https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769696 https://www.taxtmi.com/caselaws?id=769696 Demand u/s 201 & 201(1A) - "assessee in default" for non-deduction of TDS on certain expenses/ - HELD THAT:- We note that the facts remain admitted that no expenditure incurred by the assessee as on 31.03.2015. The provision was made on the basis of estimation relating to supply of services and goods by the vendors. The facts and circumstances of the case clearly show that no invoice is received by the assessee from the vendors and no payment was made to the vendors towards services and supply of goods rendered by the vendors as on 31.03.2015. The provision was created by the assessee is only an estimation basis taking into account the quantum of services and supply of goods by the vendors. On an examination of the tabular form, which, clearly demonstrate the facts of the case in detail, which is not disputed by the Revenue, therefore, in this regard, we find the facts and circumstances, as referred by the ld. AR, in the case of Biocon Ltd. [2022 (4) TMI 795 - ITAT BANGALORE] are similar and identical. The assessee received invoices from the vendors to an extent of Rs..24,76,17,968/- only, meaning thereby the provision created was in excess by Rs..3,11,71,303/- [Rs..27,87,89,271 - Rs..24,76,17,968/-]. When the payment is made, the provision for expenses account shall be debited with Rs..24,76,17,968/-, which will leave a credit balance of Rs..3,11,71,303/- in the provisions for expenses account. This remaining credit balance is transferred to profit and loss account. Accordingly, the provision for expenses account is shown NIL balance and there is impact on the profit and loss account of the succeeding year by way of income of Rs..3,11,71,303/-. Short deduction of TDS on the excess provision - We find force in the arguments of the ld. AR that no interest could be imposed on excess provision, which remained unpaid. Further, we note that the said excess provision was transferred to profit and loss account and admittedly, there is an impact on the P & L account in the succeeding year. Therefore, we find when the said excess provision is not paid to any vendor and there is no recipient to the said amount, when there is impact on P & L account by way of income, in our view, the Assessing Officer, holding short deduction and levying interest on such short deduction is not justified. Therefore, we hold that there is no short deduction under section 201 of the Act and the interest under section 201(1A) calculated at 1% per month on such short deduction of TDS for a period of 85 days on the amounts which remained unpaid is not justified and it is deleted. Thus, the grounds concerning the issue under section 201/201(1A) of the Act is allowed. Interest u/s 201(1A) imposed on the situation i.e., the actual payment made in the succeeding year is less than the provision amount - We note that admittedly, actual payment was made less than the amount of provision made. There is no doubt the TDS was deducted by the assessee at the time of credit or at the time of making actual payment to the vendors of the assessee. We find, since the yearend provision was made as on 31.03.2015, the date on which TDS was deductible shall be on 31.03.2015. Thus, the assessee is liable to pay interest from that date to the date of actual deduction/payment as per the provisions of section 201(1A) of the Act on the amount of actual payment made. In the present case, as already discussed above, the provision of Rs..27,87,89,271/- was made as on 31.03.2015 and actual payment was made to an extent of Rs..24,76,17,968/-. Therefore, the liability to deduct TDS shall be on the amount of actual payment only. In this scenario, following the order of Biocon Ltd. [2022 (4) TMI 795 - ITAT BANGALORE] we hold the tax liability upon the recipient will be on the amount to extent of Rs..24,76,17,968/- and accordingly, the TDS liability also on the said amount actually paid and interest under section 201(1A) of the Act is liable to be paid on Rs..24,76,17,968/-. Case-Laws Income Tax Wed, 22 Jan 2025 00:00:00 +0530