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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 ..... II-B workable. Tax deducted at source is considered to be tax paid on behalf of the person from whose income the deduction was made and, therefore, the credit for the same is to be given to such person. When the payee is not identifiable, to whose account the credit for such TDS is to be given. Thus we set aside the orders of authorities below on this point and restore the matter to the file of AO for both the years under consideration 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. The Assessing Officer will readjudicate the issue afresh after examining the above facts. Needless to mention that he will allow adequate opportunity of being heard to the assessee while giving effect to our order. - ITA No.3215/Del/2015 & 3216/Del/2015 - - - Dated:- 10-1-2017 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.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. 5. That the ld.CIT(A)/AO grossly erred on facts and in law in holding that tax ought have been deducted at source on provision for business development conferences amounting to INR 5,00,00,000/-. 5.1 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 reversed/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. 6. That the ld.CIT(A)/AO grossly erred on facts and in law in holding that tax ought have been deducted at source on provision for product publicity expenses outside India amounting to INR 4,58,14,000/-. 6.1 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201(1A) holding that it failed to deduct the TDS in respect of provisions made under several heads of income amounting to ₹ 15,07,25,637/-. Accordingly, the demand u/s 201(1) was raised at ₹ 1,04,02,197/- and also interest u/s 201(1A) at ₹ 38,48,924/-. The details of the provisions of various heads of income and alleged nondeduction of tax is as under :- Head of provision Amount Date of provision Amount of TDS demand u/s 201(1) Delay in months Interest amount Demand u/s 201(1A) Misc. Expenses conference expenses 4,00,00,000 31.03.10 40,00,000 @ 10% 37 14,80,000 Business development initiative (reimbursement to dealers) 1,25,61,825 31.03.10 2,51,236 @ 2% 37 92,957 Business development conference 5,00,00,000 31.03.10 50,00,000 @ 10% 37 18,50,000 Product public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 decision of Cochin Bench of ITAT in the case of Abad Builders (P) Ltd. (supra), wherein the learned Members of the ITAT held as under :- 6.2 A careful reading of the provisions of sec. 194C would show that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract, shall deduct the tax at source either at the time of credit of the same to the account of the contractor or at the time of payment thereof, whichever is earlier. It is further provided in Explanation 2 of sec. 194C, which existed at the relevant point of time, that the said TDS liability would arise even if the amount is cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 held as under :- 24. Now coming to the issue of year-end provisions, the contention of the assessee is that it is engaged in various services like address verifications, credit certification, content development etc. The assessee claims that provisions are made on estimation basis since it is not identifiable as to what amount has to be paid to the service providers. In case of new service connections, the assessee has to necessarily verify the customers' address and identification. The claim of the assessee is that in the last month of the financial year, it is not known how many customer verifications have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 decide the issue in accordance with law after giving reasonable opportunity to the assessee. (emphasis by underlining supplied by us) 11. We have carefully considered the submissions of both the sides including the decisions relied upon by them. As per the scheme of Chapter XVII-B of the Income-tax Act, 1961, there is a provision for deduction of tax at source. Ordinarily, the deduction is to be made at the time of payment or the credit of the amount to the account of payee. However, as per provision of Section 194C(2), the tax is to be deducted even if the amount is not credited to the account of the payee but to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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