2014 (4) TMI 775 - AT - Income Tax

Contravention of section 201/201(1A) of the Act Short deduction of TDS u/s 194J of the act Payment of professional fees Held that - FAA was of the view that the arrear has accrued since the assessee has inadvertently deducted and deposited the tax u/s 119 J by applying the pre amended rate of 5% - sole deductee during the year for the assessee company was Motorola India Pvt.Ltd., which had duly paid all the taxes for the AY 2008-09 The Decision in Hindustan Cocacola Beverages P.Ltd. vs. CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA and Circular of the CBDT No.275/201/95 and IT(B) dt. 29.1.1997 followed - the circular declares that no demand visualized u/s 201(1) of the Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee assessee - this will not alter the liability to charge interest u/s 201(1A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty u/s 271C of the Act thus, there is no infirmity in the order of CIT(A) Decided against Revenue.

Summary

Issues:
Appeal against order of Ld.CIT(A) for AY 2008-09 - Short deduction of TDS u/s 194J - Liability of assessee - Relief granted by Ld.CIT(A) - Charging of interest u/s 201(1A) - Applicability of Circular No. 275/201/95 and judicial precedents.

Detailed Analysis:

1. Short Deduction of TDS u/s 194J:
The case involved an appeal by the Revenue against the order of the Ld.CIT(A) for the AY 2008-09 regarding short deduction of TDS u/s 194J. The assessee, a tax deductor, had e-filed quarterly returns revealing a contravention of TDS provisions. The AO held the assessee in default for short deduction of tax, raising a substantial demand. The Ld.CIT(A) considered that the arrear accrued due to inadvertent deduction at pre-amended rates. The First Appellate Authority applied Circular No. 275/201/95 and the decision in Hindustan Cocacola Beverages P.Ltd. vs. CIT, granting relief to the assessee. The Ld.CIT(A) noted that the deductee had paid all taxes for the relevant year, leading to the conclusion that the appellant had deducted more tax than required. The judgment emphasized the importance of examining details and submissions before passing orders.

2. Charging of Interest u/s 201(1A):
Regarding the interest levied under section 201(1A) of the Act, the Ld.CIT(A) relied on the Circular and the judgment of the Jurisdictional High Court in Hindustan Coca Cola Beverages P.Ltd. The Ld.CIT(A) held that no interest could be charged under this provision. The judgment dismissed the ground of the Revenue in this regard, aligning with the interpretation of the Circular and judicial precedents.

3. Conclusion:
Ultimately, the appeal of the Revenue was dismissed, affirming the decision of the Ld.CIT(A) in favor of the assessee. The judgment highlighted the significance of compliance with TDS provisions, the impact of amendments in tax rates, and the relevance of Circulars and judicial decisions in determining liabilities related to TDS deductions and interest charges. The detailed analysis provided a comprehensive understanding of the case and the legal principles applied in reaching the final decision.

This judgment underscores the importance of meticulous compliance with TDS provisions, the impact of rate amendments, and the significance of Circulars and judicial precedents in determining liabilities related to TDS deductions and interest charges.