TMI Blog2009 (7) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, 1961. 2. The assessee is a Television Channel operating from Kochi. The assessee has entered into a "Transponder Service Agreement" with non-resident companies. As per the agreement, the assessee-company has to make payments to the non-resident companies for transmission of datas and software through uplink and downlink services. The assessee-company is making various payments towards contract, rent, advertisement, technical fees, salary, and also Transponder Service Charges. The assessee has been, deducting taxes at source while making payments against the above heads and remitting to the credit of the Central Government. But of late, the assessee defaulted the payments of tax collected to the credit of the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Appeals). The CIT(Appeals), while agreeing with the basic factual background of the case, held that the payments made by the assessee-company to non-resident companies for obtaining Transponder Services are not income liable to tax in India and therefore, the assessee-company had no obligation to deduct tax at source. Accordingly, he quashed the orders of the TDS Officer passed under section 201(1) and 201(1A) and directed the TDS Officer to refund the money if any, collected from the assessee in this regard. 5. The Revenue is highly aggrieved by the orders of the CIT(Appeals) and therefore the second appeals before us. 6. When these appeals were called on for hearing, an adjournment petition was placed before the Bench recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hearing on 8-7-2009. Therefore, we are constrained to reject the adjournment petition and to proceed to dispose of the appeals ex parte , qua the assessee. 8. We heard Shri C. Kathikeyan Nair, learned Additional Commissioner of Income-tax, for the Revenue. 9. It is a matter on record that the assessee had deducted tax at source from various payments made towards different services obtained including the Transponder Services. The main thrust of the finding of the TDS Officer is that the assessee was bound to remit the tax deducted at source to the credit of the Central Government. Therefore, the TDS officer treated the assessee, an assessee in default. Thereafter, consequences followed. 10. But the CIT(Appeals) has adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression "shall" provided in section 200 is for the purpose of reflecting the mandatory character of the duty to be discharged by a person deducting tax at source. 13. Section 201(1) of the Income-tax Act further provides the consequence of failure, if the taxes deducted were not paid to the credit of the Central Government. Section 201(1) provides where any person does not pay after deducting the tax at source as required under this Act, such person shall without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax. 14. In the present case, the TDS Officer has treated the assessee as an assessee in default in respect of such tax. Such tax means the tax collected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen before the deductor is to pay the money to the credit of the Central Government. 16. Therefore, in the facts and circumstances of the case, the conduct of the assessee itself is a sufficient ground on which the TDS Officer is justified to treat the assessee as an assessee in default. Actions under section 201(1) and 201(1A) are only inevitable consequences of the operation of section 201. The consequence cannot be stopped. Therefore, on this ground itself we find that the CIT(Appeals) has grossly erred in allowing the appeals of the assessee and in directing the Assessing Officer to make refund of the TDS so paid by the assessee-company. The order of the CIT(Appeals) is unlawful. He has acted beyond his jurisdiction. 17. Another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nduct, the Assessing Officer is justified in holding that the assessee is assuming the responsibility of deducting tax at source and to pay the same to the credit of the Central Government. The Hon ble Supreme Court in the case of Transmission Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 587 has held that section 195 provides for deduction of tax at source subject to regular assessment and if the person making payment thinks that the tax is not to be deducted, he may file an application before the Assessing Officer and if no such application is filed, tax must be deducted on gross income. This decision of the Hon ble Supreme Court amply justifies the reliance placed by the TDS Officer on the past conduct of the assessee. 19. In paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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