Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Asstt. Commissioner of Income Tax, TDS, Noida Versus ST Microelectronics Pvt. Ltd.,

TDS liability - penal action under section 201(1) and interest under 201(1A) - Held that:- The assessee expenses were debited on the accrual basis on monthly estimate in a common basket and not to the account of specific party/payees. As pleaded that the provisioning of expenses did not result in any constructive credit to a specific Payee and the purpose was to manage reporting on monthly results for monitoring and tax was deducted on receipt of bills/invoices from the parties after rendering 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

DS was also deducted at that point of time. - Moreover, we find that the Department itself in the assessment year 2010-11 has accepted the accounting followed in respect of the expenses and no penal action under section 201(1) and interest under 201(1A) of the Act was considered. The learned Commissioner of Income Tax(Appeal) has followed the finding of the Tribunal in the case of Pfizer Ltd Vs. ITO(TDS) (2012 (11) TMI 164 - ITAT MUMBAI) wherein the Tribunal has held that since the payee wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Sr.DR For The Respondent by Sh. K.V.S.R. Krishna, CA ORDER PER O.P. KANT, A.M.: This appeal of the Revenue is directed against order dated 19/07/2013 of the Commissioner of Income-tax(Appeals), Noida for assessment year 2007-08 raising following grounds: That CIT(A) has erred in law and on facts in directing to delete the order u/s 201(1)/201(1A) of the I.T. Act passed by the Assessing Officer ignoring the fact that assessee must follow the mercantile system of accounting for these payments 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

TDS in respect of those accruals was not deducted/deposited as at March 2007. The assessee pleaded that said amounts have been considered for disallowance under section 40a(i) of the Income-tax Act, 1961 (for short the Act ) and taxed accordingly. However, according to the AO it was mandatory for the assessee to deduct tax at source on such accruals. The Assessing Officer declared the assessee in default for a sum of ₹ 23,03,672/- under section 201(1) of the Act for short deduction of TDS .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under section 201(1) and 201 (1A) of the Act in respect of the provision of expenses. Aggrieved, the Revenue is in appeal before the Tribunal. 3. In the sole ground of appeal, the Revenue has challenged the deletion of order under section 201(1) and 201(1A) of the Act. 4. Before us, the learned Sr. Departmental Representative (DR) relying on the order of the Assessing Officer submitted that assessee cannot be allowed to follow hybrid system of accounting as according to section 145(1) of the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the Assessing Officer. 5. On the other hand, the learned Authorized Representative of the assessee relying on the order of the learned Commissioner of Income-tax(Appeals), submitted that there was no change in the method of accounting regularly followed by the assessee. The assessee had debited expenses on accrual and tax was deducted on actual booking of the expenses. The learned AR referred to the submission made before the Commissioner of Income Tax(Appeal) in respect of the accounting of e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

us ITO (TDs) (2013) 55 SOT 277 (ITAT, Mum). 6. We have heard the rival submission and perused the material on record. The learned Commissioner of Income-tax(Appeals) has made a detailed discussion on the issue in dispute in the impugned order and after providing opportunity to the Assessing Officer as well as to the assessee, has given his findings following the decision of the Tribunal in the case of Pfizer Centre Ltd. Vs. Income Tax Officer (TDS) (supra). The relevant findings of the learned C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a common basket and not to the account of specific party/payees. It was also pleaded that above provisioning did not result in any constructive credit to a specific payee and that prime purpose of managing books of accounts in above manner is for the purpose of management reporting on monthly results for monitoring purpose. It was also stated that the payee would raise invoice after rendering of services and it was only after due approval of services having been rendered satisfactorily, that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y ITAT in the case of IDBI Vs. ITO (Mum) reported in (2007) 107 ITD 45(Mum). The appellant has submitted copy of CBDT s Circular No. 3/2010 dated 2/3/2010 as referred above which is in respect of TDS u/s. 194A on interest payable by banks. The relevant portion of the said circular is reproduced as under: As per provisions of section 194A of the Income Tax Act 1961, income tax has to be deducted at source at the time of credit of interest income to the account of the payee or at the time of payme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h income to the account of the payee and the provisions of this section shall apply accordingly". 2. Representations have been received from Indian Banks Association (IBA) seeking clarification regarding deduction of tax at source from payment of interest on time deposits by banks using Core- Branch Banking solutions (CBS) software. In case of banks using CBS software, interest payable on time deposits is calculated generally on daily basis or monthly basis and is swept & parked accordi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hile calculating interest on time deposits on daily or monthly basis in the CBS software used by banks, tax need not be deducted at source on such provisioning of interest by banks for the purposes of macro monitoring only. In such cases, tax shall be deducted at source on accrual of interest at the end of financial year or at periodic intervals as per practice of the bank or as per the depositor s / payee s requirement or on maturity or on encashment of time deposits; whichever event takes plac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t has pleaded that the above Circular, though meant for banks, the principles laid down in above Circular can be applied to the facts of the appellant s case as the appellant is also making provisional entries because of SAP System for preparing monthly Profit and Loss Accounts and Balance Sheet for internal control and monitoring of operations. Further, the appellant has also filed copy of computation of income for the year under consideration in which entire sum of ₹ 2,50,95,948/- has vo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts reliance on very recent decision of Hon ble ITAT C Bench, Mumbai in ITA No.1667/Mum/2010 dated 31/10/2012 in the case of M/s. Pfyzer Ltd. Vs. Income Tax Officer(TDS), Mumbai where in facts are exactly same as that of the assessee. The relevant portion of ITAT order is reproduced as under:- 5. The learned Counsel reiterated the submission made before A.O. and CIT(A) to submit that assessee is in the practice of making provision for expenses at the end of the year as it has multifarious locatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ard's Circular No. 288 of 1980were relied upon. It was the contention that it is not a constructive payment made to any payee as per the provisions of the Act and when assessee is making payment, it was following the TDS provisions. It was further submitted that when payee is not known or determined, TDS cannot be made and relied on the order of the ITAT in the case of Industrial Development Bank of India Vs. Income Tax Officer, 107 ITR 45(Mum). 6. It was further submitted that assessee has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nch, since the payee is not identifiable in this case also at the time making provision, no TDS need to be made on the above amount. Further, the entire provision has been written back in the ext year and the actual amounts paid/credited were subjected to TDS as per the detailed statements filed before the authorities on which there is no dispute. Therefore, assessee is following the provisions of TDS as and when the amounts are paid/credited to respective parties. 12. As already explained and e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 A). We are unable to understand the logic of AO in considering the same as covered by the provisions of section 194C to 194J. Assessee as stated has already disallowed the entire amount in the computation of income as no TDS has been made. Once an amount was disallowed under section 40(a)(i)/(ia) on the basis of the audit report of the Chartered Accountant, the same amount cannot be subject to the provision of TDS under section 201(1) on the reason that assessee should have deducted the tax. 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

ground on this issue are to be allowed as the entire amount has been disallowed under the provisions of section 40(a)(i)/(ia) in computation of income on the reason that TDS was not made. For this reason alone assessee s grounds can to be allowed. Considering the facts and reasons stated above assessee s grounds are allowed. 13.Assessee has raised one more contention that interest under section 201(1 A) should be levied till the date of payment and not till the date of order. Anyhow this issue b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o drawn my attention to the order of A.O. dated 7/2/2013 in assessee s own case for Assessment Year 2010-11 wherein A.O. has accepted the TDS return of the appellant. On similar issues and similar facts the A.O. has accepted the contention of the assessee and has not considered the assessee as assessee in default u/s 201(1). I agree that the provisions of TDS are applicable only when the individual payee is identified. According to provisions of Section 190 of the Income Tax Act the scheme of de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e person whose liability is to pay the income, knows the identity of the beneficiary or the recipient of the income. In the present appeal before me the A.O. has not controverted in his Remand Report the contention of the appellant that the provisions for expenses are made in a SAP environment where in the expenses are booked in order to facilitate management reporting and at this point there is no constructive recognition of liability to the payee. The year end accounting entries regarding prov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

10 dated 2/3/2010 as cited and relied upon by the appellant and find that the facts of the present appeal is squarely covered by the above judgment of Mumbai Tribunal. So far as CBDT s Circular No. 03/2010 dated 2/3/2010 is concerned the same is applicable to banks only. However, the principle behind the said Circular tends to cover the issue involved in the present appeal. Moreover, the A.O. herself in subsequent assessment year i.e. A.Y. 2010-11 has accepted the consistent practice followed by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by A.O. u/s. 201(1)/2Q1(1 A) is directed to be deleted. 7. We find that in the case of the assessee expenses were debited on the accrual basis on monthly estimate in a common basket and not to the account of specific party/payees. It was pleaded that the provisioning of expenses did not result in any constructive credit to a specific Payee and the purpose was to manage reporting on monthly results for monitoring and tax was deducted on receipt of bills/invoices from the parties after rendering .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: National Advisory Committee on Accounting Standards - Tenure of the NACAS extended from one year to two years

Notification: National Advisory Committee on Accounting Standards

Forum: Duty Drawback- Urgent

Notification: Central Government appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the Companies Act 2013, shall come into force - "subsidiary company" or "subsidiary"

Highlight: Restriction on number of layers for certain classes of holding companies - More than two layers of subsidiaries not allowed subject to certain exceptions.

Forum: GST on RCM on rent in a unregistered state

Forum: COMPOSITION SCHEME

Forum: Input Tax Credit - Reg

Forum: GST Invoice

Article: Websites of Government Departments need lot of improvement. We are noticing detoriations in them for example, case of website of ITAT.

Highlight: Levy of additions tax u/s 115O on distribution of dividend - shares of its profits declared as distributable among the shareholders is not impressed with the character of the profit from which it reaches the hands of the shareholder - not to be bifurcated as agriculture and non-agriculture dividend - SC

Highlight: Rate of GST on old and scrap buses - 28% or 18% - at such initial tender process initiated by the Respondents-KSRTC, the present petitions filed by the petitioners are premature and misconceived and do not require any interference by this Court at this stage. - HC

Forum: Rent a cab operator

Highlight: In view of amendment made u/s 132A of the Income Tax Act, 1961 by Finance Act of 2017, the 'reason to believe' or 'reason to suspect', as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal, SC dismissed the appeal of the assessee

Highlight: Validity of Assessment Order - period of limitation u/s 153 (2A) is applicable even if the entire order was not set aside but matter was remanded back for for limited aspects with directions - HC

News: Note ban was a shake-up, achieved its main objectives

Notification: Amendments in the notification No.5/2017- Integrated Tax (Rate) dated the 28th June, 2017.

Highlight: Levying interest u/s 234C - interest is to be charged on the returned income and not on assessed income.

Highlight: Accrual of income - sale of right to develop and sell incentive FSI under LOI - till the conditions of LOI are fulfilled transfer is not complete and income does not accrue to the assessee

Highlight: TPA - determination of ALP - TP adjustment by applying Bright Line Test (BLT) is not sustainable on protective basis having no statutory mandate.

Highlight: Safeguard Duty - Advance License Scheme - as there is no exemption from safeguard duty leviable under Section 8C, which is imposed on the goods imported from China, the importer has to pay safeguard duty

Highlight: Manufacture - process of cutting of waste plastic container - Such plastic containers before and after cutting are nothing but waste / scrap - Not a manufacturing activity as no new product emerges.

News: NITI Aayog and Govt. of Assam organizes workshop on health sector reforms in Guwahati; launches SATH- Sustainable Action for Transforming Human Capital

Notification: Seeks to amend notification no. 5/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics

Notification: Seeks to amend notification no. 2/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst exemptions

Notification: seeks to exempt Skimmed milk powder, or concentrated milk

Notification: Seeks to amend notification no. 2/2017- integrated tax(rate) dated 28.06.2017 to give effect to GST council decisions regarding GST exemptions.

Notification: Seeks to amend notification no. 1/2017- central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates

Notification: Seeks to amend notification no. 1/2017- integrated tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding gst rates.

News: Notification Issued For GST Actionable Claim On Branded Food Products

Highlight: Classification printed computer stationary/manifold Business Forms - to be classified under Chapter Heading 4820.00 or under Chapter Heading 4901.90 - items like A4 sheets, advertisement and job card to be classified under Chapter 49

Article: RCM Applicability to persons not liable to get registered us 23(1)

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017



|| 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