2015 (10) TMI 1875 - AT - Income Tax

Tribunal directs Assessing Officer to consider tax payments by recipients in partial appeal win.

M/s Ratna Infrastructure Projects P. Ltd. Versus Deputy Commissioner of Income-Tax, Circle-15 (1), Hyderabad

M/s Ratna Infrastructure Projects P. Ltd. Versus Deputy Commissioner of Income-Tax, Circle-15 (1), Hyderabad - TMI Issues:Assessment of default in TDS provisions under sections 194A, 194C, 194H, 194I, and 194J of the Income Tax Act, 1961; imposition of interest under sections 201(1) and 201(1A) for non-compliance.Detailed Analysis:1. Default in TDS Provisions - Section 194A:The appellant, a company engaged in civil contracts, faced assessments for non-deduction of tax at source under section 194A concerning interest payments on loans for machinery and vehicles. The Assessing Officer rejected the appellant's explanation that tax was not deductible under section 194A due to hire purchase agreements, deeming them financial transactions. Consequently, the appellant was treated as in default for not deducting TDS, leading to interest charges.2. Default in TDS Provisions - Sections 194C, 194H, 194I, and 194J:Apart from section 194A, the Assessing Officer found defaults in non-deduction or short deduction of tax under sections 194C, 194H, 194I, and 194J. This additional non-compliance led to the appellant being treated as in default under section 201(1) and incurring corresponding interest under section 201(1A).3. Appellate Tribunal's Decision:Upon appeals to the CIT(A), the orders of the Assessing Officer were largely upheld, confirming the appellant's default under sections 201(1) for failure to deduct TDS as per various provisions. The CIT(A) also upheld the imposition of interest under section 201(1A). Dissatisfied with this decision, the appellant approached the Tribunal.4. Tribunal's Ruling and Directions:During the Tribunal hearing, the appellant relied on a Supreme Court case to argue that if recipients had paid taxes on the received amounts, the appellant should not be considered in default under section 201(1). The Tribunal accepted this argument and directed the Assessing Officer to allow the appellant to present evidence supporting tax payments by recipients. The Assessing Officer was instructed to reevaluate the situation based on this evidence and the Supreme Court ruling, affording the appellant a fair hearing before issuing revised orders.5. Outcome and Conclusion:Ultimately, the Tribunal partly allowed the appeals for statistical purposes, indicating a favorable stance towards the appellant's contentions. The decision was pronounced on a specified date, providing clarity on the course of action to be taken by the Assessing Officer in light of the Supreme Court precedent cited by the appellant.