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2022 (9) TMI 408 - Income Tax
TDS on settlement amount paid by the Appellant - demand u/s 201 and u/s 201 (1A) - difference between the words ‘paid’ and ‘payable’ - amount was received by the Payees as per Settlement Agreement for relinquishment of right of equity in the appellant company - as per assessee amount is not paid but made only a provision - Whether the assessee has claimed the said amount as deduction while computing the income of the assessee? - HELD THAT:- If the assessee claimed it as deduction while computing income of the assessee for AY 2013-14, then the assessee is liable to deduct the TDS on the said amount.
The amount paid to the said persons which is “Profit in lieu of salary” and which being a part of total salary and the same is paid based on settlement agreement, thought the sum is over and above the salary, par takes the character of salary, therefore, the sum is liable for deduction of TDS in the hands of the assessee. The plea of the counsel for the assessee is that the said amount is not paid but made only a provision, therefore, provisions of Section 201(1) and 201(1A) cannot be invoked. This plea of the assessee is devoid of merit.
Supreme Court in the case of Shri Choudhary Transport Company [2020 (8) TMI 23 - SUPREME COURT] held descriptive of the payments which attract the liability for deducting tax at source and has not been used in the provision in question to specify any particular class of default on the basis of whether or not payment has been made. The semantical suggestion that this expression “payable” be read in contradistinction to the expression “Paid” is not sustainable.” By reading the above judgment it is clear that there is no difference between the words ‘paid’ and ‘payable’.
Settlement amount paid by the assessee to liable to deduct the TDS at the time of payment. The assessee vide written submission dated 12/02/2018 submitted before the CIT(A) that during FY 2012-13, the amount was not actual paid by the assessee but only provision was made in the books of accounts. The assessee further contended before the CIT(A) that as there was no actual payment during the FY 2012-13, therefore, the CIT(A) held that the assessee was not liable to deduct TDS on the said amount during the year under consideration. CIT(A) gave liberty to the Assessing Officer to examine the issue of non deduction of TDS in the year in which this amount is actually paid. We do not find any error or infirmity in the approach of the Ld. CIT(A).
We deem it fit to remand the matter to the file of the A.O with a direction to the assessee to provide the material to prove that the recipients have actually paid the tax. If such materials are produced by the assessee, the Ld. A.O is directed to verify the same and decide the issue in accordance with law. A.O is also at liberty to examine the issue of non deduction of TDS in the year in winch the said amount is actually paid. Accordingly, the Ground No. 1 to 2(i) to (viii) and the Ground No. 3 are dismissed and Ground No. 2 ((ix) is allowed for statistical purpose.