TaxTMI 
TaxTMI 
2016 (5) TMI 1228
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....e heard altogether and are being disposed off by this common order. Since the identical grounds have been taken by the revenue in all its appeals, hence, for the sake of convenience, we take the ITA No.5053/Mum/2013 as a lead case. The revenue has taken as many as 10 grounds of appeal. 3. Ground Nos.1 to 3 are relating to non-deduction of tax at source on year end provision. 4. Brief facts relating to the issue under consideration are that the assessee is engaged in the business of manufacturing and trading of pharmaceuticals, chemicals and animal health products. A survey under section 133A of the Act was conducted by the AO at the premises of the assessee on 8th September, 2008 and it was found that assessee had not deducted TDS in respect of accrued liabilities for which provisions were made in the profit and loss account. As a result of which, the proceedings u/s.201(1)/201(1A) were initiated against the assessee. During the course of the proceedings u/s.201(1)/201(1A) submissions were made by the assessee from time to time. Pursuant to the same and after considering the assessee's submissions, the AO passed the impugned orders u/s.201(1)/201(1A) of the Act raising demand....
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....ility was crystalised or the payments were made and even when the assessee himself had disallowed the entire amount in the computation of income upon which no TDS was deducted, in that event proceeding u/s.201(1) and the levy of interest u/s.201(1A) was not justified. Relevant observation made by the Tribunal for the sake of convenience are reproduced as under :- 11. In view of the above decision of coordinate bench, since the payee is not identifiable in this case also at the time of making provision, no TDS need to be made on the above amount. Further the entire provision has been written back in the next year and the actual amounts paid/credited were subjected to TDS as per the detailed statements filed before the authorities on which there is no dispute. Therefore, assessee is following the provisions of TDS as and when the amounts are paid/credited to respective parties. 12. As already explained and evidenced from the computation of income as well as the orders of AO in the assessment proceedings, the entire provision has been disallowed under section 40(a)(ia) and section 40(a)(i). Once the amount has been disallowed under the provisions of section 40(a)(i) ....
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...., the grounds No.1 to 3 in the appeals of the revenue relating to disallowance made on account of nondeduction of TDS on year-end and provision are hereby dismissed. 8. Ground Nos.4 to 8 are relating to non-deduction of tax at source on purchase of traded goods and packing material. We find that this issue is also covered by the decision of Tribunal in assessee's own case for the assessment year 2007-08, wherein the Tribunal has decided the issue in favour of the assessee observing as under :- 14. As briefly stated above, AO raised demand on 1.purchase of traded goods, 2.purchase of packing material and 3.clinical trials. The order of the CIT (A) on the three issues are as under: 1. Finished/Traded Goods: "11. I have carefully considered the facts of the case, various agreements with third party, submission and legal propositions made by the Appellant. From the agreement it is clear that the assessee has exercised right for quality specification and quality control as agreed by the third party. This is common practice in pharma industries, wherein the purchaser of traded goods purchases goods only when it is up to their quality requirement. Further fro....
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....nd is allowed". 3. Clinical Trials "15. I have gone through the facts of the case and submissions of the appellant. As far as the appellant's contention that the above expenditure of Rs. 11,35,14,000/- includes an amount of Rs. 3,66,90,204/- on which TDS is not deductible on the following grounds: a) Purchase of various materials. b) Expenditure on food and travelling c) Availability of tax exemption certificate d) Payment of regulatory fees. Prima facie TDS is not deductible on all the four items mentioned above. However, this particular break up has not been provided to AO. I therefore, direct AO to verify the above break up given by the appellant. If the above break up of expenditure given by the appellant is found to be correct, then I hold no TDS is required to be deducted on the above payments. AO is directed accordingly". With regard to balance expenditure amount of Rs. 7,68,21,907/- is concerned, the appellant has deducted TDS of Rs. 42,45,914/- on the same. However, it is seen that payment in question is in the nature of professional fees. In order to carry out clinic trial, the person who carries out ....