TDS Default-Assessee liable us 2011A for interest even if payee declared income and paid taxes. ITAT amends order in line with Supreme Court judgment

TDS Default-Assessee liable us 2011A for interest even if payee declared income and paid taxes. ITAT amends the order in line with Supreme Court judgment.

ABCAUS Case Law Citation:
943 2016 (06) ITAT
Date of Judgment/Order June 2016

Brief Facts of the Case:
A TDS survey was conducted in the premises of the assessee and it was found that TDS was not deducted on contract payment, rent and on professional charges and the TDS assessments were completed accordigly. Aggrieved by the order, the assessee preferred appeals before the CIT(A) who held that payments made to advertising agencies were liable to TDS and directed the A.O. to compute the TDS liability if the amount exceeds the threshold limit for that particular assessment year. Aggrieved by the decision of the CIT(A), the assessee preferred appeals before the ITAT. The ITAT  by order dated 18-09-2014 remitted the matter to the AO with direction to verify as to whether the payee has declared the respective income and paid tax thereon and if so, the assessee shall not be held as ‘the assessee in default’ for the purpose of invoking provisions of section 201 and 201A. 

The appeal in the subject, has been preferred by the Revenue pointing out that the observation of Tribunal directing the AO not to treat the assessee in default for the purpose of section 201(1A), if the payee has declared the respective income, is not in line with the decision of Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd., vs. CIT (2007) 293 ITR 226 (SC). 

The ITAT observed that a mistake had occurred in the order of Tribunal dated 18.09.2014 in and replaced the para no. 13 of the judgment.

Extract from ITAT Judgment:

……… we replace para No.13 which shall read as follows :

13. Hence, we remit the matter to the Assessing Officer to verify as to whether the payee has declared the respective income and paid tax thereon and if so, the assessee shall not be held as “the assessee in default” for the purpose of invoking provisions of section 201(1). However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee. Further, from the details at para 6.3 produced at page 6 of the CIT(A) order, we find from the payments made towards advertisement the following do not exceed Rs.20,000.