Case Law Details
Ambience Private Limited Vs ITO (ITAT Delhi)
The case of Ambience Private Limited vs ITO, adjudicated by ITAT Delhi, revolves around the imposition of a penalty under section 271C of the Income Tax Act, 1961. The central contention pertains to the non-deduction of TDS (Tax Deducted at Source) on payments made by the assessee company, leading to a thorough analysis by the authorities.
The crux of the matter lies in the failure of the assessee to deduct TDS on payments towards directors’ sitting fees and transaction charges categorized as professional payments, contravening section 194J of the Act. However, the assessee argued a bonafide belief regarding the applicability of TDS provisions, particularly citing ambiguity in the law during the relevant fiscal year. The ITAT, upon examination, acknowledged the reasonable cause asserted by the assessee, emphasizing the absence of contumacious conduct and the subsequent tax compliance by the directors receiving payments. Notably, the ambiguity surrounding the classification of transaction charges under section 194J(1)(ba) further supported the assessee’s contention of bonafide belief, thereby negating the imposition of penalty.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal preferred by the assessee is against the order dated 25.03.2022 of the Commissioner of Income-tax (Appeal)-27, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No.CIT(A), Delhi-27/10074/2009-10 arising out of an appeal before it against the order dated 15.03.2021 passed u/s 271C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the JCIT, Range-73, Delhi (hereinafter referred as the Ld. AO).
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