2014 (7) TMI 518 - AT - Income Tax

Levy of interest u/s 201(1) and 201(1A) of the Act TDS not deducted against certain payments - Held that - Assessee contended that if the tax deducted and the amount deposited into the Government account, the due credit shall be given to that extent - if the details produced in respect of the recipients and the recipient has declared income in their return of income, the assessee cannot be liable for payment of TDS once again Relying upon Hindustan Coca Cola Beverage P Ltd vs CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA - where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating dedcutor to be assessee in default for short fall in its amount of tax deducted at source thus, the matter is remitted back to the AO for fresh consideration Decided partly in favour of Assessee.

Summary

Issues Involved:
Levy of interest under sections 201(1) and 201(1A) of the Income Tax Act, 1961 for the assessment year 2011-12 due to non-deduction and non-remittance of tax on payments made to artists, technicians, and for production expenses related to television programs, TV serials, and movies.

Analysis:

Issue 1: Non-deduction and Non-remittance of Tax
The appellant, a firm engaged in the production of television programs and movies, faced scrutiny due to non-deduction and non-remittance of tax on various payments made. The Assessing Officer (AO) found instances where no tax was deducted, short deductions were made, or taxes were not remitted to the Central Government account. The appellant argued that certain payments were refundable and thus not subject to tax deduction at source. However, the AO cited provisions of section 194J of the Act, which mandates tax deduction at the time of credit or payment, and referred to CBDT clarifications regarding similar payments under section 194C. The AO deemed advance payments as liable for TDS, rejecting the appellant's explanation.

Issue 2: Short Deduction of Tax
Regarding short deductions on payments to film artists and technicians, the appellant claimed these were reimbursements for expenses incurred. The AO noted discrepancies in vendor accounts and highlighted that reimbursements cannot be deducted from bill amounts for TDS purposes as per CBDT circulars. The AO held the appellant in default for failing to deduct and remit taxes, leading to the levy of interest under sections 201 and 201(1) of the Act. The CIT(A) upheld this decision on appeal.

Court's Decision
The appellate tribunal acknowledged the appellant's submissions, emphasizing that if taxes were deducted and deposited, due credit should be given. Citing a Supreme Court judgment, the tribunal ruled that if recipients had already paid taxes on income received, the appellant cannot be held liable for TDS again. The tribunal remitted the issue back to the AO for fresh consideration, directing the appellant to cooperate and provide necessary details. Consequently, the appeal was partly allowed for statistical purposes.

This detailed analysis of the judgment highlights the issues of non-deduction and non-remittance of tax, short deduction of tax, and the tribunal's decision to remit the matter for reconsideration in light of legal principles and precedents.