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TMI Blog2016 (4) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 25.06.2013. 2. In the present appeal, the assessee has assailed the order of the Assessing Officer (TDS) dismissing the petition under S. 154 in connection with the order passed under section 201(1) & 201(1A) of the Act and in treating the assessee as assessee in default in respect of salary remaining unpaid to its employees till the end of the relevant assessment year. 3. The relevant facts governing the issue in brief are that the assessee company is engaged in the business of manufacturing of ready to use panels and allied construction industrial materials. In the course of carrying on of the business, the assessee company makes a number of payments towards various expenses inter-alia towards salary which is subjected to l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year as on 31.03.2009 according to the assessee on which liability to deduct tax did not accrue in terms of S. 192 stands at Rs. 1,22,25,827/-. Thus, no default can be attributed in respect of this unpaid sum under S. 192 of the Act. Therefore, in short, for the purposes of determination of quantum of default under S. 201(1) and under S. 201(1A), the unpaid salary is not includible. So to say in nutshell, it is the case of the assessee company that it is not liable for depositing TDS on salary remaining unpaid to its employees which is outstanding and consequently no default can be quantified under S. 201(1) and S. 201(1A) for unpaid sum. 4. The Assessing Officer rejected the application of the assessee under section 154 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us. 7. The Ld. Authorized Representative for the assessee impugned the action of the authorities below and submitted that the Assessing Officer has wrongly applied the provisions of section 192 of the Act for the purposes of determination of quantum of default on the face of the apparent facts available on record. The Ld. Authorized Representative for the assessee adverted our attention to Schedule 7 of the Balance Sheet of the assessee as on 31.03.2009 as appearing at Page No.12 of the Paper Book filed and submitted that the current liabilities outstanding at the end of the year included a figure of Rs. 25,08,07,581/- under the head 'sundry creditors'. A further breakup of this amount under the head 'sundry creditors' as appearing at P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. Section 192 of the Act forms part of Chapter XVII-B of the Act. The liability to deposit the tax will arise only when the liability to collect TDS arises under section 192 of the Act. In the instant case, the liability to deduct the tax did not arise and consequently liability to deposit the same also does not arise on a mere book entry recognizing the salary outstanding at the end of the year. To compliment his stand on S. 192, he canvassed reliance on following decisions : (i) CIT vs. Tej Quebecor Printing Ltd., (2006) 151 taxmann.com 210 (Delhi-HC) and (ii) Citigroup Global Markets India (P.) Ltd. vs. DCIT, (2009) 29 SOT 326 (Mum-Trib.). He next referred the order of the CIT(A) dated 09.11.2012 in its own case under section 201(1) & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) for failure to deduct TDS on salary as contemplated under S. 192 in respect of unpaid amount and in consequence committing default in not depositing the same in Govt. treasury. As noted above, it is the case of the assessee that out of the total salary debited to the Profit & Loss Account, a sum of Rs. 1,22,25,827/- has not been paid and remained outstanding as unpaid salary at the end of the year. It is further case on behalf of the assessee that merely because the provision for unpaid salary together with provisions for unpaid TDS has been reflected as liability in the Balance Sheet, such book entry for unpaid and uncollected TDS does not give rise to any obligation envisaged under S. 192 of the Act. We agree with the stand of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to it and mere book entries made in this regard are not conclusive. As a corollary, patent mistake has been committed by the AO in applying the statutory provisions of S. 192 while framing impugned order which is rectifiable under S. 154. In this view of the matter, we direct the Assessing Officer not to hold the assessee as assessee in default under section 201(1) & 201(1A) of the Act in respect of TDS liability attributable to unpaid salary. While computing the revised liability for default under S. 201(1) & 201(1A), however, the Assessing Officer shall be at liberty to satisfy himself about the arithmetical correctness of quantum of outstanding salary remaining unpaid at the end of the year qua the total salary expenditure incurred by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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