Transcript PRESENTATION ON TAX DEDUCTION AT SOURCE - ICAI

TAX DEDUCTED AT SOURCE
CA. SUDHIR BAHETI
12 JUNE 2010
1
INDEX
 Introduction
 Payments covered
under the scheme of TDS.
 Provisions for filing
Returns to the Income Tax
Department.
 Effects of Tax Evasion
Introduction
To avoid cases of tax evasion, the Income-Tax Act has made
provisions to collect tax at source on accrual of income. Cases
included in the scheme are, generally, those where income can
be computed at the time of accrual of income. Under this
scheme, persons responsible for making payment of income
covered by the scheme are responsible to deduct tax at source
and deposit the same to the Government’s treasury within the
stipulated time. The recipient of income—though he gets only
the net amount (after deduction of tax at source)—is liable to
tax on the gross amount and the amount deducted at source is
adjusted against his final tax liability. The details of the scheme
of tax deduction and collection at source are briefly discussed in
this presentation. To conclude one can say that the scheme of
TDS is only payment of tax on adhoc basis by the payer of
income on behalf of recipient.
Setps for TDS
TAN
• Every deductor is required to obtain a
unique identification number called TAN
(Tax Deduction Account Number) which is
a ten digit alpha numeric number. This
number has to be quoted by the deductor in
every correspondence related to TDS
Tax Deduction & Collection Account Number
Every person deducting tax or collecting tax should
obtain a tax deduction & collection number
Such person should quote such number in every
challan for payment u/s 200 or 206C(3), in every
certificate furnished u/s 203 or u/s 206C(5)
In all the TDS returns delivered
In all other documents pertaining to such transaction
as may be prescribed in the interest of revenue.
Payment covered under the scheme of TDS.
 Salary (Sec.192)
 Interest on Securities (Sec.193)
 Dividends (Sec.194)
 Interest other than Interest on Securities (Sec.194A)
 Winnings from Lotteries or crossword puzzles (Sec.194B)
 Winnings from Horse Races (Sec.194BB)
 Payments to Contractors and Sub-contractors (Sec.194C)
 Insurance Commission (Sec.194D)
 Payment to Non-resident sportsmen or sports association
(Sec.194E)
 Payment in respect of NSC (Sec. 194EE)
Contd…
Payment covered under the scheme of TDS.
 Payments in respect of Repurchase of units of Mutual
Funds or UTI (Sec.194F)
 Commission on Sale of Lottery Tickets (Sec.194G)
 Commission or Brokerage (Sec.194H)
 Rent (Sec.194I)
 Fees for Professional or Technical Services (Sec.194J)
 Payment of Compensation on acquisition of certain
immovable property (Sec.194LA)
 Other Sums (Sec.195)
 Long term capital gain (Sec.196B)
 Income or Long term capital gain from Foreign Currency
bonds/Global Depository Receipts (Sec.196C)
 Income of Foreign Institutional Investors from Securities
(Sec.196D)
Contd…
Salary (Sec.192)
Who is the payer
Employer
Who is the recipient
Employee
Payment Covered
Taxable Salary of the employee
At what time TDS to be deducted
At the time of payment
Maximum amount which can be paid
without tax deduction
The amount of exemption limit
(i.e.,Rs.160000/190000/240000 for A.Y.
2011-12)
Rate at which tax to be deducted.
As per Calculation
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
The employee can make application in
Form No.13 to the Assessing Officer to get
the certificate of lower tax deduction or no
tax deduction.
Interest on Securities (Sec. 193)
Who is the payer
Payer of interest on securities
Who is the recipient
A resident person holding securities
Payment covered
Interest on securities
At what time TDS to be deducted.
At the time of payment or at the time of
credit, whichever is earlier
Maximum amount which can be paid
without tax deduction
Rs. 2500
Rate at which TDS to be deducted
10%
When the provisions are not applicable
Interest on Central/State Government
securities
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make application to the
Assessing Officer in Form No. 13 or
declaration to the payer in Form 15G or
15H as applicable
Dividends (Sec. 194)
Who is the payer
Domestic company
Who is the recipient
Resident shareholder
Payment Covered
Deemed dividend under section 2(22)(e)
At what time TDS to be deducted
At the time of payment
Maximum amount which can be paid
without tax deduction
Rs.2500
Rate at which TDS to be deducted
20%
When the provisions are not applicable
Dividend covered by section 115-O
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make application to the
Assessing Officer in Form No. 13 or
declaration to the payer in Form 15G or
15H as applicable
INTEREST OTHER THAN INTEREST ON
SECURITIES (Sec 194A)
Who is the payer
Any person paying interest other than interest
on securities
Who is the recipient
A Resident person
Payment covered
Interest other than interest on securities
At what time TDS to be deducted.
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid without
tax deduction
If payer is banking company, co-operative
engaged in banking business or Rs 10000/- if
Payer is any other person Rs 5000/-
Rate at which TDS to be deducted
10% if the recipient is resident non-corporate
assessee and 20% if the recipient is resident
corporate assessee
When the provisions are not applicable
If the payee are Insurance companies or
financial institutions including co-operative
societies etc.
Is it possible to get the payment without tax
deduction or with lower tax deduction
Declaration to the payer in Form 15G or 15H
as applicable
Winnings from Lotteries or Crossword Puzzles
(Sec. 194B)
Who is the payer
Any person paying winnings from
lotteries/crossword puzzles/card games/other
games
Who is the recipient
Any Person
Payment covered
Winnings from lotteries/crossword
puzzles/card games/other games
At what time TDS to be deducted.
At the time of Payment
Maximum amount which can be paid without
tax deduction
If the amount payment is Rs. 10000/- or less
than Rs. 10000/-
Rate at which TDS to be deducted
30%
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
Not Possible
Winnings From Horse Races (Sec. 194BB)
Who is the payer
Any person paying winnings from horse
races
Who is the recipient
Any person
Payment covered
Winnings from Horse Races
At what time TDS to be deducted.
At the time of payment
Maximum amount which can be paid
without tax deduction
If the amount of payment is Rs. 5000/- or
less than Rs. 5000/-
Rate at which TDS to be deducted
30%
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
Not Possible
Payments to Contractors And Sub-contractors
(Sec.194C)
Who is the payer
Specified person
Who is the recipient
A resident person
Rate of TDS
2%
Payment Covered
Consideration for any Work Contract
At what time TDS has to be
deducted
At the time of payment or at the time of credit
Maximum amount which can
be paid without tax deduction
The tax is required to be deducted if a single payment exceeds
Rs. 30000/- or if the aggregate payments exceed Rs. 75000/per annum
Is it possible to get the
payment without tax
deduction or with lower tax
deduction
The recipient can make application to the Assessing Officer in
Form No. 13
Insurance Commission (Sec.194D)
Who is the payer
Any person paying insurance commission.
Who is the recipient
A resident person
Payment covered
Insurance Commission
At what time TDS to be deducted.
At the time of payment or at the time of credit
whichever is earlier
Maximum amount which can be paid without
tax deduction
If the amount of payment is Rs. 20000/- or
less than Rs. 20000/-
Rate at which TDS to be deducted
10% if the recipient is resident non-corporate
assessee and
20% if the recipient is resident corporate
assessee
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make an application in
Form No. 13 to the Assessing Officer to get
the certificate of lower tax deduction or no tax
deduction.
Payment to Non-resident sportsmen or
sports association (Sec.194E)
Who is the payer
Any person making payment to non-resident
sportsman/sports association
Who is the recipient
Non-resident sportsman/sports association
Payment covered
Payment to non-resident sportsman/sports
association
At what time TDS to be deducted.
At the time of payment or at the time of credit
whichever is earlier
Maximum amount which can be paid without
tax deduction
Nil
Rate at which TDS to be deducted
10%+ Education cess etc and Surcharge as
applicable
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
No Provision
Payments in respect of NSC (Sec.194EE)
Who is the payer
Post Office
Who is the recipient
Any Person
Payment covered
Payment (Principal+Interest) out of National
Saving Scheme, 1987.
At what time TDS to be deducted.
At the time of payment
Maximum amount which can be paid without If the amount of payment is Rs.2500 or less
tax deduction
than Rs.2500
Rate at which TDS to be deducted
20%
When the provisions are not applicable
The payment is made to legal heirs of the
deceased depositor
Payments on account of repurchase of units of Mutual Funds
or UTI
(Sec. 194F)
Who is the payer
Mutual Fund or UTI
Who is the recipient
Unit holder under section 80CCB
Payment covered
Payment on account of repurchase of units
referred to in section 80CCB
At what time TDS to be deducted.
At the time of payment
Maximum amount which can be paid without
tax deduction
--
Rate at which TDS to be deducted
20%
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
No Provision
Commission on Sale of Lottery Tickets
(Sec.194G)
Who is the payer
Any person paying commission of sale of
lottery tickets
Who is the recipient
Any person
Payment covered
Commission on sale of lottery tickets
At what time TDS to be deducted.
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid without
tax deduction
If the amount of payment is Rs. 1000 or less
than Rs. 1000
Rate at which TDS to be deducted
10%
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make an application in
Form No. 13 to the Assessing Officer to get a
certificate of lower tax deduction or no tax
deduction
Commission or Brokerage (Sec.194H)
Who is the payer
Any person paying commission or
brokerage
Who is the recipient
Any resident person
Payment covered
Commission or brokerage (not being
insurance commission)
At what time TDS to be deducted.
At the time of payment or at the time of
credit, whichever is earlier
Maximum amount which can be paid
without tax deduction
If the amount of payment is Rs. 5000 or
less than Rs. 5000
Rate at which TDS to be deducted
10% (up to may 31, 2007 : 5%)
When the provisions are not applicable
--
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make an application in
Form No.13 to the Assessing Officer to get
a certificate of lower tax deduction or no tax
deduction
Rent (Sec.194-I)
Who is the payer
Any person paying rent (not being an individual
or HUF whose books of account are not
required to be audited under section 44AB in the
immediately preceding financial year)
Who is the recipient
A Resident Person
Payment covered
Rent
At what time TDS to be deducted.
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid
without tax deduction
Rs. 180000/-
Rate at which TDS to be deducted
For Plant and Machinary Rent 2% and for
For Use of and Land or Building including
Furniture etc.
Individual Huf 10%
For any other 20%
Is it possible to get the payment without
tax deduction or with lower tax
deduction
The recipient can make application in Form No.
13
Fees for Professional or Technical Services
(Sec.194J)
Who is the payer
Any person paying professional charges (not
being an individual or HUF whose books of
account are not required to be audited under
section 44AB in the immediately preceding
financial year)
Who is the recipient
Any Person
Payment covered
Professional services, technical services,
Royalty,
At what time TDS to be deducted.
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paid
without tax deduction
If the amount of payment during the financial
year is Rs. 30000 or less than Rs. 30000
Rate at which TDS to be deducted
10%
Is it possible to get the payment without
tax deduction or with lower tax deduction
The recipient can make application in Form No.
13
Provisions for Filing Returns
Different Payments
In case the person deducting tax is a
company or a Government
department or a person whose books
are required to be audited u/s. 44AB
in the immediately preceding year or
in whose case number of deductees
in any of the quarterly statements in
the immediately year is 20 or more
In case the person
deducting tax is
any other person
Time-limit for submission
of return by the person
deducting tax
Salary
Form No. 24Q in Electronic format
and Form No. 27A
Form No. 24Q
Within 15 days from the
end of each quarter (31st
May in case of last
quarter)
Payment (other
than salary) to a
resident
Form No. 26Q in Electronic format
and Form No. 27A
Form No. 26Q
Within 15 days from the
end of each quarter (31st
May in case of last
quarter)
Payment (other
than salary) to a
non-resident
Form No. 27Q in Electronic format
and Form No. 27A (quarterly)
Form No. 27Q
(quarterly)
Within 15 days from the
end of each quarter (31st
May in case of last
quarter)
Issue TDS Certificates Sec. 203
Sr.
No.
Form no
Periodicity Cut off Date
1
16 For
Salary
Annual
2
16A Other Quarterly
than
salary
31st May of following financial
year
Within 15 days from due date
of furnishing the TDS
statement under rule 31A
Dates for Payment of TDS
Deductor
For MARCH
For April to February
Government On or before 7th
of next month for
salary
On the same day for other than
salary & on or before 7th of
next month for salary
Other than
On or before 30th
Government April
On or before 7th of next month
Special
Cases
30th April
Quarterly payment on or before
7th of the month succeeding
quarter
Furnishing of quarterly returns for payment of interest
to residents without Deducting Tax (Sec. 206A)
• Banking company, Cooperative societies, &
Public Companies shall furnish quarterly
return to department in respect of payments of
Interest (other than Interest on Securities) in
any computer readable media.
Collection of Tax
Who is the payer
Seller
Who is the recipient
Buyer
Payment covered
As per Details in next slide
At what time TDS to be Collected.
At the time of receipt or at the time of
debiting the account, whichever is earlier
Maximum amount which can be paid
without tax collection
Nil
Rate at which TDS to be deducted
As per Details in next slide
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make an application in
Form No. 13 to the Assessing Officer to get
a certificate of lower tax deduction or no tax
deduction
Rates for Collection of TAX
Effects of Evasion of TDS (Sec 201)
Sr.
No.
Reasons
Effects
1.
Non deduction
of TDS
The expenditure for which TDS to be
deducted gets DISALLOWED & penal interest
@1% for every month or part of month from
the date on which such tax was deductible to
the date of deduction
2.
Non payment of
TDS
The expenditure for which TDS deducted but
not paid gets disallowed
3.
Less deduction
of TDS.
The amount less deducted is required to be
paid by the deduct or along with penalty
4.
Late Payment of The deductor should have to pay penal interest
TDS
@1.5% for every month or part of month
from date of deduction to the date of
payment.
Penal Provisions
Practical Issues
Based on TDS Proceedings
Contents
Uniform deduction of tax
Exempt allowances
Payments by way of adjustment
Contract for Sale – Printing Charges
Contractor & Sub contractor payments
Reimbursement to C & F Agents
Reimbursement under Agency
Element of Agency
Rent on Plant & Machinery
Regular Contract vis-à-vis Rate Contracts
33
Contents
Internet Connectivity charges – Technical Services?
Reimbursement of Expenses
Tax paid by Payee – non/short deduction
Time Limit under section 201
34
Case Study 1
FACTS
• An assessee employer is liable to deducted tax at source
under section 192.
• Deduction of tax of the employees was not uniform
during the year; very negligible in the initial months and
high amount in the last months.
• AO passed order levying interest under section 201(1A)
on the grounds that tax was not properly deducted.
35
Case Study 1
ISSUES
• Whether the Assessing Officer has rightly levied
interest on non-uniformity of TDS deducted?
CASE LAWS
 Vinsons v. ITO, 89 ITD 267 (Mum)
 Grasim Industries Ltd. v. ITO, 92 TTJ 944 (Jodh)
 Secy. Board Of Secondary Education, Rajasthan v. ITO, 93
TTJ 256 (Jaipur)
36
Case Study 2
FACTS
• The assessee company (employer) deducted tax
under section 192 treating leave travel expense
as exempt on the basis of declarations filed by
the employee.
• The assessee did not obtain any documentary
evidence to treat LTA as exempt.
• AO passed order under section 201(1) treating
‘assessee in default’ having regard to nonverification of travel payments proof.
37
Case Study 2
ISSUES
• Is the AO’s order justified in treating the assessee as
‘assessee in default’ and levy interest u/s 201(1A)?
CASE LAWS
 DCIT v. HCL Infosystems Ltd. 282 ITR 263
 Savani Financials Ltd. v. ITO, 1 SOT 111
 Lintas India Ltd. v. Ass. CIT, 5 SOT 310
 DCIT v. Excel Industries Ltd., 5 SOT 235
38
Case Study 3
FACTS
• G Ltd is a construction company engaged in the
business of construction etc.
• At the initiation of the job work, the client provides G
Ltd. some interest bearing ‘mobilization and plant
advance’, which is to be repaid by the end of the
contract along with interest.
• G Ltd. submits the running account bills on monthly
basis depending on the completion of contract.
• Against this the client recovers the principal + interest
amount and thus G Ltd. does not actually pay any
interest.
• Since no direct payment of interest made, NO TDS 39
Case Study 3
ISSUES
• Is the contention of assessee correct?
• Whether tax is required to be deducted at source
under section 194A- ‘Interest other than interest
on securities’?
• What are the other implications of such nondeduction?
CASE LAWS
 Raymond Limited V. DCIT 86 ITD 791.
40
Case Study 4
FACTS
• Assessee engaged in business of imports and/or exports,
engages services of Clearing & Forwarding agents.
• Payments to such C&F agents comprise of the following:

Reimbursement of freight paid to shipping companies or airlines.
 Reimbursement of freight on local transportation.
 Reimbursement of import or export clearing expenses like
payments to Port Trust, Airport Authorities of India,
miscellaneous charges, etc.
 Reimbursement of bonded warehousing charges.
 Reimbursement of Customs duties and Octroi.
 Reimbursement for Crane and Machinery charges to Port Trust
etc.
 Agency service charges.
41
Case Study 4
ISSUES
• Whether any tax is liable to be deducted on any of the
above payments to C&F agents?
• If the agent has already deducted TDS on freight payment
to the Indian Shipping Co., then whether the
importer/exporter also needs to deduct tax on the
payments made to the agents and if so then on what
amount?
• When C&F agent deduct tax and pays it to the exchequer,
the payment would be on his own TDS account or his
clients’ account number?
42
Case Study 4
CASE LAW
 CIT v. Industrial Engineering Projects Pvt.
Ltd., 202 ITR 1014 (Del.)
 CIT v. Dunlop Rubber Co. Ltd, 142 ITR 493
(Cal.)
 Raymond Ltd. 86 ITD 791 (Mum.)
 Associated Cement Co. Ltd.(SC) 201 ITR 435
43
Case Study 5
FACTS
• The assessee is a pharmaceutical company, engaged in
manufacturing and selling business.
• It procures packing material like plastics wrappers,
containers, cardboard boxes etc from the vendors
(manufacturers) as per assessee’s desired specifications
viz. brand name, name & address, designs, trademarks etc.
• Similarly, payments are also made to printing and
stationary vendors who supply printed letterheads,
business cards, sales and other printed literature where the
printing is done as per the assessee’s specifications.
• Vendor’s charge excise duty and sales tax on such items.
44
Case Study 5
ISSUES
• Whether TDS is required to be deducted under
section 194C for payments made as printing
charges?
CASE LAWS
 BDA Ltd. v. ITO (TDS), 281 ITR 99 (Mum.)
45
Case Study 6
FACTS
• G Ltd. is engaged in the business of engineering
and construction.
• G Ltd enters into execution of construction
contracts.
• G Ltd has made certain payments for carrying out
certain ancillary work undertaken for the purpose
of executing the above contracts.
46
Case Study 6
ISSUES
• Whether the payments made by G Ltd should be treated as
payments for main contract or as sub-contract for
deduction of tax at source u/s 194 C?
CASE LAWS
 Datta Digamber Sahakari Kamgar Sanstha Ltd. V. ACIT
83 ITD 148 (Pune)
 ITO V. Rama Nand & Co. And Others 163 ITR 702 47
Case Study 7
FACTS
• Assessee, a Govt. establishment procured milk from
various Sanghs etc and sold it in the market through milk
centres run by the appointed agents.
• Agents sold the goods at the price fixed by the assessee.
• Assessee used to reimburse these agents @ Re.0.90 per
litre towards transport cost, container cost and chilling
charges.
• Assessee had given the nomenclature as Commission for
such payments.
• AO held to deduct tax u/s 194H as payments for
commission.
48
Case Study 7
ISSUES
• Is the said transaction based on ‘principal-agent’
relationship?
• Whether any TDS is required to be deducted u/s 194H?
CASE LAWS
 Government Milk Scheme v. ACIT [2006] 98 ITD 306
49
Case Study 8
FACTS
• B Ltd is engaged in the business of providing cellular
mobile telephone services through its distributors.
• It sold SIM and other pre-paid cards at a fixed rate [below
market price] to such distributors for ultimate sale to
customers.
• As agreed, all rights, title, ownership and property rights
in such cards would all time vest with B Ltd.
• Assessee claimed such price difference as discount
allowed and not as commission defined in Expl. u/s 194H
• AO treated it as default and levied interest under section
201(1) and 201(1A).
50
Case Study 8
ISSUES
• Is the AO’s claim justified in treating it as
commission?
• Whether provisions of section 194H gets
attracted??
CASE LAWS
 ACIT v. Bharti Cellular Ltd. 105 ITD 129 (Cal.)
 Hindustan Coca-Cola Beverages (P.) Ltd. v. ITO
[2005] 97 ITD 105 (Jp.)
51
Case Study 9
FACTS
• X Ltd. is in the business of running a call centre.
• Contract is entered with transport contractor for
transporting the employees of X
• X Ltd. uses the bus or van and such other means of
transport for this purpose.
• The payments made by X Ltd to transport contractor are
fixed hire charges .
• TDS is deducted by X u/s 194 C.
• AO is of the view that payments are in nature of ‘rent’
under section 194I, as defined by Tax Law Amendment,
2006.
52
Case Study 9
ISSUES
• Is the stand taken by the AO is correct?
CASE LAW & REFERENCE
 Circular No. 558 dated 28.3.1990
53
Case Study 10
FACTS
• PQR Ltd., the assessee, is engaged in the business of
providing airline services.
• Co. frequently requires hotel rooms for accommodation of
its pilots and crew members.
• Co. books rooms and makes payments for hire of rooms.
• PQR Ltd. has entered into ‘rate-contracts’ with some and
with others the nature of contract is such that hotels are
under an obligation to provide accommodation to PQR Ltd.
• TDS is deducted under section 194C.
54
Case Study 10
ISSUES
• Is PQR Ltd. required to deduct tax under section 194I or whether the co. is justified in deducting under
section 194C?
CASE LAWS
 Krishna Oberoi and another v. UOI [2002] 257 ITR
105 (AP)
 Circular No. 5/2002 dtd. 30-7-2002, 194I does not 55
Case Study 11
FACTS
• G Ltd. is a manufacturer.
• Company has made payments to an Indian entity towards
the Internet connectivity, Vo-Data card charges and Domain
registration charges.
• No TDS is deducted on such payments made.
• Company has a view that the payments made are not in
terms with ‘payment for technical services’ as covered
under section 194J.
• However, CCIT treats the payments made as ‘fees received
for providing technical services’ and deduct tax at source.
56
Case Study 11
ISSUES
• Is G Ltd correct in its stand that the payments made to
providers of internet connectivity, facility of Vo-Data
card or domain registration charges are out of the
purview of ‘fees for technical services’?
• Whether TDS should be deducted on such payments?
CASE LAW
 Skycell Communications Ltd (251 ITR 53) [Mad.]
57
Case Study 12
FACTS
• The invoice raised on the assessee was inclusive of
professional charges and service tax thereon and
reimbursement of actual expenses.
• No TDS deducted on the reimbursement of expenses.
• Under ‘any sum paid’ as referred to in Sec.194J,
reimbursement of actual expenses cannot be deducted out of
the bill amount for the purpose of tax deduction. [Circular:
No. 715 dtd. 8-8-1995]
• AO relied on CBDT circular and levied interest u/s
201(1A).
58
Case Study 12
ISSUES
• Whether TDS will be deductible on gross value of bill or
on net?
• Will the answer be different if separate bills are raised for
both?
CASE LAW
 ITO v. Dr. Willmar Schwabe India (P) Ltd. , 3 SOT 71.
59
Case Study 13
FACTS
• A Ltd., the assessee, entered into a lease agreement with
B Ltd. for taking premises on lease with a separate
agreement on hire of furniture.
• A Ltd. fails to deduct tax at source under section 194-I
on the lease payments made to the payee.
• However B Ltd. while filing his return of income
declared the said receipt of income and paid taxes
thereon.
• Assessing officer issued notice under section 201(1) &
201(1A) levying interest for non deduction of TDS.
60
Case Study 13
ISSUES
•
•
•
•
Whether the AO can issue such a notice on A Ltd.?
If yes, is he liable to pay tax?
If not, is he liable to pay interest?
If yes, what is the period for which interest is payable?
CASE LAWS
 CIT v. Adidas India Marketing Pvt. Ltd. , 288 ITR 379
 CIT v. Rishikesh Apartments Co-op Housing Soc. Ltd.
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253 ITR 310,316 (Guj.)
Case Study 14
FACTS
• A Ltd. delayed in depositing the tax deducted at
source into Government’s account for the
assessment years 1988-89 to 1996-97.
• For the above stated Ass. yrs. the Assessing Officer
passed orders dated 25.5.2000 levying interest under
section 201(1A) on the grounds of such delay.
• The assessment and other proceedings for all those
years has been completed much earlier.
• Appeal was filed by A Ltd. saying no such interest
could be levied after lapse of such a long time.
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Case Study 14
ISSUES
• Whether in absence of the prescribed time limit for
initiation and completion of proceedings under the Act,
initiation of proceedings should be within reasonable time?
• What can be the reasonable time period of levy of interest
under section 201(1A) for delay in deposit of TDS?
• Whether AO can levy/order interest u/s 201(1A)?
CASE LAWS
 Raymond Woollen Mills Ltd. 57 ITD 536 (Mum.)
 Century Textiles & Industries Ltd. 13 SOT 507 (Mum.)
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Questions?
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Thank You!
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