2017 (2) TMI 798 - AT - Income Tax

TDS liability - failure to deposit TDS with Central Government - Held that - The assessee entered into an agreement of leave and license with M/s. Om Sai Auto World which lies at page 15 to 21 of the paper book. According to the said agreement the assessee was entitled to recover an amount of ₹ 2,00,000/- per month. The assessee received an amount of ₹ 1,80,000/- per month in accordance with bank statement lies at page 25 which speaks that the licensee deducted the TDS but nothing came into the notice that the licensee deposited the same with the Central Government or not. But is not the liability of the appellant to pay the TDS when the TDS has already been deducted by the licensee. We are of the view that the finding of the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law, therefore is hereby ordered to be set aside and the Assessing Officer is directed to delete the addition on account of TDS. However, recovery can be initiated against the person who deducted the TDS in accordance with law. Accordingly, all these issues decided in favour of the assessee against the revenue.

Summary

Issues Involved:
The judgment involves issues related to the appeal filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-21, Mumbai for the Assessment Year 2013-14. The primary issue revolves around the denial of credit for TDS amount of ?80,000 by the assessing officer, leading to the appeal and subsequent legal proceedings.

Issue 1-5 Analysis:
The key contention raised by the assessee was that they were not obligated to pay the TDS amount as per the agreement, where the payee was responsible for deducting and depositing the tax with the Government of India. The appellant argued that the revenue wrongly imposed the liability on them, contrary to law and facts. The assessee cited a precedent from the Hon'ble Bombay High Court to support their claim. However, the CIT(A) dismissed the appeal, stating that there was no evidence of TDS deduction as no certificate was issued to the appellant. The CIT(A) directed the Assessing Officer to verify the credit in department records. The tribunal, after reviewing the facts, found that the appellant had indeed entered into a leave and license agreement where TDS was deducted by the licensee but could not confirm if it was deposited with the Central Government. Relying on the precedent cited by the appellant, the tribunal held that the liability to pay TDS does not fall on the assessee when it has already been deducted by the licensee. The tribunal set aside the CIT(A)'s order and directed the Assessing Officer to delete the addition of ?80,000 on account of TDS, allowing the appeal in favor of the assessee. It was clarified that recovery could be initiated against the person who deducted the TDS as per the law.

This detailed analysis of the judgment showcases the legal intricacies involved in the dispute over TDS credit and highlights how the tribunal interpreted the law to rule in favor of the appellant, emphasizing the responsibilities of the deductor in such cases.