TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 1177
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....al. 2. In this case, the assessee has taken following grounds of appeal: "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the disallowance of Rs. 3,45,174/- made by Ld. AO u/s 40(a)(ia) by holding that the appellant did not deduct Income Tax at Source (TDS) on the interest paid to NBFC(s) without appreciating that the entire amount stood "paid" during the year itself and no amount remained outstanding as on 31.03.2011. Thus, the provisions of section 40(a)(ia) are not attracted in the facts & circumstances of the case, and hence the addition of Rs. 3,45,174/- deserves to be deleted. 1.1 That, the Ld. CIT(A) has further erred in ignoring the binding order of Hon'ble Jurisdictional Benc....
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....n the case of CIT Vs. Vatika Township Ltd. reported in 267 ITR 466." 3. In this case, the assessee e-filed his return on 27/09/2011 declaring total income of Rs. 10,38,256/-. Assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) was finalized on 28/10/2013. The assessee is engaged in the business of installation and erection of mobile towers under the name and style of M/s Shree Shyam Enterprises. 4. In the ground Nos. 1 and 1.1 of the appeal, issue raised by the assessee is that the assessee had paid entire amount during the year itself, therefore, not liable to deduct TDS U/s 40(a)(ia) of the Act. At the outset of the hearing, it was made clear by the ld Sr. DR that the Hon'ble Supreme Court in the recent decision in ....
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....e expenditure. When read in this context, it is clear that Section 40(a)(ia) deals with the nature of default and the consequences thereof. Default is relatable to Chapter XVIIB (in the instant case Sections 194C and 200, which provisions are in the aforesaid Chapter). When the entire scheme of obligation to deduct the tax at source and paying it over to the Central Government is read holistically, it cannot be held that the word 'payable' occurring in Section 40(a)(ia) refers to only those cases where the amount is yet to be paid and does not cover the cases where the amount is actually paid. If the provision is interpreted in the manner suggested by the appellant herein, then even when it is found that a person, like the appellant....
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....ho follows the mercantile system. Such an assessee may have incurred the liability to pay amounts to a party. Such an assessee is also not bound to deduct tax at source unless he credits such sums to the account of the party/payee, such as, a contractor. This is clear from Section 194C set out earlier. The liability to deduct tax at source, in the case of an assessee following the cash system, arises only when the payment is made and in the case of an assessee following the mercantile system, when he credits such sum to the account of the party entitled to receive the payment. 28. The government has nothing to do with the dispute between the assessee and the payee such as a contractor. The provisions of the Act including Section 40 and th....
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....ad High Court (See V.M. Salgaocar & Bros. (P) Ltd. v. Commissioner of Income Tax, (2000) 243 ITR 383 and Supreme Court Employees Welfare Association v. Union of India, (1989) 4 SCC 187. 18) In view of the aforesaid discussion, we hold that the view taken by the High Courts of Punjab & Haryana, Madras and Calcutta is the correct view and the judgment of the Allahabad High Court in CIT v. Vector Shipping Services (P) Ltd., (2013) 357 ITR 642 did not decide the question of law correctly. Thus, insofar as the judgment of the Allahabad High Court is concerned, we overrule the same. Consequences of the aforesaid discussion will be to answer the question against the appellant/assessee thereby approving the view taken by the High Court." 5. In v....