Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (5) TMI 538 - ITAT DELHI

2015 (5) TMI 538 - ITAT DELHI - TMI - TCS u/s 206C - sale of forest produce, not being timber or tendu leaves - waiver from collection of TCS - Demand u/s 206C(6) and 206C(7)- Assessee in default for such non-collection of tax at source at the time of sale of the goods - assessee contended that all the buyers had taken into account the purchases made from the assessee for computing income in their respective returns filed u/s 139 after paying tax due thereon - Held that:- the liability of the se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r alike conditions as per the convenience of the parties.

Assessee was unable to adduce necessary material before us in the regard that all the buyers had taken into account the purchases made from the assessee for computing income in their respective returns filed u/s 139 after paying tax due thereon. The assertion so made cannot be inferred in the absence of any positive material to prove it. There can be no presumption about the buyers having paid tax on the income by including the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed returns u/s 139 of the Act after paying tax due thereon. We want to make it clear that if the assessee fails to specifically prove this position, then, the Officer would be fully entitled to treat it as assessee in default in terms of section 206C. Further, the liability of interest u/s 206C(7) would be fastened on the assessee from the date on which the assessee was required to collect tax at source up to the date on which the amount of tax was paid by the buyers - Decided in favour of as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

206C(6) and 206C(7) of the Income-tax Act, 1961 (hereinafter also called the Act ). 2. Briefly stated, the facts of the case are that the assessee, a Government undertaking, sold Lisa during the financial year 2007-08 to buyers u/s 206C(1) of the Act amounting to ₹ 7,66,82,453/-. The Income-tax Officer (TDS) observed that a sum of ₹ 19,17,061/- was required to be collected at source, which the assessee did not collect. On being called upon to explain as to why it be not deemed to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eceipt of such forms from the respective buyers, at the time of sale of the goods, it committed default as per section 206C, for which it was liable to be treated as assessee in default. The amount of short collection of tax at source was determined at ₹ 19,17,061/- and the consequential interest at ₹ 11,50,236/-, thereby raising total demand of ₹ 30,67,297/- for the year under consideration. The ld. CIT(A) upheld the order passed by the ITO (TDS). 3. We have heard the rival su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aid buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax.. . Going by the mandate of sub-section (1), any seller of the forest produce is required to collect tax at source from the buyers at the time of debiting the amount payable to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes . The prescribed form of the said declaration is Form no. 27C. When we read sub-section (1) in conjunction with sub-section (1A), the position which becomes evident is that there is a requirement on the seller to collect tax at source at the prescribed rates on the prescribed goods sold by him t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at source is dispensed with. Sub-section (1B) of section 206C further provides that the person responsible for collecting tax at source shall deliver to the Commissioner one copy of such Form no. 27C on or before the seventh day of the month next following the month in which the declaration is furnished to him. 4. Thus, sub-section (1A) of section 206C saves the seller from collecting tax at source at the time of receiving the amount or debiting the account of the buyer, whichever is earlier, o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld be submitted at the earliest of the occasion of the debiting of his account by the seller or the receipt of payment. Unless these conditions are cumulatively fulfilled, the seller is obliged to collect tax at source at the rates prescribed and deposit the same into the exchequer at the material time. These conditions must be fulfilled in letter and spirit without any sort of distortion or dilution or their substitution with other alike conditions as per the convenience of the parties. 5. Adve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r furnishing of such Registration certificates to the assessee at the time of purchase of the goods should be construed as fulfillment of the requirement of submission of Form no. 27Cs, is devoid of merit. When the Act clearly stipulates for furnishing of Form no. 27C, there can be no question of substituting such requirement with the furnishing of any other document or Registration certificate issued under any other Act. The obligation of law can be said to have been properly complied with only .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s only directory and not mandatory. 6.2. It is an undisputed fact that the buyers did not tender Form No. 27Cs at the material time. The assessee collected the same from the buyers and submitted when the ITO (TDS) took up the instant proceedings for treating it as assessee in default. We are unable to concur with the view canvassed by the ld. AR about the requirement of receiving Form No. 27C as declaratory. It is axiomatic from the language of sub-section (1A) that no collection of tax at sourc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed. If such declaration is not available at the earliest of the receipt of payment or debiting the account of buyer, the relevant part of the provisions of sub-section (1) of section 206C becomes operative, making it obligatory for the person responsible to collect tax at source so as to avoid it from being treated as an assessee in default. It is vivid that once the dictate of sub-section (1) has operated and tax is collected at source due to the non-availability of Form no. 27C at the time as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be construed as anything other than mandatory. The argument of the ld. AR to interpret the requirement of submission of such declaration at the aforesaid time as declaratory, so as to avoid collection of tax at source on its late furnishing, evidently does not hold water. The same is, therefore, repelled. 7. One needs to appreciate the vital difference between submitting the declaration in Form No. 27C before or at the time of the arising of the liability to collect tax at source on one hand an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

al time immunes the seller from collecting tax at source. What is relevant is the stage of the crystallization of liability for collecting tax at source. Once that stage crosses without collection of tax at source, the consequences of noncollection follow notwithstanding the receipt of declaration after the relevant time. In fact, there is no material difference in the consequences of two situations, viz., in which either Form no. 27C is not at all received or is received belatedly after the pas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provision is to furnish Form no. 27C by the buyer to the seller in duplicate and, then, the seller is obliged to deliver one copy of such declaration to the Commissioner on or before the seventh day of the month next following the month in which the declaration is furnished to him. This requirement of furnishing a copy of the declaration to the Commissioner by the seller cannot be satisfied by merely giving it to the ITO (TDS). The assessee in the instant case submitted copies of Form No. 27Cs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ome from the purchase of Lisa and the sale of the manufactured goods with the use of such material was properly offered for taxation. In the backdrop of this fact, it was put forth that the collection of tax at source at this stage from the assessee would amount to double collection of tax on the same amount of income, which is impermissible. On the other hand, the ld. DR opposed the said contention. 11. Section 206C is not a charging provision but a provision for collection of tax. Any tax coll .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alf of the person from whom the amount has been collected and credit shall be given to such person for the amount so collected in a particular assessment year in accordance with the rules as may be prescribed by the Board from time to time. If due to one reason or the other, the buyer has no liability to pay tax or his tax liability is less than the amount so collected, then such amount of tax collected at source or the excess, as the case may be, is refunded to the buyer after his assessment. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rationale in collection of tax at source from the seller by treating him as an assessee in default, knowing fully well that the amount of tax so collected will not get adjustment either in the hands of the buyer or the seller. 12. The Hon ble Supreme Court in the case Hindustan Coca Cola Beverage (P) Ltd. Vs. CIT (2007) 293 ITR 226 (SC) has held that where the payee has already paid tax on the income on which there was a short deduction of tax at source, then no recovery of tax should be made on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cause the deductee would not be able to avail the benefit of such tax against his income, which has already been assessed to tax. A person responsible becomes assessee in default in case of TDS provisions, when he makes the payment without deduction of tax at source at the point of making payment or crediting the account of the payee, as the case may be under the relevant provision; and in case of TCS provisions, when he receives the payment without collecting tax at source at the point of recei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me Court in the case of Hindustan Coca Cola Beverage (P) Ltd. (supra) and other judgments rendered by various Hon ble High Courts uniformly in not treating the person responsible as assessee in default when the other person has paid due tax on his total income by including income from such transactions, the legislature has stepped in by inserting first proviso to section 206C (6A) by the Finance Act, 2012 w.e.f. 1.7.2012, reading as under :- (6A) If any person responsible for collecting tax in a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee- (i) has furnished his return of income under section 139; (ii) has taken into account such amount for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lure to collect tax at source at the material time, erases the tag of assessee in default , if the buyer has furnished his return of income u/s 139(1) by taking into account the transaction covered under this provision and paying the tax due on the income declared and necessary certificate in the prescribed form is issued. Though this proviso has been inserted by the Finance Act, 2012 from 1.7.2012, but, it is nothing, but reiteration of the law laid down by the Hon ble Supreme Court in the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version