TMI Blog2024 (1) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... educted by his employer for the Assessment Year 2013-14 to the petitioner. - HON'BLE MR. JUSTICE RAJIV SHAKDHER AND HON'BLE MR. JUSTICE GIRISH KATHPALIA For the Petitioner Through: Mr Sandeep D. Das, Ms Anandini Kumari Rathore and Ms Anurima Sood, Advocates. For the Respondent Through: Mr Gaurav Gupta, Senior Standing Counsel with Mr Shivendra Singh, Mr Puneet Singhal, Ms Mahima Garg and Ms Deepika Goel, Advocates. GIRISH KATHPALIA, J.: 1. By way of this petition brought under Article 226 of the Constitution of India, the petitioner has prayed for setting aside demand letter dated 04.02.2019 qua outstanding tax liability pertaining to the Assessment Year 2013-14 and for allowing credit to the petitioner against the Tax Deducted at Source (TDS) for the assessment year 2013-14 by his employer. On notice of the petition, respondent entered appearance through counsel and filed counter affidavit. We heard learned counsel for both sides. 2. Briefly stated, circumstances relevant for present purposes are as follows. The petitioner was employed with Tulip Telecom Ltd. (hereinafter referred to as the employer ) as Associate Vice-President during the period from November 2011 to Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered by us is as to whether any recovery towards the outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on his salary was being regularly deducted at source by his employer who did not deposit the same with the authorities. 6. The said issue stands covered by the judgment of this court in the case of Sanjay Sudan vs Assistant Commissioner of Income Tax, [2023] 148 taxmann.com 329 (Delhi). The relevant observations made in the said judgment are set forth hereafter: 5. Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of the respondents/revenue, says that the credit for withholding tax can only be given in terms of Section 199 of the Act, when the amount is received in the Central Government account. 5.1 It is, therefore, his submission that while no coercive measure can be taken against the petitioner, the demand will remain outstanding and cannot, thus, be effaced. 6. We have heard counsel for the parties. 7. According to us, Section 205 read with instruction dated 01.06.2015, clearly point in the direction that the deductee/assessee cannot be called upon to pay tax, which has been deducted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of BDR Finvest Pvt. Ltd. vs DCIT, WP(C) 9043/2021 decided by this court on 31.10.2023 , it was clarified that payment of the tax deducted at source to the Central Government has to be understood as the payment in accordance with law. 9. As held by this court in the case of Shri Chintan Bindra vs DCIT, 2023:DHC:8483-DB, the petitioner, having accepted the salary after deduction of income tax at source, had no further control over it in the sense that thereafter it was the duty of his employer, acting as tax collecting agent of the revenue under Chapter XVII of the Act, to pay the deducted tax amount to the Central Government in accordance with law; and for the employer of the petitioner having failed to perform his duty to deposit the deducted tax with the revenue, petitioner cannot be penalized. It would always be open for revenue to proceed against employer of the petitioner for recovery of the deducted tax in accordance with law. 10. The issue pertaining to Section 199 of the Act was also elaborately examined in the case of PCIT vs Jasjit Singh, 2023:DHC:8522-DB thus: 7. In this context, it is important to note that sub-section (3) of Section 199 of the Act alludes to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of life insurance policy, and payments made to the non-resident sportsmen or sports associations are liable for deduction to tax at source under Sections 194C, 194D, 194DA, and 194E, respectively. 8.3 As far as payments made to non-residents [not being a company], or to a foreign company are concerned, any interest (not being interest referred to in section 194LB or section 194LC or section 194LD) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head Salaries ) payable to such non-resident is made amenable to deduction of tax at source under Section 195 of the Act. 8.4 Specifically, the grossing up principle finds statutory recognition in Section 198 of the Act. This is a principle, whereby, income which is payable, say, under any agreement/arrangement [in a case not referred to in Section 192(IA), and the tax chargeable on that income is required to be deducted by the payor, then the income is increased by the payor/deductor and offered to tax inclusive of the tax deducted at source. 8.5 Chapter XVII also contains provisions where, if tax is not deducted at source, it can be recovered from the payee. This is contained in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue, no steps were taken either under the provisions of the Act or under the common law for recovery or even under the extant statute(s) for bringing deductors to book in accordance with the law. 13. In our opinion, the argument advanced by Mr Bhatia that the amount deducted towards tax at source will not be given credit because the deductor has chosen not to deposit the amount with the Central Government is erroneous for another reason, which is that the nature of the amount retained by the deductor continues to remain as tax . 13.1 This aspect clearly emerges upon perusal of the contents of the information provided in the Tax Payers Information Series-28 booklet titled Tax Deduction at Source (TDS) Other Than Salaries published by the Income Tax Department. The booklet notes that tax deducted at source will be treated as payment of tax on the assessee s behalf. For convenience, the relevant part of the booklet is extracted hereafter: 4.2 Credit of TDS Where taxes have been deducted at source from any payment of income receivable by an assessee, the amount of tax deducted at source would be included in the income of the assessee while computing the income of the assessee and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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