is not the case of the assessee that the payments without TDS were made before this judgment of the Hon'ble High Court of Karnataka. b) Even if the payment was already made prior to 15.10.2011 then also, the tax could have been deducted in subsequent period against subsequent payments because, as per the Ld. DR the assessee had continued the business with the same party in the subsequent period also and the Ld. AR has not controverted this claim of the Ld. DR by establishing that no business was undertaken with the same party during the subsequent period. c) As per Section 40(a)(ia), if the assessee fails to deduct the tax in the relevant year and pay to the credit of the central government the assessee can deduct the tax in the subsequent period and make the payment to the credit of the central government. If the assessee does so, deduction is allowable u/s. 40(a)(ia) in the year of payment. d)Hence when TDS can be deducted in subsequent period and the assessee has not shown that the assessee was not dealing with the same party during the subsequent period, this claim of the assessee that there was impossibility of performance has no merit. The assessee can very well discharge its obligation by subsequently deducting the TDS in subsequent year and hence there is no impossibility of performance as claimed. The law was in the statute book, when there was an obligation to deduct the tax by the assessee and law continues to be so by the decision rendered by the Hon'ble jurisdiction in the matter of Samsung Electronics. [2009 (9) TMI 526 - KARNATAKA HIGH COURT] and thereafter also law continues to be the same in Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] In view of the above, we find force, substance and merit in the contention of the Ld. DR and accordingly the order passed by the CIT(A) is reversed and that of the AO is restored. Delayed payment of employees' contribution to ESI and PF u/s. 43B - HELD THAT:- Revenue in the present case has relied upon the decision in the matter of Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT]. However, the said judgment was considered by the jurisdictional High Court in the matter of Essae Teraoka P. Ltd. v. DCIT [2014 (3) TMI 386 - KARNATAKA HIGH COURT] and had expressed that it is difficult to endorse the view taken by the Hon'ble Gujarat High Court. The Tribunal falls within the territorial jurisdiction of the Hon'ble High Court of Karnataka and is bound and governed by the judgment and law decided by the Karnataka High Court. Therefore respectfully following the judgment of the jurisdictional High Court, the issue of disallowance of delayed deposit of employees' contribution to PF and ESI is decided in favour of the assessee and against the Revenue.
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