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2018 (3) TMI 1022 - HC - Income TaxAdditions made u/s 40(a)(ia) - resident-receiver of amounts, paid tax on such receipts; even when the payer has failed to deduct tax at source - assessee in default - Held that:- To avail of the beneficial provisos under Sections 40(a)(ia) & 201(1), there should be (i) return of income under Section 139(ii), with computation of income including such amounts received, as also (ii) payment of tax on such income. Only if all the three conditions are satisfied, would the beneficial provision be applicable to an assessee who failed to deduct tax at source. In the present case, admittedly, resident-receiver to whom the assessee paid or credited the lease rent has filed a return belatedly and not paid any tax due on the income declared. When there is no tax paid on the income declared; even if for reason of a loss return, there cannot be any claim raised by the assessee in default to absolve him from the consequences flowing from Sections 201(1) and 40(a)(ia). He will then be treated as an 'assessee in default' and would be liable to pay the amount of TDS with interest as also subject to the expenses being disallowed. Additional ground urged on the basis of Section 43(2) - Held that:- The term “paid” has been defined as an amount paid or actually incurred and hence in the case of a loss return, even if there is no actual payment, the loss return, which does not raise a liability to pay, has to be liberally construed is the argument. The definition clause is with reference to 'income from profits and gains of business'. By the specific words employed in sub-section(2) of Section 43, this is with reference to the method of accounting; which is either on accrual or receipt. There is no ground raised on the basis of the method of accounting of the assessee, herein and the contention is only to be rejected. The definition clause has nothing to do with Section 201(1) or the determination of an 'assessee in default'. We cannot countenance the further argument of the learned Senior Counsel that the appellant/ assessee should be considered as a charitable educational institution under Section 12AA. Admittedly, the assessee had applied for such registration only in the year 2011-12. The application for condonation of delay for the previous years stood rejected. There is no question of any exemption allowed in a year in which such registration was not available; especially by this Court exercising jurisdiction under Section 260A - Decided in favour of the Revenue. Liability of the assessee under Section 201(1) being treated as an assessee in default confirmed - Decided in favour of the revenue
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