Case Law Details
ITO (TDS) Vs Om Sai Ram Enterprises Ravulapalem (ITAT Visakhapatnam)
The issue under consideration is whether the penalty levied u/s 271C is justified in law?
In the present case, assessee awarded contract work and at the same time, it also supplied material to the contractor. Revenue found that the assessee passed the entries for supply of materials/payments from time to time without making TDS as required under section 194C. Accordingly, Revenue initiated penalty proceedings under section 271C for assessee’s failure to deduct tax at source and remittance to Government account.
ITAT states that, assessee was consistently following the practice of arriving the TDS liability at the end of the year since the material supplies were involved in the contract and material supply would be more than the payments to the contractor during the interim period, thus, it should not be treated as offender for non-deduction of tax at source. Further, the assessee was supplying the material to the contractor throughout the year and at the end of the year, after receiving the bills, the assessee is making the payments to the contractor duly deducting the tax at source and remitting to the Govt. account and no default is committed. There is no doubt that the assessee has duly deducted the TDS and remitted to Govt. account. Therefore, the assessee’s case is squarely covered by the case of CIT-XVIII, Delhi Vs. Bank of Nova Scotia. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
FULL TEXT OF THE ITAT JUDGEMENT
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