Case Law Details
Toyota Kirloskar Motor (P) Ltd. Vs ITO (Karnataka High Court)
The Supreme Court in SHOORJI VALLABH DAS supra has held that income tax is a levy on income and the Act takes into account two points of time at which the liability to tax is attracted i.e., accrual of income or its receipt but substance of the matter is the income. It has further been held that if the income does not result at all, there cannot be a levy of tax even though in book keeping entry is made about a hypothetical income which does not materialize. The High Court of Delhi in Ericsson Communications Ltd. supra has also taken a view that in the absence of any accrual of income, there is no obligation on the part of the assessee to deduct tax at source. Similar view has been taken by various other High Court’s including this court.
In the light of aforesaid well settled legal position, we may advert to the facts of the case on hand. In the instant case, the provisions were created during the course of the year and reversal of entry was also made in the same accounting year. The Assessing Officer erred in law in holding that assessee should have deducted tax as per the rate applicable along with interest. The authorities under the Act ought to have appreciated that in the absence of any income accruing to anyone under the Act, the liability to deduct TDS on the assessee could not have been fastened and consequently, the proceeding under Section 201 and 201(1A) could not have been initiated. For the aforementioned reasons, the substantial question of law is answered in favour of the assessee and against the revenue.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2012-13. The appeal was admitted by a bench of this Court vide order dated 09.11.2018 on the following substantial questions of law:
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
