TMI Blog2023 (5) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... various dates are enclosed. See case UCO BANK VERSUS UNION OF INDIA OTHERS [ 2014 (11) TMI 412 - DELHI HIGH COURT] We find that in the absence of an ascertainable amount and identifiable payee, the machinery provisions of recovering tax deducted at source falls flat because in either way, it does not aid the charge of tax u/s 4 of the Act, but, takes a form of separate levy independent of other provisions of the Act. Similar view was also taken in yet another decision of the Hon ble Jurisdictional High Court in the case of DCIT vs. Ericcson Communications Ltd. [ 2015 (9) TMI 507 - DELHI HIGH COURT] . Thus we hold that the assessee cannot be treated as an assessee in default for mere book entries passed within the meaning of section 201(1) and consequentially interest u/s 201(1A) is also directed to be deleted. Assessee in default u/s 201(1) and interest u/s 201(1A) levied - short-deduction of tax at source on certain expenditures - HELD THAT:- We find that the assessee had explained before the lower authorities that some of the payees had furnished low tax deduction certificate obtained u/s 197 of the Act from their TDS Officer and had furnished the same to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITBA/NFAC/S/250/2022-23/1044618450(1) in DIN Order No.ITBA/NFAC/S/250/2022-23/1044620237(1), respectively, dated 11.08.2022 against the orders of assessment passed u/s 201(1)/201(1A) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 18.03.2021 by the ld. Assessing Officer, Circle-74(1), New Delhi (hereinafter referred to as ld. AO ). 2. Identical issues are involved in both these appeals, hence, they are taken up together and disposed of by this common order for the sake of convenience. 3. Let us take up the appeal for the AY 2013-14 first. The only effective issue to be decided in the appeal for AY 2013-14 is as to whether the assessee could be treated as an assessee in default within the meaning of section 201(1) of the Act and consequentially liable for interest u/s 201(1A) of the Act, in respect of non-deduction of tax at source on provision for expenses made at the end of the year, falling within the ambit of provisions of sections 194C, 194I and 194J of the Act. 4. We have heard the rival submissions and perused the material available on record. The case of the Revenue is that the assessee had made year-end provisions for expenses amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICAI) while finalizing books of account. It is a fact on record that such provisions were made in view of accrual method of accounting followed by the assessee and the same were reversed in the books of account on the first day of the immediately succeeding year. It is not in dispute that as and when the invoices are received by the assessee in the succeeding year with date of invoice falling in the succeeding year, the same are processed for payment wherein due deduction of tax at source have been made and remitted to the account of the Central Government within the prescribed time. We find that this is a consistent practice followed by the assessee on year-to-year basis. The fact of reversal of these expenses in the succeeding year are enclosed in pages 23 to 29 of the paper book. This is not disputed by the revenue before us. The fact of the assessee deducting the tax at source in the succeeding year and remitting the same to the account of the Central Government on 02.05.2013, 30.05.2013, 05.07.2013 and 06.09.2013 are enclosed are enclosed in pages 33-37 of the paper book. We find that the issue in dispute is no longer res integra in view of the decision of the Hon ble jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accruing thereon. Therefore, the Registrar General cannot be considered as a payee for the purposes of Section 194A of the Act. The credit by the petitioner bank in the name of the Registrar General would, thus, not attract the provisions of Section 194A of the Act. Although, Section 190(1) of the Act clarifies that deduction of tax can be made prior to the assessment year of regular assessment, nonetheless the same would not imply that deduction of tax is mandatory even where it is known that the payee is not the assessee and there is no other assessee. 21. It is relevant to note that there is no assessee to whom interest income from the deposits in question can be ascribed; no person can file a return claiming the interest payable by the petitioner as income. The necessary implication of this situation is recovery of tax without the corresponding income being assessed in the hands of any assessee. The ultimate recipient of the funds from the FD would also not be able to avail of the credit of TDS. It is apparent that in absence of an ascertainable assessee the machinery of recovering tax by deduction of tax at source breaks down because it does not aid the charge of tax un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in yet another decision of the Hon ble Jurisdictional High Court in the case of DCIT vs. Ericcson Communications Ltd. reported in 378 ITR 395 (Del), wherein it was held as under:- 22. In our view, mere passing of the book entries, which are reversed, would not give rise to an obligation to deduct TAS by the Assessee, as clearly, there is no debt that can be said to be acknowledged by the Assessee. Imposition of an obligation to deduct TAS in these circumstances would amount to enforcing payments from one person towards a tax liability of another, even where the person does not acknowledge that any sum is payable. This, in our view, is contrary to the scheme of provisions relating to collection of TAS under the Act. 23. It is also not disputed that TLME had not claimed royalty payable from the Assessee and, concededly, no royalty for the period has been paid either. In the circumstances, we are unable to accept that any income had accrued or arisen or deemed to have accrued or arisen, which is chargeable to tax in the hands of TLME. It is not disputed that the agreement dated 1st January, 1997 was not acted upon at the material time. In the absence of any income chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and desired that the said private companies be substituted as managing agents in its place. In this background one of the shipping companies managed by the Assessee received a letter from two of its shareholders, who objected to the quantum of management agency commission being charged by the Assessee. In this context, the Assessee was invited to make an offer to reduce the commission charged. The Assessee agreed for reduction in the agency commission in order to put the concerned managed companies on a firm financial footing and at the Extraordinary General Body Meeting of the managed companies held subsequently, the private companies floated by the assessee were accepted as the managing agents in place of the Assessee. The Income Tax Officer as well as the Appellate Assistant Commissioner had concluded that larger commission had accrued during the relevant period and was thus assessable to tax. The Tribunal accepted the Assessee's contention and held that the income on account of larger commission had neither accrued nor was paid to the Assessee and, thus, was not chargeable to tax. The Bombay High Court agreed with the Tribunal, however, certified the case as fit under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in default for mere book entries passed within the meaning of section 201(1) of the Act and consequentially interest u/s 201(1A) is also directed to be deleted. 9. The next issue involved in this appeal is as to whether the assessee could be treated as an assessee in default u/s 201(1) of the Act liable for interest u/s 201(1A) of the Act in respect of short-deduction of tax at source on certain expenditures, in the facts and circumstances of the instant case. 10. We find that out of the total TDS demand of Rs.23,03,028/- raised by the ld. AO u/s 201(1) of the Act, a sum of Rs.8,61,247/- discussed hereinabove was on account of non-deduction of tax at source on year-end provision for expenditure and balance sum of Rs.14,41,781/- was on account of short-deduction of tax at source on certain expenditures incurred by the assessee during the year under consideration. As stated above, we find that demand of Rs.14,41,781/- has been raised on the ground that the assessee had made short-deduction of tax at source on certain expenses. We find that the assessee had explained before the lower authorities that some of the payees had furnished low tax deduction certificate ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as to whether the assessee could be treated as an assessee in default u/s 201(1) of the Act in the sum of Rs.5,47,118/- and liable for interest u/s 201(1A) of the Act in the sum of Rs.4,95,140/- in respect of professional expenses incurred by the assessee in the sum of Rs.54,71,186/-. 16. We have heard the rival submissions and perused the material available on record. The main grievance of the Revenue is that the assessee had not furnished documentary evidences in support of this issue. On the contrary, the assessee had submitted that it had deducted tax at source on the aggregate amount of Rs.1,70,71,786/- debited under the head Retainership fee , out of which an amount of Rs.54,71,186/- was transferred to Professional charges account in the books of account of the assessee. The corresponding documentary evidences in this regard were duly placed on record before the lower authorities, which fact was not appreciated by the lower authorities. We find from the details placed on record in pages 133-134 of the paper book containing the details of payments made to Randstad India Ltd. and Team Lease Services Pvt. Ltd. totaling to Rs.1,70,71,786/-, which had been duly subjecte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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