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M/s. Wockhardt Hospitals Ltd. Versus Asstt. Commissioner of Income Tax (TDS) –3 (1) , Mumbai

2016 (2) TMI 509 - ITAT MUMBAI

Short deduction of tax at source - non deducting tax at appropriate rate - Held that:- We direct the Assessing Officer to verify whether taxes have been paid by the payees in respect of the amount received by them from the assessee and if upon such verification it is found that the deductees have paid tax on the amount received by them from the assessee cannot be treated as an assessee in default. - Decided in favour of assessee for statistical purposes.

Liability to pay interest unde .....

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Shri Shrikant Mamdeo ORDER PER SAKTIJIT DEY, J.M. Instant appeal by the assessee is directed against the order dated 15th January 2014, passed by the learned Commissioner (Appeals)-16, Mumbai, for the assessment year 2009-10. Following grounds have been raised by the assessee:- GROUND I: 1. On the facts and in the circumstances of the case in law, the Ld. CIT(A) erred in confirming the order of the AO in treating the Appellant as "assessee in default" on short deduction of tax deducte .....

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The Appellant prays that it be held that the Appellant is not 'assesse in default'. Alternatively, the AO he directed to verify, on the basis of declaration, whether the recipients have paid taxes on their income and pass an appropriate order. GROUND II: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the order of the AO in holding the Appellant as "assessee in default" under section 201 of the Act and thereby levying the interest .....

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available with him, the Assessing Officer quantified the short deduction of TDS at ₹ 42,02,940. He, therefore, passed an order under section 201(1) and 201(1A) of the Act, demanding tax of ₹ 42,02,940 and interest of ₹ 14,71,160. Being aggrieved of such order of the Assessing Officer, assessee preferred appeal before the learned Commissioner (Appeals). 3. Before the first appellate authority, challenging the order of the Assessing Officer in treating the assessee as assessee i .....

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the relevant financial year declaring the amount received as income and paid taxes therefore, the assessee cannot be treated as an assessee in default under section 201(1) and no demand for recovery of the taxes for alleged short deduction can be raised. In support of such contention, assessee also submitted the confirmation / declaration received from two recipients in respect of whom there was short deduction of tax. The learned Commissioner (Appeals), after considering the submissions of the .....

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nd raising the demand under section 201(1) of the Act. 4. The learned Counsel for the assessee reiterating the stand taken before the learned Commissioner (Appeals), submitted, the assessee having furnished confirmation / declarations from both the recipients to the effect that they have shown the amounts received in the return of income filed by them for the assessment year under consideration, there is no justification to treat the assessee as an assessee in default under section 201(1) of the .....

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the assessment year under dispute, the assessee cannot be treated as an assessee in default under section 201(1) as per the decision of the Hon'ble Supreme Court in Hindustan Coca Cola Beverage (P.) Ltd. v/s CIT, [2007] 293 ITR 226 (SC). Further, learned counsel submitted, if the Assessing Officer still had any doubt with regard to the fact, whether the receipts subject to deduction of tax has been declared as income in the return of income filed by the deductee and taxes were paid thereon, .....

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the learned Commissioner (Appeals). 6. We have considered the submissions of the parties, perused the material available on record and the case laws cited by the learned counsel. Undisputedly, it is a case of short deduction of tax at source and not non-deduction of tax at source. As could be seen from the facts on record in respect of two recipient viz. G.E. Capital Services India and DSP Merrill Lynch Capital Ltd., assessee has deducted tax @ 11.33% instead of 22.66% by treating them as non-co .....

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count Number. As could be seen from the order of the learned Commissioner (Appeals), though, he does not deny the fact that assessee has furnished confirmation from both the recipient companies but he has rejected assessee s claim by stating that confirmation letters do not specify whether taxes have been paid on the amount received and, if so, the date of payment of tax. In our view, the decision of the learned Commissioner (Appeals) is unacceptable. On a perusal of the confirmation letters, it .....

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Officer had any doubt with regard to the claim of the assessee that deductees have shown the receipts as income and paid taxes thereon, he could have made necessary enquiry as all necessary details relating to the deductee with their assessment jurisdiction have been furnished by the assessee before the Departmental Authorities. Without doing so, Assessing Officer cannot fasten the liability on assessee. The Tribunal, Mumbai Bench, in Vodafone Essar Ltd. (supra), has observed as under:- 34. &he .....

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verify the factual position have been filed before the Assessing Officer it was for the Assessing Officer, with his vast powers, to invoke them and have the details furnished by the assessee verified. In the present case the assessee has furnished the Permanent Account Numbers of nineteen parties and letters of confirmation have been filed from eight of them before the CIT(A). The Permanent Account Numbers would facilitate an enquiry to be made by the Assessing Officer from the Assessing Officer .....

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the details regarding their tax payments or returns of income to the assessee except confirming that the taxes have been paid. But when their Permanent Account Numbers are made available to the Assessing Officer, it would not be unreasonable on the part of the assessee to ask the Assessing Officer to have the payments verified from the records of the Assessing Officers within whose jurisdiction the payees are assessed. We are, therefore, unable to appreciate or uphold the decision of the CIT(A) .....

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