2012 (3) TMI 442 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of treating the appellant as assessee in default u/s 201(1) & 201(1A) of the IT Act and raising a demand. It also addresses the interpretation of section 194H of the I.T. Act, 1956, the consideration of Circulars issued by the CBDT, and the relevance of judicial precedent u/s 194H.

Issue 1: Treating Appellant as Assessee in Default u/s 201(1) & 201(1A):
The appeals were filed against the order of the CIT(A) treating the appellant as assessee in default u/s 201(1) & 201(1A) of the IT Act and raising a demand of Rs. 12,90,280. The appellant contended that the issue was covered in their favor by a previous order of the ITAT Pune Bench. The appellant relied on a CBDT Instruction clarifying the recovery of TDS under Section 194H on commission paid by BSNL and MTNL to their STD-PCO franchisees. The Tribunal held that the issue was indeed covered in favor of the assessee by the previous order, and authorities erred in treating the assessee in default under Section 201(1) and 201(1A). Consequently, the orders of the authorities below were reversed, and the appeals filed by the assessee were allowed.

Issue 2: Interpretation of Section 194H of the I.T. Act, 1956:
The appellant argued that the amendment to Section 194H was of a clarifying nature only, supported by a CBDT Instruction. The Tribunal noted that the ITAT Pune Bench had previously held that the amendment to Section 194H was clarification in nature. The Tribunal followed the earlier order and held that the authorities erred in treating the assessee in default under Section 201(1) and 201(1A). The appeals were allowed based on this interpretation.

Issue 3: Consideration of Circulars Issued by the CBDT:
The appellant contended that Circulars issued by the CBDT regarding deduction of TDS u/s 194H from STD/PCO franchises of the BSNL were binding on income tax authorities. The Tribunal, in line with the previous order of the ITAT Pune Bench, held that the authorities erred in treating the assessee in default under Section 201(1) and 201(1A). The appeals were allowed based on this consideration.

Issue 4: Relevance of Judicial Precedent u/s 194H:
The appellant argued that the CIT(A) disregarded a binding judicial precedent delivered by the ITAT Delhi in a specific case. The Tribunal referred to the earlier order of the ITAT Pune Bench and held that the authorities erred in treating the assessee in default under Section 201(1) and 201(1A). The appeals were allowed based on the relevance of the judicial precedent.

This judgment highlights the importance of legal interpretations, precedents, and circulars in tax matters, emphasizing the need for authorities to consider relevant provisions and instructions before making determinations.