DCIT Vs Viacom 18 Media Pvt. Ltd. (ITAT Mumbai)
Year End Provisions Not Equal to TDS Liability- TDS Triggered Only on Crystallized Liability, Says ITAT
The dispute arose when AO, during proceedings u/s 201(1)/201(1A), noticed from Form 3CD that Viacom 18 Media Pvt. Ltd. had made year-end provisions amounting to ₹719.84 crores towards expenses falling u/s 194C, 194J, 194I & 194H. AO held that though final invoices were not received, liability had already been accounted & therefore TDS ought to have been deducted. Treating Assessee as “assessee-in-default”, AO computed a demand of ₹45.96 crores (tax & interest).
Assessee contended that the provisions were merely general estimates credited to “Accrual General – Expenses” & not to any specific vendor. Since the exact quantum of liability & identity of payees were uncertain at year-end, TDS obligation could not arise. It was further submitted that these provisions were reversed on the first day of the following year & actual invoices were subjected to TDS at the time of booking. Assessee also pointed out that disallowance u/s 40(a)(ia) had already been offered in computation. Reliance was placed on several judicial precedents including Motor Industries Co. (Karnataka HC, 249 ITR 141), IDBI (107 ITD 45, Mumbai Tribunal) & Mahindra & Mahindra Ltd. (Mumbai Tribunal).
