TaxTMI 
TaxTMI 
2025 (8) TMI 1438
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....me Tax Act, 1961 (the Act) vide order dated 23.08.2008. Subsequently, the assessment was reopened by issuing notice u/s. 148 of the Act. The reassessment was completed vide order dated 28.03.2013 passed u/s. 143(3) r.w.s. 147 of the Act after making addition of Rs. 7,33,77,497/- being the amount paid to Muthoot Pappachan Consultancy & Management (hereinafter called "MPCMS") towards professional charges/consultancy u/s. 40(a)(ia) for non-deduction of TDS. On further appeal before the CIT(A), the CIT(A) confirmed the addition. However, on further appeal before this Tribunal, the Tribunal vide order in ITA Nos. 61 & 62/Coch/2014 dated 27.06.2014 remanded the matter back to the file of AO for passing fresh assessment order in view of the order of the Hon'ble Kerala High Court in assessee's own case for 2008-09. Pursuant to the remand made by the Tribunal, the AO passed assessment order dated 30.03.2016 after making addition of Rs. 6,01,34,577/- being the payment made to MPCMS for non deduction of tax at source. 5. The factual background leading to the above addition is that during the previous year relevant to the assessment year under consideration, the appellant company paid a....
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....s argued that the MPCMS, i.e. the payee had already shown this receipts as income. Therefore, in view of the second proviso inserted by Finance Act, 2013 to section 40(a)(ia) no TDS is required to be made. 9. On the other hand, ld. CIT-DR submits that the principles of res judicata have no application to income tax proceedings simply because the claim of the assessee was accepted in earlier years does not mean that the AO is precluded from examining the same issue again and apply the correct position of law. He also placed reliance on CBDT Circular No. 715 dated 08.08.1995. Referring to the answer to question 30, he submits that tax deduction at source had to be made on the gross amount of the bills including reimbursement of expenditure. As regards applicability of second proviso to section 40(a)(ia), the appellant had not filed any application as envisaged in section 40(a)(ia) and, therefore the appellant cannot be granted the benefit of second proviso to section 40(a)(ia) of the Act. He further submits that this pleas has been taken for the first time and it cannot be entertained. 10. We have heard the rival contentions and perused the material available on record. The sol....
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....rovision is for tentative deduction of income-tax thereon subject to regular assessment and by the deduction of income-tax, rights of the parties are not, in any manner, adversely affected. Further, the rights of payee or recipient are fully safeguarded under sections 195(2), 195(3) and 197. Only thing which is required to be done by them is to file an application for determination by the Assessing Officer that such sum would not be chargeable to tax in the case of recipient, or for determination of appropriate proportion of such sum so chargeable, or for grant of certificate authorising recipient to receive the amount without deduction of tax, or deduction of income-tax at any lower rates or no deduction. On such determination, tax at appropriate rate would be deducted at the source. If no such application is filed, income-tax on such sum is to be deducted and it is the statutory obligation of the person responsible for paying such 'sum' to deduct tax thereon before making payment. He has to discharge the obligation of tax deduction at source." 12. Similar provisions are incorporated in the context of provisions of section 194C. The safeguards in the context of section ....
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....ay of interest other than income by way of interest on securities, shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section." 8. Reading of the provision shows that individuals and Hindu undivided family are excluded in Section 194A (1) and therefore, are not liable to deduct tax at source. However, by virtue of the proviso which was inserted by the Finance Act, 2002, the benefit of exclusion is restricted only to those individuals and Hindu undivided families, whose total sales, gross receipts or turnover from business or profession do not exceed the monetary limit specified under Section....
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....ITO [2014] 364 ITR 689/51 taxmann.com 426/[2015] 228 Taxman 320 (Mag.). 14. However, counsel for the appellants placed reliance on the judgment in Allied Motor (P.) Ltd. (supra). That was a case where the Apex Court was considering the scope and applicability of the first proviso to Section 43B inserted by the Finance Act, 1987, with effect from 01.04.1988. On examination of the legislative history the court found that the language of Section 43B was causing undue hardship to the taxpayers and the first proviso was designed to eliminate unintended consequences which cause undue hardship to the assessee's and which made the provision unworkable or unjust in a specific situation. Accordingly, the court held that the proviso was remedial and curative in nature and on that basis held the proviso to be retrospective in operation. In Commissioner of Income Tax (supra) also following the judgment in Allied Motor (P.) Ltd. ( supra ), the Apex Court held that provisions of the Finance Act, 2003 by which the second proviso to Section 43B was deleted and the first proviso was amended, were curative in nature and therefore retrospective. 15. A statutory provision, unless othe....