August Cinema (India) Pvt Ltd Vs ITO (TDS) (Kerala High Court)
Kerala High Court held that TDS never deducted and entire amount of TDS was paid along with penal interest hence initiation of prosecution under section 276B of the Income Tax Act unjustified. Accordingly, all the proceedings quashed.
Facts- The petitioners are accused Nos.1 to 4 in CC No.637/2014 on the file of Additional Chief Judicial Magistrate Court (Economic Offences) Ernakulam. It is a complaint filed against the petitioners by the Income Tax Officer (TDS), alleging offence u/s. 276B of the Income Tax Act.
The allegation in the complaint in brief is that, when an inspection was conducted on 03.02.2012 in the premises of the accused, it was found that the accused was making various payments during 2010-11 which were liable to tax deduction at source such as fees of artists and other contracts, professional and other consultancy charges, rents etc., without deducting tax and thereby not paying Rs.11,44,375/-. Hence, it is alleged that the accused committed the offence. According to the petitioners, even if the entire allegations are accepted, no offence is made out.
Conclusion- Held that TDS were not deducted from the payment and remuneration effected during the 1st Cinema namely ‘Urumi’, produced by the Company. This happened due to ignorance. When it was pointed out by the department, the entire amount of TDS which was liable to be paid i.e. Rs.11,44,375/- along with its penal interest were paid on 14.03.2012, 28.03.2012 and 29.03.2012. Thus, there is no necessity at all to initiate prosecution u/s. 276B of the Income Tax Act. Further, also held that the petitioners never deducted tax at source. If that be the case, I think, there is force in the argument of the petitioners that Section 276B of the Income Tax Act is not attracted.
