TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1703
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....ssee is not an assessee-in-default, without appreciating the fact that, provision of section 40(a)(ia) of the Act is very clear that wherever there is default in payment of TDS on any amount where TDS is applicable, 30% of such amount will not be allowable as expenses in computing the income of the assessee. Further, the provisions of section 40(a)(ia) does not negate the liability to deposit the TDS once the disallowance has been made. In the instant case, the assessee itself has accepted the default and made the disallowance and the Auditor has reported the same in Tax Audit report also." 3. During the course of proceedings u/s 201(1)/201(1A) of the Act, the AO observed from Form 3CD report of the assessee that the assessee company has made payments of Rs. 7,19,84,31,935/- on account of various expenses on which tax at source was deductible under the TDS provisions of various Sections of the Act. But the assessee did not deduct the tax at source. The assessee company was asked to explain why it should not be treated as an assessee in default u/s 201(1)/201(1A) of the Act for non-deduction of tax at source on the payments related to Sections 194C, 194J and 194I of the Act.....
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.... provider was not actually quantifiable, the Company made a provision in its books on a fair estimation basis. In view of the above, the Company believes that tax is not required to be deducted at source from the amounts credited to the provision account considering the following reason and relied on various case laws. * reversal of provision in the next Financial Year * No constructive credit accrual of income in the hands of the payee under section 4 of the I.T Act Relied on Decision * ACIT V/s Motor Industries Co (2001} 249 ITR 141 ( Karnataka High Court) * Karataka power Transmission Corporation Limited V/s DCIT(TDS) (ITA. No 750 758 759 of 2009) (Karnataka High Court) * Industrial Development Bank Of India V/s ITO (2007) 107 ITD 45 (Mumbai Tribunal) * M/s Apax Partner Put Ita V/s DCIT (2017) ITA No 628 / Mum/ 2013(Mumbai Tribunal) * Aditya Birla Nava Limited v/s DCIT(2014) ITA No 8427 / Mum/2010 Mumbai Tribunal) * Mahindra and Mahindra Limited (ITA No 8597/ Mum/ 2010) Mumbai tribunal * Telco Construction Equipment Co ltd ( ITA No 478/ Bang/ 2012) Bangalore Tribunal In view of the above it....
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....ome and in the hands of the person who earns that income. Therefore, tax deduction at source mechanism can be put into practice when identity of the person in whose hands it is includible as income can be ascertained. In this case, the assessee company has already ascertained the amounts and identified the payees and thus the assessee company should have made TDS on these amounts payable. iv. The provision of section 40(a)(ia) of the Act is very clear wherein it has been mentioned that wherever there is default in payment of TDS on any amount where TDS is applicable, 30% of such amount will not be allowable as expenses in computing the income of the assessee. In your case, you have defaulted in deduction of TDS on Rs 7,19,84,31,935/-which has been claimed as expenses during the year u/s 30 to 38 of the IT Act and thus the assessee has defaulted the TDS provision. This default on assessee part makes the company "assessee in default" v. Various decisions relied by the assessee company arguing that disallowance has been made under section 40(a) (ia) of the IT Act in the computation of income is irrelevant as the assessee company has disallowed only 30% of the amounts....
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.... charge of tax u/s 4 of the Act but takes a form of separate levy, independent of other provisions of the Act. The ld. CIT (A) further observed that the AO has considered the amount of provisions as ascertainable liability on the premise that they have been disclosed in the tax audit report by the assessee. However, the AO has failed to understand that it is never disputed that the amounts have been accounted as provision made on estimated basis and credited to a separate account i.e. "Accrual General - Expenses". Hence the individual parties/vendors were not credited at the time of creating the provision. The disclosure made in the tax audit report was done to comply with the requirements of the tax audit which requires the auditor to disclose the amounts of expenses including the provision created for such expenses in relation to which no TDS has been deducted. The ld. CIT (A) accordingly deleted the impugned addition. 6. The representatives were heard at length. Case records carefully perused. 7. The business profile of the assessee is that it is into the media industry and is engaged in program production, movie production, distribution and marketing, Over the Top (OTT) p....
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....s and are booked by the Appellant following the mandatory accounting standards for casting its financial statements and are eventually reversed in the subsequent year when the Appellant receives the actual invoice for the vendors) / parties. 8. On receipt of such actual invoices and identification of parties in subsequent year, TDS is deducted and paid by the Appellant on such actual invoices." 8. The sample data entries in the books of the assessee can be understood from the following charts:- 9. Similar accounting entries are also made for marketing and advertisement expenses. It can be seen from the above sample entries against the estimate provisions, actual invoice booking in AY 2018-19 relevant to AY 2019-20 on which TDS was deducted. Therefore, the assessee cannot be treated as assessee in default for the year under consideration. The year-end provisions can further be understood from the following chart:- Particulars Rs (in crores) Provisions against which invoices were booked in FY 2017-18 (AY 2018) and TDS is deducted and paid at the time of booking of invoices 289.40 Provisions reversed immediately in the FY 2018-19 (AY 2019-20) and since, n....
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....od Mic Exos 3.00 21,170,893.50 Other Prod Mkt Exos Other Hrou Het ER R-Creplex Mktg MarlB 5 40 41010016 16 Gaming&Aps Dev. Chos 3,802, 000.00 Gaming&Aps Dev. Chgs R-Oneplex DIG Maria INR 47 831 000.00 Brod- Brow ReCrepax tidahas Trophy Mar18 041010107 Prod- Prov INR 4,172,140.00 Prod- Prov Rsh Ind GAP Mar1 6. 40 41010107 Prod- Pray 502 500:00 Prod- Popy Rsh Ind Prog Mar1 8 0 41010107 Prod- Prov INR 6,986,250.00 Prod- Prov Rish Ind Prog show MariB 10 40 4 7,500,000.00 Music nights Rsh Musk UAE Syndikation Har18 0 41010107 ProQ- PTDY INR Rsh Proo Marin , THAI AL INTI SYND REV Rah Prog Mar18 - Shiva IC 2 120 030 00 Eee-charges Balika Vadhu - Conversion -Conversion Up (13000*240) 14 40 41010107 Dred- Prov 787,500.00 Prod. Prov Rah Programming - Rasoi Show 41 41020024 3.00 21,170,893.50 Other Prod Mkt Exos Other Hrou Het ER 47 831 000.00 Brod- Brow 2 120 030 00 Eee-charges VRP (1) 300 * Corp INS Type here to search Date: 01/04/2018 (Reversal of Year-end provision at the start of the year) 14020012 Exp accruals - revrs Dr 247,831,000 41010107 To Prod- Prov C 247,831,000 i....
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.... - 6,339,156.30 Input IGST - MH 6,339,156.30 Input IGST - M 220-4101 Input JGST - MH 8 40 22044101 Input IGST - MH 9 40 22044101 Input 1GST - MH INR DIR 10 50 14035053 TO4 Ore Chn SAPY VRP (1) 300 * camp IN5 : O Type here to search Date: 06/07/2018 (Entry for payment of TDS alongwith TDS challan attached as page no.354 of FPB and copy of LWC u/s 197 is attached as page no.355 of FPB) DI 3,000,000 14035053 TDS- Prof. Serv 3,000,000 Bank A/c Cr Date: 09/05/2018 (Entry at the time of booking actual invoice for aforesaid transaction) 2013023 To LEX SPORTEL VISION PRIVATE LIM Cr 59,000,000.00 41010101 Prod. - Episode Dr 50,000,000.00 22044101 Input IGST - MH 9,000,000.00 Dr E Document Edt Goto Extras Settings Enyronment System Het . Display Document: Data Entry View 0 7 - 9 8 81Duply Omenty General Ledger View Data Entry View Document Number 1900003341 Company Code 1100 Escal Ya 2019 Document Date 04.04.2016 Posting Date 09.05.2018 Pero Reference LEX/2018-15/002 Cross-Comp.No. Currency Texts esst Ledger Group Co Im PK S Account Description Amount G/L account name 0' 1 31 2013023 LEX SPO....