TMI Blog2016 (4) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of law. As a sequel to these aforesaid observations, We do not find any merit in the plea of the Revenue that liability to deposit the tax arises simply because provision thereof has been made in the books of account. It is trite that the determination of tax liability depends upon the provisions of law relating to it and mere book entries made in this regard are not conclusive. As a corollary, patent mistake has been committed by the AO in applying the statutory provisions of S. 192 while framing impugned order which is rectifiable under S. 154. In this view of the matter, we direct the Assessing Officer not to hold the assessee as assessee in default under section 201(1) & 201(1A) of the Act in respect of TDS liability attributabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company is engaged in the business of manufacturing of ready to use panels and allied construction industrial materials. In the course of carrying on of the business, the assessee company makes a number of payments towards various expenses inter-alia towards salary which is subjected to liability of deduction of tax at source (TDS) while making such payments. The liability to deduct TDS concerning salary expenditure is regulated by section 192 under Chapter XVII-B of the Act. The AO observed certain defaults in compliances of liability to deduct at source as provided under Chapter XVII-B of the Act. One such default found was lower deduction towards salary expenses with which we are concerned in the present appeal. Thus, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company that it is not liable for depositing TDS on salary remaining unpaid to its employees which is outstanding and consequently no default can be quantified under S. 201(1) and S. 201(1A) for unpaid sum. 4. The Assessing Officer rejected the application of the assessee under section 154 of the Act on the solitary ground that unpaid salary outstanding at the end of the year is not reflected as liability in the Balance Sheet as on 31.03.2009. The Assessing Officer (TDS) observed that if the salary is not paid, it should have appeared in the Balance Sheet at the year-end. When outstanding liability is not shown in the Balance Sheet, it suggests that salary has already been paid and consequently TDS provisions are applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee as on 31.03.2009 as appearing at Page No.12 of the Paper Book filed and submitted that the current liabilities outstanding at the end of the year included a figure of ₹ 25,08,07,581/- under the head sundry creditors . A further breakup of this amount under the head sundry creditors as appearing at Page No.75 of the Paper Book would show salary and wages outstanding and payable at ₹ 1,22,25827/-. He therefore submitted that the very premise of the Assessing Officer (TDS) to reject the application under section 154 of the Act on the ground that the salary outstanding is not reflected in liability in the Balance Sheet runs contrary to the records ex facie. He thereafter submitted that notwithstanding the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand on S. 192, he canvassed reliance on following decisions : (i) CIT vs. Tej Quebecor Printing Ltd., (2006) 151 taxmann.com 210 (Delhi-HC) and (ii) Citigroup Global Markets India (P.) Ltd. vs. DCIT, (2009) 29 SOT 326 (Mum-Trib.). He next referred the order of the CIT(A) dated 09.11.2012 in its own case under section 201(1) 201(1A) of the Act concerning subsequent assessment year 2010-11 where the CIT(A) has correctly accepted the plea of the assessee that TDS liability under section 192 of the Act arises qua actual payment of salary. 8. The Ld. Departmental Representative of the Revenue, on the other hand, relied upon the orders of the authorities below and in furtherance submitted that outstanding TDS liability would imply that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther case on behalf of the assessee that merely because the provision for unpaid salary together with provisions for unpaid TDS has been reflected as liability in the Balance Sheet, such book entry for unpaid and uncollected TDS does not give rise to any obligation envisaged under S. 192 of the Act. We agree with the stand of the assessee at the first instance. We find that the provisions of section 192 of the Act has in mistakable terms provided that the liability to deduct tax arises under section 192 of the Act only when the salary is actually paid to its employees. In any event, this position of law is no longer res-integra and is squarely covered by the decisions cited on behalf of the Assessee noted supra. On facts, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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