TaxTMI 
TaxTMI 
2021 (4) TMI 276
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....s Court vide order dated 09.11.2018 on the following substantial questions of law: "Whether in the facts and circumstances of the present case, the ITAT was right in law in affirming the order of CIT(A) in treating the appellant as "assessee in default" under Section 201(1) of the Act for non deduction of tax at source from the amount of Rs. 8,74,32,988/- when such amount had not accrued to payee or any person at all?" 2. Facts leading to filing of this appeal briefly stated are that the assessee is a Joint Venture and is a subsidiary of Toyota Motor Corporation, Japan. The assessee is engaged in manufacturing and sale of passenger cars and multi utility vehicles. The assessee follows mercantile system of accounting and as per its....
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....tioned in the invoices was debited to the provision already made with a corresponding credit to the respective vendors account. The amount indicated in the invoices for a sum of Rs. 5,589,454/- was utilized against the provision and the TDS along with interest was also discharged at the time of credit of the invoice amount to the account of the vendor. Subsequently, the amount which remained un-utilized i.e., a sum of Rs. 8,71,32,988/- in the provision account after completion of negotiation / finalization of services was reversed in the books of accounts of the assessee. The assessee received a communication on 30.07.2013 asking it to furnish details of computations of income, audit report in Form 3CD for the year ending 31.03.2012 reflect....
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....e amounts in respect of which a provision was made and which remained un-utilized was reversed in the books of accounts as the same was not payable to anyone and therefore, no tax could be levied on an amount which was payable to anyone and did not accrue in any income. It is contended that no tax liability can be fastened on the assessee on account of an entry made in the books of accounts in the absence of any income and a machinery provision in a taxing statute has to be interpreted with reference to the taxing event. It is further submitted that in the fact situation of the case neither provision of Section 201 nor Section 201(1A) could have been invoked. However, the aforesaid aspect of the matter have been considered by the authoritie....
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....e have considered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is apposite to take note of Section 201(1) and 201(1A) of the Act, which reads as under: 201(1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax....
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....ection 200. 9. Thus, it is evident that if an assessee fails to deduct the TDS as required under the provisions of the Act, he is treated as assessee in default. Section 194C(1) of the Act mandates that a person who makes a payment to any non resident Indian, has to deduct the tax at the time of payment. Similar language is employed in Section 194J, 194H and 194I. Thus, the tax is required to be deducted at the time when the payment is made. In other words, when an income accrues under the provisions of the Act. 10. The Supreme Court in SHOORJI VALLABH DAS supra has held that income tax is a levy on income and the Act takes into account two points of time at which the liability to tax is attracted i.e., accrual of income or its rec....