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2016 (9) TMI 1 - ITAT MUMBAI

2016 (9) TMI 1 - ITAT MUMBAI - TMI - Disallowance u/s 40(a) - Held that:- Once the amount has been disallowed under the provisions of section 40(a)/40 (a) (ia) of the Act on the reason that tax has not been deducted, the AO cannot invoke the TDS provisions for holding the assessee as, “assessee in default” u/s 201 (1) of the Act. But, if 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 .....

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). - ITA No.2630 and 2631/Mum/2014, ITA No.3125/Mum/2014 - Dated:- 26-7-2016 - SRI MAHAVIR SINGH, JUDICIAL MEMBER AND SRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For The Revenue : Shri K. Mohandas, DR For The Assessee : Shri Ronak G. Doshi, AR ORDER PER MAHAVIR SINGH, JM: Out of these three appeals, the appeal in ITA No.2630/Mum/2014 by the assessee and the appeal in ITA No.3125/Mum/2014 by the Revenue are directed against order of the CIT (A)-13, Mumbai passed in appeal No.CIT (A)-13/IT-237/ Ra .....

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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 out that in this case, the tax demand is ₹ 8,78,889/- and thus, the tax effect in this appeal is below ₹ 10.00 lacs and further submitted that in view of the CBDT Circular No.21/2015, dated 10.12.2015 brought out by the Centr .....

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77; 10 lacs and therefore, in view of the circular No. 21/2015 dated 10th December, 2015 no appeal should be filed by the Revenue before the Tribunal which has tax effect of ₹ 10.00 lacs or less and this circular is also applicable retrospectively to all pending appeals. The relevant extract the said CBDT Circular (Supra) is as under:- This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specif .....

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n 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 .....

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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 for short deduction of ₹ 59,21,831/- u/s 201(1) / 201(1A) of the Income Tax Act, 1961, ( the Act ) and interest thereon amounting to ₹ 28,42,479/- u/s 201 (1A) of the Act. 2. The Appellant, prays that on the fact .....

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d not be treated as, 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 ₹ 2,63,89,265/- u/s 194 I of the Act @ 22.4% amounting to ₹ 59,21,831/-. The AO also charged consequent interest u/s 201 (1A) of the Act amounting to ₹ 28,42,479/-. Aggrieved, the assessee preferred appeal before the .....

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the year end. For this, he took us through a chart produced before the CIT (A) and the same is reproduced at page 2 and 3 of the CIT (A) s order. He referred to the entries made in the chart that the provision is made as on 31-03-2007. When his attention was drawn to some of the entries for the month of April, 2006 and June, 2006, he stated that only the entries related to the year end i.e. March, 2007 were the provisions which are reversed and added as income for the assessment year 2008-09 and .....

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he same, he fairly stated that the issue can be remitted back to the file of the AO for verification of the facts. In terms of the above, the learned Counsel for the assessee stated that in case of provision made at the year end and it was subsequently reversed the assessee cannot be held to 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. DCI .....

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uppliers. In the present case, when a query was put to the learned Counsel for the assessee to show the fact of reversal of entries, he fairly agreed that the issue can be remitted back for verification of the fact by the AO. In terms of the above, the learned Sr. DR however, agreed to the proposition but he also stated that consequential interest is to be charged till the date of payment of TDS. 8. After hearing both the sides and going through the facts of the case, we find that the facts of t .....

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