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TMI Blog2017 (1) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction and is silent about the details and evidences furnished by Appellant) when the complete details were filed during appellate proceedings. 3. That the ld.CIT(A)/AO erred on facts and in law in holding that tax ought to have been deducted at source on provision for conference expenses amounting to INR 4,00,00,000/-. 3.1 That the ld.CIT(A) erred on facts and in law in not appreciating that the parties to whom conferences expenses were to be paid were not identifiable at the time of making provision and hence tax could not have been deducted at that point of time. 3.2 Without prejudice to the above, the ld.CIT(A)/AO erred on facts and in law in treating appellant as an 'assessee in default' when the provision was reversed in subsequent year and tax was deducted on actual expenses booked in accounts whereof resulting in double taxation. 4. That the ld.CIT(A) has erred on facts and in law in holding that tax ought to have been deducted at source on provision for business development initiative expenses amounting to INR 1,25,61,825/-. 4.1 That the ld. CIT(A)/AO erred on facts and in law in not appreciating that expenses relating to business development initiative were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on year end provision on commission paid to selling agents for clearing & forwarding amounting to INR 3,85,812/-. 8.1 Without prejudice to the above, the ld.CIT(A)/AO erred on facts and in law in treating appellant as an 'assessee in default' when the provision was adjusted on the basis of actual expenditure incurred in the subsequent year and tax was deducted on actual expenses booked in accounts whereof resulting in double taxation. 9. That the ld.CIT(A)/AO erred on facts and in law in levying interest under section 201(1A) of the Act. 10. That the ld.CIT(A)/AO erred on facts and in law in charging an ad-hoc rate for computing alleged liability on deducting tax at source in respect to the year end provision." 3. At the time of hearing before us, it was admitted by both the sides that the grounds raised by the assessee in its appeal in ITA No.3216/Del/2015 are identical to the grounds as raised in ITA No.3215/Del/2015. 4. The facts of the case are that a TDS survey was conducted by the ACIT, TDS Circle, Gurgaon on 5th August, 2011 at the premises of the assessee company at Gurgaon. Thereafter, the summons were issued u/s 131 of the Income-tax Act, 1961 asking for details/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07] 293 ITR (AT) 267 (Mumbai). 7. Learned DR, on the other hand, stated that when the assessee made the provision, he claimed the deduction for the expenditure in this year. Provision can be made only when the liability is an ascertained liability. Therefore, the assessee cannot claim that the payee in respect of whom the liability is created is unidentifiable. He further stated that as per provision of Section 194C(2), the tax is to be deducted at source where any sum is credited to any account whether called suspense account or by any other name in the books of account of the person liable to pay such income. Therefore, when the assessee made the provision in its books of account, the liability of TDS arose. In support of this contention, he relied upon the decision of ITAT, Cochin Bench in the case of Abad Builders (P) Ltd. Vs. ACIT - [2014] 43 taxmann.com 128 (Cochin-Trib). 8. We have carefully considered the submissions of both the sides and have perused the material placed before us. The limited dispute before us is whether the assessee can be said to be in default for not deducting the TDS in respect of a provision made at the year end. Learned DR has relied upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erable. The assessee could not be expected to know as on March 31 who would own the bonds on May 15 of that year. The Explanation to section 193 could not be applied because the payee was not known at the stage of provision for "interest accrued but not due" being made. The fiction embodied in the Explanation was only applicable in situations in which tax deduction liability is sought to be evaded by crediting interest to an account other than that of the recipient of interest. The bonds being transferrable by simple endorsement and delivery and the relevant registration date being a date subsequent to the closure of books of account, the assessee could not have ascertained the payees made. Accordingly, no tax was required to be deducted at source in respect of the provision for interest payable made by the assessee. Taxes having been duly deducted at source at the time of payment, on June 9, 1994, there was no loss of revenue as such. When there was no obligation to deduct tax at source, there was no question of levy of penalty or interest." 10. Learned counsel has also relied upon the decision of ITAT, Chennai Bench in the case of Dishnet Wireless Ltd. (supra), wherein the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that the payee may not be identified may not be justified. The exact facts need to be examined. However, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. In other words, the Assessing Officer has to examine whether the payment to the party /payee is identifiable on the last day of financial year and whether the quantum payable by the assessee is also quantified on the last date of financial year. In case, the Assessing Officer finds that the payee could not be identified on the last day of financial year and the amount payable also could not be ascertained, the assessee may not require to deduct tax in respect of that provision. However, in case the payee is identified and quantum is also ascertainable on the last day of the financial year, this Tribunal is of the considered opinion that the assessee has to necessarily deduct tax at source. Since the details are not available on record, the orders of the lower authorities are set aside and the issue of year-end provision is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the issue afresh as indicated above and thereafter decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given to such person. When the payee is not identifiable, to whose account the credit for such TDS is to be given. Section 203(1) lays down that for all tax deductions at source, the tax deductor has to furnish a certificate to the person to whose account such credit is to be given. Therefore, when the tax deductor cannot ascertain the payee who is the beneficiary of a credit of tax deduction at source, the mechanism of Chapter XVII-B cannot be put into service. In view of the above, we, respectfully agreeing with the views of ITAT Chennai Bench in the case of Dishnet Wireless Ltd. (supra), set aside the orders of authorities below on this point and restore the matter to the file of the Assessing Officer for both the years under consideration. We direct the Assessing Officer to verify whether the payee is identifiable and the amount payable to him is ascertainable. Then the assessee would be required to deduct tax at source in respect of such provision. However, in case payee is not identifiable, the provision of Chapter XVII-B i.e., tax deduction at source, cannot be pressed into service and, therefore, the assessee is not required to deduct tax at source in such a case. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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