Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 769 - ITAT BANGALOREDemand u/s 201(1) & 201(1A) - Non deduction of tds - reversal of entries for payment to Avastagen Ltd., parent company of the Assessee - termination of agreement between the parties - Agreement to pay Royalty was cancelled before the closure of account, HELD THAT:- Reasons assigned by the revenue authorities cannot be the basis to hold that there was in fact an entry for payment which obligates the Assessee to deduct tax at source. Admittedly, even at the time of survey, the entries for payments as well as the entry for reversal of those entries were found. The theory of reversal cannot therefore be an afterthought. Had there been no reversal of entries in the books of accounts the liability of the Assessee to deduct tax at source would exist. It is only owing the mistake in making the entries for payment despite the agreement having been terminated that the reversal of entries became necessary. Therefore the reversal of entries cannot be said to be an after- thought. Secondly, the termination of agreement between the parties was unilateral and there is no material on record to show that the plea of termination of the agreement was not true. The parties to an agreement are at liberty to vary the terms of the agreement or terminate the agreement. The conclusions of the revenue authorities in this regard are purely based on surmises and cannot be sustained. Since the Agreement was cancelled there was no obligation to deduct tax at source. On further appeal, the Hon’ble High Court in Wipro Health Care IT Ltd. [2013 (5) TMI 45 - KARNATAKA HIGH COURT] held that from the material on record, it was clear that if agreement with regard to payment of royalty was cancelled, no royalty was payable and therefore, the question of deducting TDS on such royalty does not arise. - decided in favour of assessee.
|