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TMI Blog2016 (7) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... Department itself in the assessment year 2010-11 has accepted the accounting followed in respect of the expenses and no penal action under section 201(1) and interest under 201(1A) of the Act was considered. The learned Commissioner of Income Tax(Appeal) has followed the finding of the Tribunal in the case of Pfizer Ltd Vs. ITO(TDS) (2012 (11) TMI 164 - ITAT MUMBAI) wherein the Tribunal has held that since the payee was not identifiable in the case at the time of making the provision, no TDS was required to be made and further the entire provision had been written back the next year and the actual amounts paid/credited were subjected to TDS as per the detailed statement filed before the authorities, on which there was no dispute - Decided against revenue. - ITA No. 5597/Del/2013 - - - Dated:- 10-6-2016 - SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant by Smt. Rishpal Bedi, Sr.DR For The Respondent by Sh. K.V.S.R. Krishna, CA ORDER PER O.P. KANT, A.M.: This appeal of the Revenue is directed against order dated 19/07/2013 of the Commissioner of Income-tax(Appeals), Noida for assessment year 2007-08 raising following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of TDS was also pointed out by the tax auditor in his report and was admitted by the assessee as the disallowance of expenses under section 40a(i) of the Act was made by the assessee itself, therefore, the assessee was liable for deduction of TDS and, thus, the penalty levied under section 201(1) and corresponding interest under section 201(1A) was rightly levied by the Assessing Officer. 5. On the other hand, the learned Authorized Representative of the assessee relying on the order of the learned Commissioner of Income-tax(Appeals), submitted that there was no change in the method of accounting regularly followed by the assessee. The assessee had debited expenses on accrual and tax was deducted on actual booking of the expenses. The learned AR referred to the submission made before the Commissioner of Income Tax(Appeal) in respect of the accounting of expenses, which are reproduced by the learned Commissioner of Income-tax (Appeals) on page 8 of the impugned order. The learned Authorised Representative also referred to pages 61 to 62 of the assessee s paper book, according to which in assessment year 2010-11 the Assessing Officer has accepted the contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of TDS u/s. 194A on interest payable by banks. The relevant portion of the said circular is reproduced as under: As per provisions of section 194A of the Income Tax Act 1961, income tax has to be deducted at source at the time of credit of interest income to the account of the payee or at the time of payment thereof in cash or by issue of the cheque or draft or by any other mode, at the rates in force such interest amount exceeds specified limit. Further, Explanation to section 194A states that for the purpose of this section, where any income by way of interest as aforesaid is credited to any account, whether called Interest payable account or Suspense Account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly . 2. Representations have been received from Indian Banks Association (IBA) seeking clarification regarding deduction of tax at source from payment of interest on time deposits by banks using Core- Branch Banking solutions (CBS) software. In case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no constructive credit to the account of payee and also the fact that expenses have been added voluntarily u/s. 40(a)(ia) the appellant cannot be treaded as assessee in default so as to attract the provisions of Section 201(1) of the I.T. Act. In this regard the appellant has placed its reliance on very recent decision of Hon ble ITAT C Bench, Mumbai in ITA No.1667/Mum/2010 dated 31/10/2012 in the case of M/s. Pfyzer Ltd. Vs. Income Tax Officer(TDS), Mumbai where in facts are exactly same as that of the assessee. The relevant portion of ITAT order is reproduced as under:- 5. The learned Counsel reiterated the submission made before A.O. and CIT(A) to submit that assessee is in the practice of making provision for expenses at the end of the year as it has multifarious locations and innumerable transactions and since all the bills would not be received, without making specific entries into account of the parties, makes provisions for expenses. Next year the entire provision of expenses was written back and the actual amounts paid to the respective parties were credited to their respective accounts and TDS as per the provisions are being made. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed under section 40(a)(i)/(ia) on the basis of the audit report of the Chartered Accountant, the same amount cannot be subject to the provision of TDS under section 201(1) on the reason that assessee should have deducted the tax. If the order of AO were to be accepted then disallowance under section 40(a)(i) and 40(a)(ia) cannot be made and provisions to that extent may become otiose. In view of the actual disallowance under section 40(a)(i) by assessee having been accepted by A.O we are of the opinion that the same amount can not be considered as amount covered by the provisions of section 194C to 194J so as to raise TDS demand again under section 201 and levy of interest under section 201(1A). Therefore, assessee's ground on this issue are to be allowed as the entire amount has been disallowed under the provisions of section 40(a)(i)/(ia) in computation of income on the reason that TDS was not made. For this reason alone assessee s grounds can to be allowed. Considering the facts and reasons stated above assessee s grounds are allowed. 13.Assessee has raised one more contention that interest under section 201(1 A) should be levied till the date of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered facts of the case in hand and has gone through the judgment of Mumbai Tribunal in the case of M/s. Pfizer Centre Vs. ITO(TDS), Mumbai and also the CBDT s Circular No.03/2010 dated 2/3/2010 as cited and relied upon by the appellant and find that the facts of the present appeal is squarely covered by the above judgment of Mumbai Tribunal. So far as CBDT s Circular No. 03/2010 dated 2/3/2010 is concerned the same is applicable to banks only. However, the principle behind the said Circular tends to cover the issue involved in the present appeal. Moreover, the A.O. herself in subsequent assessment year i.e. A.Y. 2010-11 has accepted the consistent practice followed by the appellant. Taking all the above into consideration I hold that the appellant cannot be considered as assessee in default in terms of Section 201(1) as there is no identifiable payee. I therefore do not find any default in compliance of TDS related provisions by the appellant more so when the appellant has deducted and deposited TDS on the same expenses upon actual receipt of bills/invoices from the payees. Hence, ground Nos. 1,2 and 3 of the appellant are allowed. Consequently, order passed by A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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