Dy. CIT Vs. Aditya Construction Company India (P) Ltd. (ITAT Hyderabad)
The first proviso to section 210 (1) had been inserted to benefit the assessee. It also stated that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident had furnished his return of income under section 139. No doubt, there was a mandatory requirement under section 201 to deduct tax at source under certain contingencies, but the intention of the legislature was not to treat the assessee as a person in default subject to the fulfillment of the conditions as stipulated in the first proviso to section 201(1). The insertion of the second proviso to section 40(a)(ia) was also required to be viewed in the same manner. This again was a proviso intended to benefit the assessee. The effect of the legal fiction created thereby was to treat the assessee as a person not in default of deducting tax at source under certain contingencies.
What was common to both the provisos to section 40(a)(ia) and section 210(1) was that as long as the payee/resident had filed its return of income disclosing the payment received by and in which the income earned by it was embedded and had also paid tax on such income, the assessee would not be treated as a person in default.
