SAPPHIRE FOODS INDIA LIMITED,MUMBAI vs. OSD TDS CIRCLE 2(2), MUMBAI

(a)

Appeal is allowed.
(b)

The first question of law is answered in favour of assessee and against the Revenue.
(c)

In view of first question being answered in favour of the assessee, the second question does not arise for consideration.
No costs.”
6. The Ld. AR further respectfully relied on the order of co-ordinate bench of ITAT-Mumbai in the case of Viacom 18 Media Pvt. Ltd. vs. DCIT, ITA No.
961/Mum/2025 & CO No. 92/Mum/2025 date of pronouncement 09/09/2025. The relevant observation of the bench is reproduced as below:-
“10. A conspectus understanding of the facts that the various sample entries with the year-end provisions are estimated on the basis of contract with the vendors, summary of services performed/partly performed till year-end for which no invoices have been raised. Such provision entry is merely for the purpose of accruing the relevant expenditure as required by the accounting standards and are for the purpose of compliance with the provisions of Section 145 of the Act This provisions are immediately reversed on first day of next accounting year and it is clear from the reversal entry that the individual parties/vendors were not credited at the time of making provisions but the credit was made to "Accrual General - Expenses" and reversed on the first day of the next financial year. Thus, showing that the amount payable to individual vendor has not crystallized.
11. Considering the facts in totality, we do not find any error or infirmity in the findings of the Id.
CIT(A). Accordingly, the effective ground/s raised by the revenue are dismissed and the cross- examination by the assessee becomes infructuous.
12. In the result, appeal of the revenue and cross-objection by the assessee are dismissed.”
7. The Ld.DR argued and stated that the disallowance of 30% of expenses u/s 40(a)(ia) of the Act cannot restrict imposition of tax & interest u/s 201(1) / 201(1A) of the Act. So, accordingly, the Ld. DR stands in favour of the order of the revenue authorities.
8. After careful consideration of the rival submissions and perusal of the material placed on record, we are of the considered view that the addition made by treating the assessee as an “assessee in default” under section 201(1) and levy of interest under section 201(1A) of the Act, insofar as it relates to year-end provision of expenses, cannot be sustained without verification of the factual aspect regarding subsequent deduction and deposit of TDS in the succeeding year.
The assessee’s contention that no payee was identifiable at the time of making the year-end provision and that TDS was deducted and remitted upon crystallization of liability in the subsequent year is supported by judicial precedents—particularly the decision of the Hon’ble Karnataka High Court in Subex Ltd. (supra) and the co- ordinate bench decision in Viacom 18 Media Pvt. Ltd. (supra). These authorities hold that where year-end provisions are made only for accounting compliance and no payee is identified, TDS provisions do not get triggered until such liability crystallizes.
However, as the factual verification regarding ground no-3 of the appeal of the assessee related deduction of TDS in the subsequent year has not been undertaken by the revenue authorities, the matter is remanded to the file of the Ld. AO for the limited purpose of verifying whether tax was duly deducted and deposited in the following financial year in respect of the impugned expenses. The interest U/s 201(1A) of the Act is restricted only up to the date of actual payment of tax. The assessee shall be afforded adequate opportunity of hearing and to produce all necessary evidence in support of its claim. Subject to the above direction, the appeal of the assessee is allowed for statistical purposes, with other grounds adjudicated in favour of the assessee.
9. In the result, the appeal of the assessee bearing ITA No.4558/Mum/2025 is allowed for statistical purposes.
ITAs No. 4559 to 4564/Mum/2025
10. The facts and circumstances in these appeals are identical to the facts and circumstances narrated above. Therefore, the decision arrived at above against appeal in ITA No.4558/Mum/2025, shall apply mutatis mutandis to these appeals also.
11. In the result, all the appeals filed by the assessee stand allowed for statistical purpose.
Order pronounced in the open court on 07th November, 2025 (OM PRAKASH KANT)
JUDICIAL MEMBER
Mumbai, िदनांक/Dated: 07/11/2025
Pavanan
Copy of the Order forwarded to:

BY ORDER,
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(Asstt.