ARTEMIS MEDICARE SERVICES LIMITED,NEW DELHI vs. ACIT, CIRCLE-73(1), NEW DELHI
Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI SHAMIM YAHYA, & SHRI SUDHIR PAREEKA.YR. : 2014-15
PER SHAMIM YAHYA, AM :
The assessee filed the present appeal against the order of the Ld. Addl./JCIT(A)-4,
Kolkata dated 29.4.2024 pertaining to assessment year 2014-15 on the following grounds:-
1. That in the absence of identity to whom the credit has to be allowed in respect of TDS, the Assessing Officer has no juri iction to pass the order u/s 201 and 201(1A) of IT Act dated 26.03.2021 holding the assessee as "assessee in default", thereby creating a liability of Rs. 19,57,482/-, IS arbitrary, unjust and invalid.
2. That the Assessing Officer and the CIT (Appeals) have erred on facts and under the law in holding the assessee as "assessee in default" in respect of the provisions made at the end of the accounting year which was ultimately reversed in subsequent year and the TDS had been actually deducted based on the actual payments and consequently the creation of demand of Rs.9,56,945/- u/s 201 and interest u/s 201(1A)
Rs. 10,00,5371-, is arbitrary, unjust and bad in law.
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That without prejudice to grounds No. 1 and 2 above, the alleged TDS not deducted by the assessee cannot be recovered from the assessee under the law and consequently the creation of demand of Rs. 19,57,4821-. including interest u/s 201(1A) of IT Act thereon, is arbitrary, unjust and bad in law. 4. That the above grounds of appeal are independent and without prejudice to one another. 2. The brief facts of the case as per the assessment order are as under:- 1. The case of the above deductor was taken up for verification under section 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter referred as to 'the act) on the basis of 3CD defaults. 2. The Company M/s Artemis Medicare Services Ltd is engaged in the business of consultancy services. 3. In order to verify the compliance by the deductor assessee with reference to TDS provisions under chapter XVII B of the Income Tax Act, 1961, proceedings u/s 201(1)(1A) of the Act, was initiated by issuing notice dated 06.12.2019 to the deductor company for verification of the issue and deduction of TDS which was duly served upon the deductor company through speed post. Other notices in this regard were issued on 16.11.2020. 4. In response to the same, the assessee company has submitted the reply. Necessary details as called for have been filed and placed on record. It is observed from 3CD that no T has been deducted on amounting to Rs. 2,00,99,654/-(Rs 60,86,308/- payment to contractor and Rs 1,40,13,346/ payment to Professional). Further, the asseesee has suo-moto disallowed in the computation of income for F.Y. 2013-14. The assessee has also submitted CA certificate regarding TDS has been deducted and deposited in to Govt. Account on amount of Rs 1,05,30,197/-(Rs 62,10,541/- to contractor and Rs 43,19,566/-t0 professional payment) and the same has been allowed in the F.Y. 2014-15. 5. A show cause notice u/s 201(1)/201(1A) of the Act, for F.Y. 2013-14 was issued to the deductor assessee on 22.03.2021. The deductor assessee failed to provide requisite details in response to the show cause notice u/s 201(1)/201(1A) of the Act, dated 22.03.2021. 6. Since the assessee has deducted TDS on amount of Rs 1,05,30, 197/-(Rs 62,10,541/- to contractor and Rs 43,19,566/-to professional payment) on 3 | P a g e
03.2015 which should have been deducted on 31.03.2014. Therefore the interest u/s 201(1A) is charged which is as under:- S.No. Expenses Section TDS liability on which interest u/s. 201(1A) charge Interest u/s. 201(1A) for 13 month 1 62,10,541 194C@2% 1,24,211 16,147 2 43,19,566 194J@10% 4,31,957 56,154 Total 1,05,30,197
72,301
Further, the assessee has not deducted TDS on amount of Rs 95,69,457/- (Rs. 2,00,99,654 Rs 1,05,30,197) which have been covered u/s 194. The calculation u/s 201(1)/201(1A) of the Act, is as under: S.No. Expenses Section TDS liability on which interest u/s. 201(1A) charge Interest u/s. 201(1A) for 97 months Total 1 95,69,457 194J @10% 9,56,945/- 9,28,236 18,85,181
Accordingly, the assessee is hereby directed to pay the TDS demand of Rs 19,57,482/-(Rs 9,56,945/- u/s 201(1) of the Act and Rs 10,00,537/- u/s 201(1A) of the Act on account of Interest. In this order, only the defaults of TDS which has been noticed during the course of verification of 3CD have been dealt with. If any further default of non-deduction/non-deposit of TDS comes to notice, the same shall be dealt with in a separate proceedings u/s 201(1) the Act and u/s 201(1A) the Act. 3. Against the above order, assessee preferred appeal before the ld. CIT(A), who confirmed the order of the AO. 4. Aggrieved with the aforesaid action of the ld. CIT(A), assesee is in appeal before us. 5. We have heard both the parties and perused the records. At the outset, Ld. Counsel for the assessee submitted that the issues in dispute are squarely covered in favour of the assessee by the decision of the ITAT, Delhi ‘A’ Bench decided in assessee’s own case for the assessment year 2012-13 passed in ITA No. 554/Del/2016 alongwith CO No. 176/Del/2016 vide order dated 16.01.2024, hence, the same ratio may be followed in the instant case and the accordingly, the present appeal may be allowed. Per contra, Ld. DR did
4 | P a g e not controvert the aforesaid proposition of the Ld. AR for the assessee, but he relied upon the orders of the authorities below.
6. Upon careful consideration, we find that ITAT, Delhi ‘A’ Bench in assessee’s own case for the assessment year 2012-13 passed in ITA No. 554/Del/2016 alongwith CO No.
176/Del/2016 vide order dated 16.01.2024 has adjudicated the identical issues by observing as under:-
“10. We have heard the rival submissions and perused the materials available on record. The aforesaid facts and observations made by the ld. CIT(A) and by the ld.
AO in the remand report are not in dispute before us. Once there is a categorical finding that the assessee had not credited the corresponding liability for expenses to the account of the concerned vendors who had rendered the services, the payees become non-identifiable and hence there is no question of applicability of TDS provisions on the same. Merely because the assessee had voluntarily disallowed the expenses u/s 40(a)(ia) of the Act in the return, the same would not automatically enable the ld. AO to treat it as ‘assessee in default’ u/s 201(1) of the Act and consequentially levy interest u/s 201(1A) of the Act. In our considered opinion, the provisions of section 40(a)(ia) and section 201(1) / 201(1A) of the Act are mutually exclusive. In any case, there is no estoppel against the statute. We find that the issue in dispute is squarely addressed by the Co-ordinate Bench of Delhi Tribunal in the case of HT Mobile Solutions Limited vs JCIT (O ) in ITA Nos. 2475 &
2476/Del/2022 for Asst Years 2013-14 & 2014-15 respectively dated 22.5.2023
wherein it was held as under:-
“4. We have heard the rival submissions and perused the material available on record. The case of the Revenue is that the assessee had made year-end provisions for expenses amounting to Rs.86, 12,471/- on which tax was not deducted at source. The assessee was treated as 'assessee in default' in the sum of Rs.8,61,247/- u/s 201(1) of the Act and interest of Rs.8,00.548/- u/s 201(1A) of the Act. The Id. AO observed that the provision had been made on ad hoc basis in respect of various expenditures by the assessee. On the contrary, the assessee's case is that payees of these expenses are not identifiable and, hence, tax could not be deducted at source. The assessee also submitted that invoices for these expenses were received by the assessee company in the next financial year with the date falling in next financial year.
Hence, these year-end provisions made by the assessee were reversed by the assessee in the next financial year and expenses were booked on receipt of invoices and at which point in time, tax had been duly deducted at source and remitted to the account of the Central Government. In respect of this year-end provision, the assessee had suo moto disallowed the expenses in the 5 | P a g e computation of its income. In these facts and circumstances, it was pleaded that the assessee could not be treated as 'assessee in default' u/s 201(1) of the Act and consequentially no interest could be levied u/s 201(1A) of the Act.
5. We find that the demand has been raised on the assessee treating it as an 'assessee in default' for the following expenses:-
Nature of Expenses
Section under which tax deductible
Amount of Provision made
Amount of tax deductible
Advertisement and sales promotion exp.
194J
45,94,057
4,59,406
Legal and professional fee
194J
3,59,400 (5.00.000 -
1,40,600)
35,940
Interest on loan
194 A 36,59,014
3,65,901
Total
86,12,471
8,61,247
6. The assessee had stated that it had been regularly following the practice of making provisions for expenses for which parties are not identifiable or amounts payable were not identifiable or bills have not been received or the same have not been processed for payment/credit to the accounts of the payees, based on Accounting Standards-29 "Provisions,
Contingent Liabilities & Contingent Assets" issued by the Institute of Chartered Accountants of India (ICAI) while finalizing books of account. It is a fact on record that such provisions were made in view of accrual method of accounting followed by the assessee and the same were reversed in the books of account on the first day of the immediately succeeding year. It is not in dispute that as and when the invoices are received by the assessee in the succeeding year with date of invoice falling in the succeeding year, the same are processed for payment wherein due deduction of tax at source have been made and remitted to the account of the Central Government within the prescribed time. We find that this is a consistent practice followed by the assessee on year-to-year basis. The fact of reversal of these expenses in the succeeding year are enclosed in pages 23 to 29 of the paper book. This is not disputed by the revenue before us. The fact of the assessee deducting the tax at source in the succeeding year and remitting the same to the account of the Central Government on 02.05.2013, 30.05.2013, 05.07.2013 and 06.09.2013
are enclosed are enclosed in pages 33-37 of the paper book. We find that the issue in dispute is no longer res integra in view of the decision of the Hon'ble juri ictional High Court in the case of UCO Bank vs. Union of India reported in 369 ITR 335 wherein it was held as under:-
“18. In terms of Section 194A of the Act, the petitioner would, in the normal course, be obliged to deduct tax at source in respect of any credit or payment of interest on deposits made with it. However, in the present case, the question that needs to be addressed is whether Section 194A of the Act contemplates deduction of tax in a situation where the assessee is not ascertainable and the person in whose name the interest is credited is also, admittedly, not a person liable to pay tax under the Act.
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