TMI Blog2021 (7) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... r non-deduction of TDS. See BIOCON BIOPHARMACEUTICALS PRIVATE LTD [ 2015 (3) TMI 684 - ITAT BANGALORE] Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. Assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in the month of April, as and when the bills are received, and the payment is made to the payee by deducting TDS. Further, admittedly, assessee has paid interest under section 201(1A) which further demonstrates there was no malafide intention. - ITA No.2865 & 2866/Bang/2018 - - - Dated:- 14-6-2021 - Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the immediately subsequent month by crediting the profit and loss account and therefore income does not accrue in the hands of payee. 5. That on the facts and circumstance of the case, the Learned CIT(A) erred in disregarding the submission of the Appellant that upon crystallisation of liability, the amounts paid or credited to the payee were recorded as liabilities due to the respective parties at which point in time taxes were deducted at source. 6. That on the facts and circumstances of the case, the Learned CIT(A) erred in not accepting the Appellant's contention that the obligation to deduct taxes at source would have to be determined as per the relevant withholding tax provisions under Chapter XVJI-B of the Act. Merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year-end provision for expenses amounting to ₹ 21,98,26,517/- The assessee voluntarily disallowed the said sum under section 40(a)(ia) of the Act, on account of non-deduction of TDS and that the provision created was not credited to any parties or individuals account, since quantum of payment to the parties was not determinable as on the year-end. Further assessee had not deducted tax at source/short deduciotn on a sumof ₹ 20,70,756/-. It was thus submitted that, there is a reasonable cause to believe that tax should not be deducted at source on the year-end provision. 5. The Ld.AO accordingly called on assessee to confront on the issues of non deduction of TDS. The assessee submitted that the tax was deducted in the subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and liable to be dropped. 10. The submissions of Appellant has been considered. It is mainly emphasized that: At the time provision was created in the books of account, the issue of deduction of taxes at source was not a settled issue. As submitted by the appellant, the provisions created with respect to dealers commission are to be paid to the dealers on the sales effected by them. Such commission is payable to the dealers as a percentage of sale only on actual realization of sale proceeds. Similarly with respect to provisions for payments to contractors on which TDS was required to be deducted, wherein the provisions are created on the basis of agreements entered into with the contractors where gross amount payable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. If the amount is not considered to be income in the hands of the deductee, the provision of tax deducted at source would not be made applicable. 10. In the present facts of the case, the provision created at the end of the accounting year has not been credited to the relevant parties to whom the payments has to be made for the reason that it was unquantifiable. Further, assessee has suo moto disallowed the said sum under section 40(a)(ia) for non-deduction of TDS. Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. It is also observed that assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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