DCIT TDS 2-1 Vs Pfizer Limited (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeal in ITA No. 5693/Mum/2025 for Assessment Year 2013-14 and allowed the assessee’s cross objection in CO No. 306/MUM/2025. The dispute concerned tax deduction at source on year-end provisions for expenses and the consequential levy of interest under Section 201(1A) of the Income-tax Act, 1961. Pfizer Limited, engaged in manufacturing and trading pharmaceutical drugs and medicines, was subjected to a survey under Section 133B(2) on 24.08.2018. During proceedings under Section 201(1), the Assessing Officer found that the assessee had not deducted TDS on year-end provisions of Rs.16,02,03,102/- and on stockist margins of Rs.149,20,37,573/-.
An order under Sections 201(1) and 201(1A) dated 23.03.2020 raised a consolidated demand of Rs.28,29,18,337/- for alleged non-deduction under Sections 194C, 194H, 194I and 194J. The CIT(A) allowed the assessee’s appeal by following the Tribunal’s earlier decisions in Pfizer Limited’s own case for various assessment years. Before the Tribunal, the Revenue’s appeal was confined to the issue of TDS on year-end provisions. Pfizer explained that the provisions were estimates for possible future obligations arising from services received during the year, individual payees were not available when the provisions were created, the provisions were reversed on the first day of the following year and TDS was deducted when actual invoices were received and amounts were credited or paid to the respective parties. The assessee had also suo motu disallowed Rs.16,02,03,102/- under Section 40(a)(ia).
