2022 (9) TMI 1358

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....(3) of the Income Tax Act, 1961 ('the Act' hereinafter) vide order dated 17/11/2009 for assessment year (AY) 2007-08. 2. The appeal raises, per its sole ground, a single issue, i.e., the disallowance for Rs. 1,43,903 u/s. 40(a)(ia) of the Act in view of the non-deduction of tax at source by the assessee on the contractual payments toward printing charges paid on packing material (jhilli) of the bidis sold by the assessee, a bidi manufacturer. The default u/s. 194-C, admitted by the assessee, the tax deductible was paid by it at the time of assessment, i.e., during F.Y. 2009-10, relevant to AY 2010-11 (pg. 6 of the assessment order). The default being admitted, the disallowance was confirmed in first appeal. Aggrieved, the assesse....

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....nserted by Finance Act, 2012, w.e.f. 01/4/2013, i.e., AY 2013-14 onwards, whereby the provision of sec. 40(a)(ia) shall not apply even where assessee fails to deduct or deposit tax deductible at source where the assessee is not deemed to be in-default under the first proviso to S. 201(1), which provision was simultaneously amended by insertion of the first proviso thereto, whereby the assessee, despite having failed to deduct tax at source in terms of Chapter-XVII of the Act, would not be deemed to be in-default where the conditions listed therein are satisfied, being toward the satisfaction of his tax liability for the relevant year on the relevant sum by the payee-deductee. The assessee has before us made out a prima facie case by exhibit....

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....red view, the same shall have a retrospective effect. This is as, though definitely a substantive provision, which would normally be applicable prospectively, the amendment only seeks to give effect to the decision by the Apex Court in Hindustan Coca-Cola Beverages Pvt. Ltd. vs. CIT [2007] 293 ITR 226 (SC), wherein it stands clarified that the recovery of the tax liable to be deducted and deposited u/c. XVII is subject to the same having been not paid direct by the payee, which in the instant case is being claimed as not applicable as the latter has no liability to tax for the relevant year, of course, after including the amount under reference paid/payable by the assessee. Further, true, the decision in Hindustan Coca-Cola Beverages Pvt. L....