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2016 (7) TMI 735 - AT - Income TaxTDS liability - penal action under section 201(1) and interest under 201(1A) - Held that:- The assessee expenses were debited on the accrual basis on monthly estimate in a common basket and not to the account of specific party/payees. As pleaded that the provisioning of expenses did not result in any constructive credit to a specific Payee and the purpose was to manage reporting on monthly results for monitoring and tax was deducted on receipt of bills/invoices from the parties after rendering of services and only after due approval of services, the credit was given to the payee account and TDS was accordingly deducted and deposited in the government account. The system was regularly followed by the assessee and the Department has also accepted this practice in assessment year 2010-11. The contention of the Revenue that assessee followed cash system of accounting in respect of the expenses in reference is not correct as the expenses have been accounted for as and when ascertained and TDS was also deducted at that point of time. Moreover, we find that the Department itself in the assessment year 2010-11 has accepted the accounting followed in respect of the expenses and no penal action under section 201(1) and interest under 201(1A) of the Act was considered. The learned Commissioner of Income Tax(Appeal) has followed the finding of the Tribunal in the case of Pfizer Ltd Vs. ITO(TDS) (2012 (11) TMI 164 - ITAT MUMBAI) wherein the Tribunal has held that since the payee was not identifiable in the case at the time of making the provision, no TDS was required to be made and further the entire provision had been written back the next year and the actual amounts paid/credited were subjected to TDS as per the detailed statement filed before the authorities, on which there was no dispute - Decided against revenue.
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