Case Law Details
HT Mobile Solutions Limited Vs JCIT (OSD) (ITAT Delhi)
The case of the Revenue is that the assessee had made year-end provisions for expenses amounting to Rs.86,12,471/- on which tax was not deducted at source. The assessee was treated as ‘assessee in default’ in the sum of Rs.8,61,247/- u/s 201(1) of the Act and interest of Rs.8,00.548/- u/s 201(1A) of the Act. The ld. AO observed that the provision had been made on ad hoc basis in respect of various expenditures by the assessee.
On the contrary, the assessee’s case is that payees of these expenses are not identifiable and, hence, tax could not be deducted at source. The assessee also submitted that invoices for these expenses were received by the assessee company in the next financial year with the date falling in next financial year. Hence, these year-end provisions made by the assessee were reversed by the assessee in the next financial year and expenses were booked on receipt of invoices and at which point in time, tax had been duly deducted at source and remitted to the account of the Central Government. In respect of this year-end provision, the assessee had suo moto disallowed the expenses in the computation of its income. In these facts and circumstances, it was pleaded that the assessee could not be treated as ‘assessee in default’ u/s 201(1) of the Act and consequentially no interest could be levied u/s 201(1A) of the Act.
ITAT held that in the absence of an ascertainable amount and identifiable payee, the machinery provisions of recovering tax deducted at source falls flat because in either way, it does not aid the charge of tax u/s 4 of the Act, but, takes a form of separate levy independent of other provisions of the Act. Similar view was also taken in yet another decision of the Hon’ble Jurisdictional High Court in the case of DCIT vs. Ericcson Communications Ltd. reported in 378 ITR 395 (Del).
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