TMI Blog2016 (5) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the appellant cannot be treated to be in default under section 201 for non-deduction of tax at source that the amount has been suo moto disallowed by the appellant under section 40(a)(ia) of the Act in the return of income. The demand raised by the AO is therefore not justified and the same is hereby deleted. - Decided in favour of assessee. - I.T.A. No.1741/M/14 - - - Dated:- 23-3-2016 - SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM For The Assessee : Ms. Aarti Vissanji For The Department : Shri Akhilendra P. Yadav ORDER PER AMARJIT SINGH, JM: The revenue has filed the appeal against the order dated 20.12.2013 passed by the learned Commissioner of Income Tax (Appeals)13, Mumbai [hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t), without properly appreciating the factual legal matrix of the case as clearly brought out by the A.O. in order u/s.201(1) 201(1A) of the I.T.Act, 1961. 3. In brief the revenue is aggrieved by the order of learned CIT(A) in deleting the non deducting the of tax by holding that in view of the disallowance u/s.40(a)(ia) of the of the Income Tax Act, 1961 ( in short the Act ), no demand can be raised u/s.201(1) r.w.s 40(a)(ia) vis a vis TDS provisions under chapter XVII of the Act. 4. We have heard the arguments advanced by the learned representative of the parties and have gone through the record carefully. The learned representative of the department has argued that the learned CIT(A) has earned in deciding the matter of contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax deducted and paid to the credit of Central Government meaning thereby the default has occurred and hence expenses were disallowed in the instant year and were claimed in the year when the taxes were deducted and paid. The appellant s argument is that since they have deducted and paid the exes on the amount of ₹ 28,21,000/- and hence liability to deduct tax at source, and to pay to the credit of Central Government also arose in the subsequent year and hence they are not defaulter for levy of interest u/s.201(1) and 201(1A). It can not be disputed that the liability arose in the very PY as the amounts were credited in the account of concerned parties or paid to them whichever was earlier and it is only the tax was deducted or paid o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is undisputed that the taxpayer had made provision for expenses which were disallowed under section 40(a)(i)/40(a)(ia) of the Act while filing its income-tax return. As per the journal entries passed, once the individual payee was identified, all the provisions relating to taxes deducted at source (TDS) were applicable. The Mumbai Tribunal I has held that provisions of TDS are not applicable in the absence of any identifiable payee. As the payee was not identifiable at the time of making provisions, TDS is not required to be deducted. The entire provisions were written back in the next year and the actual amounts paid/credited were subjected to TDS which was undisputed. Where an amount was disallowed under section 40(a)(i)/40(a)(ia) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be an assessee in default in respect of such tax. 2. Provided that any person, including the principal officer of a company, who fails to deduct, the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident:- i) has furnished his return of income under section 139; ii) has taken into account such sum 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 the person furnishes a certificate to this effect from an accountant in such form as may be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 201(1). The case of the appellant is identical on facts to the case of Pfizer Ltd. Hence, the appellant cannot be treated to be in default under section 201 for non-deduction of tax at source in view of the said fact that the amount of ₹ 5,50,000/- has been suo moto disallowed by the appellant under section 40(a)(ia) of the Act in the return of income. The demand of ₹ 11,98,849/- raised by the AO is therefore not justified and the same is hereby deleted. 4.2 The facts and circumstances of the present case is quite similar with the facts and circumstances of the case cited as CIT Vs. Pfizer Ltd., 330 ITR 62 (Bom.). Nothing material was produced before us which is contrary to the said findings. In view of the said circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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