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2017 (7) TMI 540 - HC - Income TaxTDS liability - permitting the petitioner to correct PAN of the deductee - system is programmed to permit correction only in case four digits/characters are to be changed and no more - Held that:- In the present case, as noted, section 200A itself refers to correction statement of tax deducted at source. The intimation sent to the petitioner of shortfall in deduction of tax also referred to the possibility of correction but limited it to certain characters. In the affidavit in reply also same stand has been taken. Some anomalous situations would arise if genuine and bona fide errors are not allowed to be corrected only on the basis that such correction travelled beyond two alphabets and two numeric characters which the system would not accept. As is contended in the present case, the deductee i.e. M/s. Star (India) Pvt. Ltd. has already discharged its full tax liability. If the full effect of the department's decision is allowed, the deductee would not get the benefit of 2% of tax deducted by the petitioner and already deposited with the Government revenue. Since the PAN does not match, the deductor i.e. the petitioner would pay additional 18% which though is styled in the name of tax deducted at source, would be additional to what M/s. Star (India) Pvt. Ltd. would have paid by way of tax to the department. Essentially, “the tax deducted at source” would have to be given credit to the payee on whose behalf such tax is being deducted. In the present case, payee having already discharged its tax liability independently, such amount would remain in Government coffers not accounted for anyone's tax liability. In the result, we hold that the decision of department in not permitting the petitioner to correct PAN of the deductee in the statement of tax deducted at source was impermissible. In the present case, department shall verify the petitioner's claim of actual deduction of tax at the prescribed rate in case of M/s. Star (India) Pvt. Ltd., verify that the PAN sought to be corrected by the petitioner belongs to the said agency and that the tax was actually deposited in case of such deductor. If these questions are answered in favour of the assessee, the department shall not insist on raising higher demand from the petitioner of failing to deduct tax at source in terms of subsection( 1) of section 206AA of the Act.
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