2024 (8) TMI 684 - AT - Income Tax

Liability u/s. 201(1) - TDS on the provisions made in the books of accounts - as submitted by the assessee that the provisions were created as per accrual basis of accounting and were therefore reversed in the subsequent assessment year and TDS compliance was done on such expenses when the actual invoices were booked in the next year. HELD THAT - We find considerable cogency in the contention of assessee that after appreciating the contention of the Assessee and relying on the case of IBM India (P) Ltd. 2015 (6) TMI 323 - ITAT BANGALORE CIT(A) passed the appellate orders for AY 2014-15 to AY 2017-18 by holding that once the assessee has deducted TDS in subsequent year, the demand u/s. 201(1) cannot be raised and further interest u/s. 201(1A) only can be charged upto the date of deduction and where party is not known, or where transactions have been reversed / cancelled, TDS provisions are not applicable. Hence, CIT(A) has rightly granted the relief to the assessee in as much as the question of TDS payment was concerned and directed the AO to verify the facts and calculate interest upto the date of deduction, which does not need any interference - Appeals filed by the Revenue are dismissed.

Summary

Issues:
Appeals against CIT(A) Orders related to assessment years 2014-15 to 2017-18 - TDS liability under section 201(1) of the Act.

Analysis:
The Revenue filed four appeals against separate Orders passed by the CIT(A) relating to assessment years 2014-15 to 2017-18. The common grounds raised in all the appeals challenged the CIT(A)'s direction to delete the assessee's liability created under section 201(1) of the Act. The Revenue contended that such actions by the CIT(A) were against statutory provisions and not in line with the law. The appeals were heard together for convenience, and a common order was passed. The Assessing Officer had raised demands for TDS and interest under section 201(1)/201(1A) for the mentioned assessment years, based on provisions made in the books of accounts. The assessee argued that TDS compliance was done in the subsequent year when actual invoices were booked, leading to double recovery if asked to pay TDS again. The CIT(A) for the assessment year 2017-18 granted relief to the assessee based on the ITAT Bangalore decision, holding that once TDS was deducted in the subsequent year, demand under section 201(1) could not be raised. The CIT(A) directed the AO not to charge TDS under section 201(1) if TDS had been deposited in the next year on provisions made during the current year.

The CIT(A) granted relief to the assessee on various provisions made, considering factors like reversal of provisions in the next year, unknown deductees, and expenses on which TDS was not applicable. The CIT(A) directed the AO to verify the claims of the appellant and not to charge TDS under section 201(1) if found correct. Regarding interest under section 201(1A), the CIT(A) directed the AO to calculate interest only up to the date of actual TDS payment. The Revenue appealed against the CIT(A)'s order, but after hearing both parties, the Tribunal affirmed the CIT(A)'s decision. The Tribunal upheld that once TDS was deducted in the subsequent year, demand under section 201(1) could not be raised, and interest under section 201(1A) could only be charged up to the date of deduction. The Tribunal dismissed the Revenue's appeals, stating that the CIT(A) rightly granted relief to the assessee on TDS payment issues, and there was no need for further interference.

In conclusion, the Tribunal dismissed all four appeals filed by the Revenue, upholding the CIT(A)'s orders related to TDS liabilities under section 201(1) of the Act for the assessment years 2014-15 to 2017-18.