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TMI Blog2016 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... / Or.602/11-12 dated 06-02-2014. In this case, Order u/s 201 (1) read with Section 40 (a) (ia) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was passed by the ACIT (TDS)-2(2), Mumbai vide his Order dated 29-03-2011 for assessment year 2009-10. The other appeal in ITA No.2631/Mum/2014 is preferred by the assessee against the order of the CIT (A)-13, Mumbai dated 04-02-2014 passed in appeal No.CIT (A)-13/IT-272/Rationalisation/Or.602/11-12. Order u/s 201 read with Section 40(a) (ia) of the Act was also passed by the ACIT (TDS)-2(2), Mumbai vide his Order dated 31-03-2011 for assessment year 2007-08. 2. At the outset, the learned Counsel for the assessee, with regard to the Revenue's appeal in ITA No.3125/Mum/2014 pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed. 5. Now in regard to both the appeals of assessee, the only issue is as regards to the order of the CIT (A) in upholding the action of the AO treating the assessee as, "assessee in default" for short deduction/non-deduction of TDS u/s 201 (1) of the Act and charging of interest thereon u/s 201(1A) of the Act. For this, the assessee has raised following grounds in its appeal in ITA No.2630/Mum/2014 for assessment year 2009-10:- "1. On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax (Appeals)-13, Mumbai ("the CIT (A)") erred in upholding the action of the Assistant Commissioner of Income Tax (TDS)-2 (2) (Ä.O.") in treating the Appellant as "assessee in default" u/s 201(1) / 201(1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , "assessee in default u/s 201 (1)" and as to why consequential interest should not be charged "u/s 201 (1A) of the Act". There was no response from the assessee's side before the AO and he passed order u/s 201(1) charging the TDS on expenditure of Rs. 2,63,89,265/- u/s 194 I of the Act @ 22.4% amounting to Rs. 59,21,831/-. The AO also charged consequent interest u/s 201 (1A) of the Act amounting to Rs. 28,42,479/-. Aggrieved, the assessee preferred appeal before the CIT (A), who also confirmed the action of the AO. Aggrieved, the assessee came in second appeal before the Tribunal. 7. Before us, the learned Counsel for the assessee first of all argued that the assessee itself has disallowed a sum of Rs. 2,63,89,625/- in its computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be "assessee in default" in terms of the provisions of Section 201 (1) of the Act in view of the decision of the Hon'ble Karnataka High Court in the case of Karnataka Power Transmission Corporation Ltd. V. DCIT (2016) 383 ITR 59 (Kar), wherein the Hon'ble High Court has held that where the assessee made provision towards contingent payment for such interest and treated the same as expenditure in the profit & loss account, in view of the fact subsequently the assessee noticed that payment of such interest were never made in view of understanding between the parties and made corresponding reversal entries in the books of account, that the assessee is not liable for TDS as no income accrued to the suppliers. In the present case, when a query w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee subsequently claims deduction of the amount after payment of TDS, charging of interest u/s 201 (1A) of the Act for limited period during which TDS was not paid as per the provisions of the Act are applied and be charged accordingly. Accordingly, we direct the AO to verify the provisions made by the assessee towards contingent payments as narrated in the order of the CIT (A) at page 2 and 3, chart filed by the assessee and reproduced by the CIT (A). In terms of the above, the AO will verify the details and will follow the decision of the Hon'ble Karnataka High Court in the case of Karnataka Power Transmission Company (supra). 9. Similar are the facts in assessment year 2009-10 in ITA No.2631/Mum/2014. Hence, exactly similar di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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