TMI Blog2012 (10) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.2002, authorizing the assessee to deduct tax at source @ 2% plus surcharge u/s 194 from the licence and maintenance fee/rent compensation payable by the assessee to M/s Nesco Ltd. upto 31.03.2003, thus it is quite clear that it was to remain in force till 31.03.2003, unless cancelled by the ITO prior to the said date Thus, the assessee has not been shown to have committed any default in deducting the tax and depositing it. It was only because the assessee did not have the TDS certificate for low deduction @ 2% on 01.04.2002 while paying the advance rent, that the Assessing Officer treated the assessee as an assessee in default for not deducting 20% tax on 01.04.2002, on the advance rent paid to M/s Nesco Ltd - the tax having been ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of section 197 of the IT Act, the person responsible for paying the income shall deduct TDS at the rates specified at the time of payment or rate specified in certificate issued u/s 197 of the Income Tax Act. 2. The facts of the case as per the relevant orders are that the Assessing Officer levied tax u/s 201(1) of the IT Act on the assessee, for the assessee s failure to deduct tax from advance of rent paid to M/s NESCO Ltd. The assessee had paid advance rent to M/s NESCO Ltd. on 01.04.2002 after deducting tax at a lower rate of 2%, instead of the higher rate of 20%. Interest u/s 201(1A) of the Act was also levied on the said tax by the Assessing Officer, for a period of 60 months. 3. By virtue of the impugned order, the Ld. CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer be revived by allowing the appeal filed by the department. 6. On the other hand, the ld. counsel for the assessee has placed strong reliance on the impugned order, contending that the Ld. CIT (A) has correctly decided the issue in favour of the assessee inasmuch as while levying the tax, the Assessing Officer had illegally ignored the fact that the deductee of tax had applied for the certificate u/s 197 of the Act before the payment had been made by the assessee company to the deductee and the same had been granted in the very month in which the payment had been made; that in fact, the assessee company had deducted the tax at the appropriate rate in the subsequent month and had deposited the tax in accordance with the directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO to the payee to deduct tax at source @ 2% u/s 194 I of the IT Act (PB 4-5). Certificate valid upto 31.3.2003. 06.05.2002 Deposit of TDS by the assessee to the Govt. Account @ 2% as allowed by the ITO u/s 197 (PB11) 23.10.2002 Payment of 2nd installment of rent by the assessee to the payee M/s Nesco Ltd. Rent (-) TDS (PB-2) 9.11.2002 Deposit of TDS by the assessee to the Govt. Account @ 2% as allowed by the ITO u/s 197 (PB 12). 8. From the above sequence of events, undisputedly, payment of Rs. 15 lacs had been made by the assessee company to M/s Nesco Ltd. on 01.04.2002. This is also clear from the copy of account of M/s Nesco Ltd. (copy at pages 2-3 of the assessee s paper book) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate, that the assessee deducted TDS of Rs. 31,500/- @ 2% plus surcharge and deposited it on 06.05.2002. Such deposit, undisputedly, was within the statutory requirement of Section 200 of the Act read with Rule 30 of the IT Rules, 1962. Thus, the assessee has not been shown to have committed any default in deducting the tax and depositing it. It was only because the assessee did not have the TDS certificate for low deduction @ 2% on 01.04.2002 while paying the advance rent, that the Assessing Officer treated the assessee as an assessee in default for not deducting 20% tax on 01.04.2002, on the advance rent paid to M/s Nesco Ltd. Now this, as rightly considered by the Ld. CIT (A), if at all, was only a venial breach or default. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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