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TMI Blog2023 (8) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... it report i.e. 3CD Report and is covered by the provisions of section 154 of Income Tax Act?" 3. That the order of the CIT(A) being erroneous in law and on facts needs to be vacated and the order of the ACIT is to be restored. 4. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so any arise." 3. In brief the Ld. Assessing Officer ("AO") found that for Financial Year ("FY") 2012-13 the assessee deductor was required to deduct TDS aggregating to Rs. 15,59,44,667/- (including interest) on gross amount of Rs. 2,87,53,24,755/- under various TDS provision of the Income Tax Act, 1961 (the "Act") which the assessee had failed to do. He, therefore, issued notice dated 18.01.2017 under section 154 of the Act to rectify the order passed by him on 27.03.2015 under section 201(1)/201(1A) of the Act whereby demand of Rs. 4,39,84,927/- was raised. In response, the assessee furnished explanation vide reply dated 20.02.2017 which was not acceptable to the Ld. AO. He, therefore computed the liability of the assessee as under and raised demand accordingly: S. No. Section Gross Amount TDS Amount 1 194C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,73,31,672/- 5.4 It is seen that the liability / 20143) 2201014) of Rs 4.39 crore is same the original order dated 27.03.2015. The AO has added interest u/s 220(2) on the aforesaid amount from the date of the original order the date of rectification order dated 19.2.2018. As submitted by the appellant, out of the demand of Rs. 4.39 crore it has paid Rs. 3.32 crore. The A.O is directed to verify the claim of the appellant at the time of giving appeal effect to this order and rework the demand of any at that time. Accordingly ground number 14 and 15 are disposed off. 5.5 The two main issues in the appeal agitated by the appellant are i) Whether the AO could raise demand for non deduction of withholding tax on year end provisions booked in the expense account and mentioned in Form 3CD by passing an order u/s 154 of the IT Act? ii) Whether the AO was correct in holding that the assessee was in default for non deduction of withholding tax on year end provisions booked in the expense account and mentioned in Form 3CD. 5.6 Regarding the first point it is seen that the AO has passed order u/s 154 rw 201(1) of the IT Act. The provisions of section 201(1) are reproduced as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a 52[payee] or on the sum credited to the account of a 52[payee] but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such 52 [payee]. (2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1) (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any port of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given 53[or two years from the end of the financial year in which the correction statement is delivered under the proviso to sub-section (3) of section 200 whichever is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntifiable, therefore, provision is made to comply with the accounting standard and fair presentation of financial statements as per regular accounting practice. On calculation of tax computation, relevant expenditure is disallowed u/s 40(a) (ia)/40(a)(i) of the IT Act and added back and the actual amount which has been crystallized during the relevant year is reduced. In the subsequent year, as and when the amount of expense is paid or credited to the relevant party then tax on the same is deducted. This happens because of facts that on several sites expenses are incurred based on allocated budget of the head office and continues to be pending as work in progress at the end of the financial year. Therefore, the appellant has to make several provisions in respect of approved budget expenses based on the site budgets and contract on which invoices are not received till the date of booking of provision. Since the amount was neither credited nor paid, TDS liability did not arise. In view of the peculiar circumstances of the case of the appellant. I find merit in its argument that since only provision was made and there was no amount credited or paid to any identifiable person, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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