DCIT Vs Wockhardt Ltd. (ITAT Mumbai)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals)-12, Pune, passed under Sections 201(1), 201(1A) and 250 of the Income-tax Act. The dispute related to TDS liability on (i) discounts offered to stockists, (ii) bonus and incentives paid to stockists, and (iii) interest paid on delayed payments to Micro, Small and Medium Enterprises (MSMEs).
The assessee, a listed public limited company engaged in the manufacturing and trading of pharmaceutical products, was subjected to a survey under Section 133A(2A). Pursuant to the survey, the TDS Officer treated the assessee as an “assessee in default” under Sections 201(1) and 201(1A) by order dated 24.03.2022. The officer held that discounts paid to stockists attracted Section 194H, bonus and incentives to stockists were also liable for TDS under Section 194H, and interest paid on delayed payments to MSMEs attracted Section 194A. The order raised demands aggregating to Rs.24,34,60,660 under Section 201(1) and Rs.21,98,95,144 under Section 201(1A), besides initiating penalty proceedings under Section 271C.
The assessee challenged the order before the CIT(A). It submitted that identical issues had already been decided in its favour by the Tribunal for Assessment Year 2010-11 and by the CIT(A) for Assessment Years 2011-12 and 2012-13. It contended that there was no change in facts or law and that the rule of consistency required the same view to be followed. The CIT(A) accepted these submissions, followed the earlier decisions, allowed the grounds relating to the TDS issues, and held that the assessee could not be treated as an assessee in default. Regarding the assessee’s reliance on Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT, the CIT(A) observed that Form 26A had not been furnished during assessment and directed the assessee to make the necessary submissions before the Assessing Officer in accordance with the prescribed procedure. Consequently, the CIT(A) also deleted the consequential interest under Section 201(1A).
