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TMI Blog2016 (7) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... and applying the ratio laid down in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA) as per the amended provisions of the Act, no tax is to be deducted out of such payments, where the payee has included the said receipts as part of its income. Merely because the net income in the hands of such an entity is exempt from tax does not mean that since no tax has eventually been paid by the payee, the said second proviso to section 40(a)(ia) of the Act is not attracted. - Decided in favour of assessee. - ITA Nos.1225 & 1226/PN/2016 - - - Dated:- 29-7-2016 - MS. SUSHMA CHOWLA, JM Appellant by : Shri M.K. Kulkarni Respondent by : Shri Hitendra Ninawe ORDER PER SUSHMA CHOWLA, JM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance made by invoking the provisions of section 40(a)(ia) of the Act at ₹ 4,48,873/-. 5. Briefly, in the facts of the case, the assessee was a private limited company and for the year under consideration, the Assessing Officer had issued notice under section 148 of the Act. In response to which, the assessee pointed out that the return of income filed on 04.09.2006 may be treated as filed in response to notice under section 148 of the Act. The reasons for reopening the assessment in this case were on account of violation of provisions of section 40(a)(ia) of the Act. The assessee had paid / debited sum of ₹ 3,14,406/- on account of interest loan raised from Phaltan Traders Co-op. Credit Society and similar issue also arose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below and pointed out that the assessee has failed to produce any evidence that the income of credit cooperative societies is not taxable. 9. On perusal of record and provisions of the Act, admittedly, second proviso has been inserted under section 40(a)(ia) of the Act by the Finance Act, 2012. Under the said second proviso, it is provided that in case the payee paid the taxes on aforesaid receipts, then the assessee in such circumstances cannot be held to be in default for non-deduction of tax at source out of such payments. The Courts in this regard have held that the amendment proposed by the Finance Act, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of its income. Merely because the net income in the hands of such an entity is exempt from tax does not mean that since no tax has eventually been paid by the payee, the said second proviso to section 40(a)(ia) of the Act is not attracted. The Hon ble Supreme Court in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT (supra) had held as under:- 10. Be that as it may, Circular No. 275/201/95-IT(B) dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares no demand visualized under section 201(1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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