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2014 (2) TMI 235 - AT - Income TaxAssessee in default u/s 201 – Non-deduction of TDS on consultancy work– Penalty u/s 201(1A) of the Act – Held that:- The actual payment of the amount was dependent on certain regulatory compliances and approvals which were ultimately not received - The payment had also not been made - Therefore in such a situation no income on account of such payment could said to have been accrued to the non-resident - only on the basis of entry in the books of accounts, the assessee could not be held liable for deduction of tax at source when ultimately the amount was found not payable nor it was paid, income therefore had not accrued to the Overseas Shipbuilding Cooperation Centre - There is no material placed on record to controvert the claim of the assessee that the assessee had no PE in India nor any business connection in India – thus, no tax was required to be deducted – the order of the CIT(A) upheld – Decided against Revenue. Penalty u/s 271C of the Act – Held that:- The penalty had been levied for failure to deduct TDS in respect of amount payable to M/s Overseas Shipbuilding Cooperation Centre - The AO had held that the assessee was liable to deduct tax in respect of the amount payable to the said concern and since there had been failure, the AO treated the assessee in default u/s 201(1) and levied interest u/s 201(1A). In addition penalty had also been levied u/s 271C for said default – it is already held that the assessee was not liable to deduct tax and thus upheld the order of CIT(A) canceling the order of AO u/s 201(1) and 201(1A) - The penalty levied by the AO cannot survive – thus, the order of the CIT(A) upheld – Decided against Revenue.
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