TaxTMI 
TaxTMI 
2006 (1) TMI 470
X X X X Extracts X X X X
X X X X Extracts X X X X
....ancial year 2001-02. These appeals arise out of the order passed under section 201 and 201(1A) of the Income-tax Act. 2. The appellant is a partnership firm. It is an accredited media agency engaged in the business of production of audio/video serials, films, compaign materials or works. For the financial year 1999-2000 the appellant filed return of Tax Deducted at Source (TDS) in Form Nos. 26C and 26K. On examination of such return of TDS filed by the appellant, the Assessing Officer noticed that the appellant had paid a sum of Rs. 47,94,842 to M/s. Teletrack Advertising Bombay (TAB) Pvt. Ltd. and it had deducted TDS on such payment at 2 per cent plus surcharge under the provisions of section 194C of the Act. The Assessing Officer was o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act. 4. On appeal by the appellant apart from the other submissions, the submissions of the appellant was that TAB had already submitted their return of income and had paid full tax on the amount received from the assessee. Since the payee had already paid the tax, the payer could not be treated as an "assessee in default" and CBDT has admitted this position in Circular No. F.No. 275/201/95-IT(B), dated 29-1-1997. It was submitted that the plea is supported by the decision of the ITAT, Madras Bench in the case of Crescent Housing (P.) Ltd. v. ITO [2002] 80 ITD 317 and of the Mumbai Bench of ITAT decision in the case of ITO v. Manav Greys Exim (P.) Ltd. [2002] 75 TTJ (Mum.) 115. 5. On the question whether the payment fell within the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 194J of the Act. Provisions of section 194C are confined to work contract and professional services have been specifically covered under section 194J of the Act. In view of this position, I find no force in the contention of the appellant that it could have a bona fide belief that such payments were covered under section 194C of the Act as it was not possible to have more than one opinion on the issue and the cases of KLM Royal Touch and Hero Honda Motors (supra) cited by the appellant could only apply, if more than one interpretation was reasonably possible." 6. On the plea regarding the payment of tax by TAB, the payee and consequent discharge from liability on the part of the appellant as an "assessee in default", the CIT(A) h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e as Explanation to section 191 inserted by Finance Act, 2003 w.e.f. 1-6-2003 is not applicable to the default committee by the assessee for earlier years." 9. Aggrieved by the order of the CIT(A) holding the appellant to be an "assessee in default" under section 201(1) of the Act and upholding charging of interest from the date on which tax ought to have been deducted till the payment of tax by the deductee, the appellant has preferred the present appeal. 10. None appeared on behalf of the appellant i.e., the person responsible for deducting tax at source. We have heard the submissions of the ld. DR. We are of the view that the present appeals can be decided on the question as to whether in the case where the recipient of the payment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in these appeal also. In the case of Crescent Housing (P.) Ltd. v. ITO [2002] 80 ITD 317 (Mad.), the Hon'ble Madras Bench of the ITAT, it has been held that in the event of payment of tax by the recipient (i.e., the payee from the appellant) no further demand could be raised on the person responsible for deducting tax at source. The aforesaid decision related to the financial years 1996-97 and 1997-98. In the said decision even in respect of interest under section 201(1A) it was held that it could be levied only till the date of payment of tax by the payee from the appellant. Even prior to inserting of Explanation to section 191 Courts have taken a view that in a case where the payee pays the tax the payer i.e., the person responsible for....