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2022 (3) TMI 481 - HC - Income TaxTDS u/s 195 - assessee in default as per Section 201(1) - HELD THAT:- When petitioner has not made any payment and it is not respondent’s case that petitioner had directly made any payment, petitioner cannot be the person responsible for deduction of tax. Respondent’s assumption that petitioner being the ultimate beneficiary of the acquisition of the shares ought to have deducted the tax at source on the payments made for the acquisition of shares of THL is not correct. If we apply the logic of respondent no.1, as stated earlier also, then the ultimate beneficiary are the shareholders of petitioner and not petitioner and hence, the liability can never be fastened on petitioner. This is dehors the fact that even if petitioner is ultimate beneficiary of the transaction, then also it does not follow that petitioner was required to deduct tax at the time of acquisition of shares of THL by IMAHI. As Section 195 is applicable only to a person who is responsible for paying to deduct tax at the time of credit to the account of the payee or at the time of payment and petitioner did not make any payment to THL, there is no obligation on petitioner to deduct tax at source. Respondent’s arguments that petitioner had made payment through IMAHI is also not acceptable because there is no evidence that petitioner made any payment through IMAHI. The Section is applicable to a person who is responsible for paying. Show cause notice dated 25th March 2010 as well as order dated 10th December 2013 have to be quashed and set aside. - Decided in favour of assessee.
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