2019 (7) TMI 849 - AT - Income Tax

TDS u/s 194J - payment made for purchase of software - TDS liability due to retrospective amendment - addition u/s 201(1) / 201(1A) - HELD THAT - As decided in assessee own case 2016 (1) TMI 1025 - ITAT MUMBAI the dispute with regard to the nature of payment made for purchase of software was settled at rest only by Finance Act 2012 through which Explanation-4 was added to Sec. 9(1)(vii). Although the said amendment was given retrospective effect, legal maxim, lex non cogit ad impossibillia, meaning thereby that the law cannot possibly compel a person to do something which is impossible to perform. As mentioned elsewhere, the amendment was given a retrospective effect but by that time the assessee has already done the transactions without deducting tax at source. On these facts, the assessee cannot be held to have violated the provisions of Sec. 194J of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of addition under sections 201(1) and 201(1A) for Assessment Year 2012-13.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai contested the order of the Ld. Commissioner of Income-Tax (Appeals) regarding the deletion of certain additions under sections 201(1) and 201(1A) for the Assessment Year 2012-13. The case involved an assessee engaged in providing online services. The genesis of the issue was an order passed by the Assistant Commissioner of Income Tax (TDS) where it was found that the assessee failed to deduct tax at source on payments for Data Line Charges. The Assessing Officer raised a demand under sections 201(1) and 201(1A) against the assessee, which was contested by the assessee but upheld by the AO.

The first appellate authority deleted the additions by relying on a previous Tribunal decision in the assessee's favor for other assessment years. The Tribunal's order highlighted that the nature of the payment for software purchase was settled by a retrospective amendment, and the assessee could not be held in violation of Section 194J as the transactions were done before the retrospective amendment. The Tribunal cited previous decisions to support its stance, emphasizing that the law cannot compel a person to do something impossible. The Tribunal upheld the CIT(A)'s decision based on this reasoning, providing relief to the assessee.

In conclusion, the appeal was dismissed by the Appellate Tribunal, affirming the deletion of the additions under sections 201(1) and 201(1A) for the Assessment Year 2012-13. The Tribunal's decision was based on the retrospective nature of the amendment and the impossibility of compliance before the change in law. The judgment highlighted the importance of legal principles and precedent in interpreting tax laws and providing relief to taxpayers in appropriate circumstances.