DCIT Vs Wockhardt Limited (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided the Revenue’s appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Year (AY) 2016-17. The appeal arose from an order passed by the Income-tax Officer (TDS) under Sections 201(1) and 201(1A) of the Income-tax Act, 1961.
A survey under Section 133A(2A) was conducted at the assessee’s premises on 14.02.2017 to verify compliance with the TDS provisions contained in Chapter XVII-B of the Act. During the survey, certain discrepancies were noticed, leading to scrutiny proceedings. Thereafter, the Assessing Officer determined a total liability of Rs.53,60,41,868, comprising Rs.28,11,99,937 under Section 201(1) and Rs.25,48,41,931 as interest under Section 201(1A).
The Assessing Officer treated the assessee as having defaulted in deducting tax at source in relation to three categories of payments:
- Discounts allowed to stockists, alleging they constituted commission liable to TDS under Section 194H.
- Bonus and incentive payments made to stockists, contending that such payments, being granted subsequent to sales, were in the nature of commission covered by Section 194H.
- Interest provided on delayed payments to Micro, Small and Medium Enterprises (MSMEs), contending that since the assessee itself described the expenditure as interest, tax was deductible under Section 194A.
The assessee challenged the order before the CIT(A). It submitted that there had been no change in either the facts or the law from earlier assessment years and therefore the principle of consistency should be followed. It also relied upon decisions of the ITAT and CIT(A) in its own case for AYs 2010-11 to 2015-16, wherein identical issues had been decided in its favour.
