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Case Law Details

Case Name : Biocon Ltd. Vs ITO (ITAT Bangalore)
Appeal Number : M.P. Nos. 89 & 90/Bang/2021 (in ITA Nos. 2865 & 2866/Bang/2018)
Date of Judgement/Order : 28/12/2021
Related Assessment Year : 2013-14 & 2014-15

Biocon Ltd. Vs ITO (ITAT Bangalore)

Present Miscellaneous Petitions are filed by assessee seeking rectification of typographic mistakes in order dated 14.06.2021 passed by this Tribunal in the above referred appeals.

We have perused the order passed by this Tribunal viz-a-viz the submissions advanced by both sides and the records placed before us. We note that following changes needs to be incorporated while reading the order dated 14.06.2021 as under.

At para 1 of the Tribunal order, the first para shall read as under:

Present appeals have been filed by assessee against separate orders dated 10/08/2018 and 13/08/2018 passed by the Ld.CIT(A)-3, Bangalore for assessment years 2013-14 and 2014­15 on following grounds of appeal. For sake of convenience, we are reproducing grounds for A.Y. 2013-14 as the facts are identical.”

In para 2, assessee has been regarded as a private limited company whereas, we note that assessee is a public limited company. The first line of para 2 shall read as under.

“The assessee is a public limited company engaged in the…….. ”

In para 3, the assessing officer has been recorded to be Ld.ACIT, TDS Circle 3(1), whereas from the assessment order we note that it is ITO (OSD), LTU and the same stands to be corrected as mentioned herein.

Para 7 shall read as under:

“7. Before Ld.CIT(A) assessee contended that these were end provisions that were reserved in subsequent financial year and based on invoices raised by the vendors were accounted in the books of account after deducting TDS. The assessee submitted that assessee has disallowed the said amount u/s 40(a)(ia) during the relevant period. It was also submitted that, such was a consistent approach followed by assessee from year to year basis.”

ITAT passed order rectifying typographic mistakes in its Original Order

We note that the reproduction in para 8 pertains to the observations in case of Wipro GE Healthcare Pvt. Ltd. as against the Ld.CIT(A) in assessee’s own case. The observations of Ld.CIT(A) in the case of the present assessee are different. Accordingly, henceforth para 8 shall be read as under.

“8. The Ld.CIT(A) after considering various decisions relied by the assessee decided the issue as under:

4.6 Thus similar arguments, as raised by the appellant in the case under consideration, were rejected by the ITAT. The ITAT held that since the assessee had itself made the disallowance under Sections 40(a)(i) & 40(a)(ia) of the Act in the return of income tiled, it had accepted its obligation to deduct TDS and hence could not plead that it was not “assessee in default” and therefore held the taxpayer was liable for tax deduction at source and for payment of interest on default thereof. The ITAT even held that it could not be said that there was no accrual of expenditure as per mercantile system of accounting since the payee was not identified. The ITAT held that even though there was disallowance under section 40(a)(ia) / 40(a)(i), it did not mean that provisions of Section 201 were not attracted. The ITAT held that the argument that provisions operate on income and not on payment was erroneous as the Sections 194C, 194J and 195 do not use the expression “income” but use “sum” and tax deduction has to be on “the sum paid”. Further the action of the AO in the case under consideration is on much stronger footing as complete details of the vendors as well as the amount payable to each of them was available in the audit report and as such the appellant was required to deduct tax at source on such provisions. As regards the balance amount of Rs.2,070,756/-, the same was not provision but actual expenditure and the appellant has admitted that it had failed to deduct tax at source on the same during the year under consideration and so it disallowed the same in the computation of income.”

In para 10 at page 6 of the Tribunal order, it has been recorded that the reversal of the provision happens in the subsequent year in the month of April. This from the record we note that the reversal happens as and when the bills are received and the payment is made to the payee. Accordingly, the phrase “in the month of April” is to be deleted. We also note that in the conclusion, this Tribunal referred to the provisions of section 271(c) r.w.s. 273B in order to hold that assessee cannot be construed as “assessee in default”. However, the present appeal has been filed by assessee against interest levied u/s. 201(1) of the Act. Accordingly, henceforth para 10-11 shall read as under:

10. In the present facts of the case, the provision created at the end of the accounting year has not been credited to the relevant parties to whom the payments has to be made for the reason that it was unquantifiable. Further, assessee has suo moto disallowed the said sum under section 40(a)(ia) for non-deduction of TDS. Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. It is also observed that assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year, as and when the bills are received, and the payment is made to the payee by deducting TDS. Further, admittedly, assessee has paid interest under section 201(1A) which further demonstrates there was no malafide intention. In our considered view, the provisions of TDS are not applicable where there is no claim of expenditure made by assessee and the assessee has made suo moto disallowance u/s 40(a)(ia) of the Act. We find merit in the contentions of the Ld.AR that assessee already made suo moto disallowance at the time of filing of return of income on which taxes are paid without any expenditure being claimed and also that has paid interest u/s. 201(1A), then assessee cannot be held to be “assessee in default”. Once assessee is treated to be “assessee in default” u/s. 201(1A), no interest is leviable for non-deduction of TDS.

11. The facts for A.Y. 2014-15 are identical and interest u/s. 201(1A) has been levied by the Ld.AO. The above view therefore is applied mutatis mutandis for A.Y. 2014-15 and we hold that assessee cannot be held to be “assessee in default” and no interest therefore is leviable u/s. 201(1A) of the Act for non-deduction of TDS.

Accordingly, the grounds raised by the assessee for both the years under consideration stands allowed.”

In the result, the miscellaneous petitions for both the years under consideration filed by the assessee stands allowed.

Order pronounced in the open court on 28th December, 2021.

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