AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 238
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....d. In the present appeals we are concerned with that part of the judgment which relates to section 201(1) of the Act, 1961. 4. Following substantial questions of law have arisen in these appeals : "1. Whether the Income-tax Appellate Tribunal was justified in holding the assessee, not liable for deduction of tax on the basis of judgment of the Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. The facts and circumstances of the case are different in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT. In that case there was already deduction of tax at source at 2 per cent. under section 194C while the Assessing Officer held it to be at 20 per cent. under section 194. Hence issue was not of deduction or non-deduction but difference of rate of deduction. As per section 194C of the Income-tax Act, 1961, liability of deduction of tax is on payment made by the deductor to the deductee. Positive or negative income is not a determining condition for applicability of TDS pro visions. 2. Whether the Tribunal was justified in restoring issue of applicability of section 201(1) of the Income-tax Act to the file of the Assessing Officer for verification, ....
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....rn of subsidy which was provided to SAL, they were entrusted with the job of printing of logo, colour scheme etc. on boarding card, ticket, baggage tag on board their aircraft so that the passengers travelling could know about the company. Hence, SAL has not undertaken any agreement for advertisement activity for and on behalf of the assessee-company and, therefore, section 194C was not attracted. 7. The assessee's representative relied on the Central Board of Direct Taxes' Circular No. 714 dated August 3, 1995 in respect of meaning of term "advertising", explained therein. The assessee's representative thus explained arrangement with regard to payment of subsidy towards passengers fair to SAL, in the nature of facilitation arrangement with them for branding reality project undertaken by the assessee-company. Reliance was also placed on accounting entry made in the books of the assessee as well as SAL. The assessee-company debited the aforesaid payment as : "work in progress" while in account of SAL the amount was credited under the head "passenger revenue". The assessing authority thereafter obtained copy of the original agreement dated March 30, 1995, on June 9, 20....
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....3-04 10000067JV Being entry of advertisement passed for the month of Oct.2003 31.10.2003 221,721,000 2003-04 11000048JV Being entry of advertisement passed for the month of Nov.2003 30.11.2003 229,422,900 2003-04 12000053JV Being entry of advertisement passed for the month of Dec.2003 31.12.2003 246,533,850 2003-04 1000092JV Being entry of advertisement passed for the month of Jan.2004 31.01.2004 266,269,800 2003-04 2000068JV Being entry of advertisement passed for the month of Feb.2004 28.02.2004 258,448,050 2003-04 3000117JV Being entry of advertisement passed for the month of March 2004 31.03.2004 273,186,450 2003-04 3000120JV Being entry passed for advertisement from April-03 to March-2004 31.03.2004 65,000,000 2,682,214,700 F. Year Voucher Narration of the voucher Voucher Amount in 2004-05 3000201JV Being entry of WIP of SAL PASS in SICCL 31.03.2005 2,787,243,925 F. Year Voucher No. Narration of the voucher as per general ledger Voucher |date Amount in Rs. 2....
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....00 2,85,36,523 5.00 14,26,826 - - 2,99,63,349 2003-04 268.22 crores 1.00 2,68,22,147 2.50 6,70,554 - - 2,74,92,701 2004-05 278.72 crores 1.00 2,78,72,439 2.50 6,96,811 2 5,71,385 2,91,40,635 2005-06 495.40 crores 1.00 4,94,49,584 10.00 49,54,958 2 10,90,090 5,55,94,632 2006-07 400 crores 1.00 4,00,00,000 10.00 40,00,000 2 8,80,000 4,48,80,000 17,27,80,693 1,17,49,149 25,41,475 18,70,71,317 9. Aggrieved thereto, the assessee filed an appeal before the Commissioner of Income-tax (Appeals)-III, Lucknow (hereinafter referred to as the "CIT(A)"). Various appeals in respect of the assessment years 2003-04 to 2007-08 were taken together and decided by a common order dated June 26, 2009. With respect to applicability of section 201 the assessee raised one of the grounds of limitation in respect of orders pertaining to the assessment years 2003-04 and 2004-05. The second ground was applicability of section 194C in the light of agreement dated March 30, 1995 and third ground was that the "assessee in def....
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.... that in appeals before this court only questions Nos.1 and 2 with respect to applicability of section 201(1) and validity of demand of tax raised by the assessing authority has arisen and question No. 3 relating to limitation does not arise. Therefore, we proceed to examine questions Nos. 1 and 2 ; only, whether the assessee in question can be said to be an "assessee in default" under section 201(1) and the Revenue can raise demand of tax which the assessee has failed to deduct. 14. Learned counsel for the parties did not dispute that transaction in question in respect whereto the assessee made payment to SAL was held as payment for advertisement by the Tribunal. On this aspect the matter has attained finality since that has not been disputed by the assessee by filing any appeal. 15. The liability to pay interest under section 201(1A) is subject to condition that a person is declared an "assessee in default" and not otherwise. This is the view expressed by the Supreme Court in CIT v. Eli Lilly and Co. (India) P. Ltd. [2009] 312 ITR 225 (SC) ; [2009] 15 SCC 1 following in ITC Ltd. v. CIT (TDS) [2016] 384 ITR 14 (SC). 16. In Hindustan Coca Cola Beverage P. Ltd. (supra) the ....
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....ind out the scheme of section 201. Sections 190 and 191 of Chapter XVII under which section 201 also falls need a closer scrutiny. Section 190(1) provides that tax on income shall be payable by deduction or collection at source or by advance payment. Sub-section (2) of section 190 starts with a negative injunction, i.e., 'nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4'. Sub-section (1) of section 4 as noted above, provides that charge of the Income-tax shall be on the income of a person. Sub-section (2) of section 190 clearly mandates that despite the mode and manner of col lection and recovery of tax i.e. by deduction or collection at source as envisaged under section 190(1), the charge of payment of Income-tax is on a person, whose income is to be taxed. Section 191 provides that in the case of income in respect of which provision is not made under this Chapter for deducting Income-tax at source and where Income-tax has not been deducted in accordance with the provision of this Chapter, Income-tax shall be payable by the assessee direct. Thus, both the conditions i.e.....