Income Tax Appellate Tribunal - Bangalore
M/S Volvo India Pvt Ltd, Bangalore vs Income Tax Officer(Tds), Bangalore on 17 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, BENGALURU
BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
and
SHRI LALIT KUMAR, JUDICIAL MEMBER
ITA No.1195/Bang/2014
(Assessment year : 2012-13)
and
ITA No.474/Bang/2016
(Assessment year: 2013-14)
M/s.Volvo India Pvt. Ltd.
Yalachalahally Village,
Tavarakere Post, Hoskote,
Bengaluru-562 122. ... Appellant
PAN:AAACV6747N
Vs.
Income-tax Officer (TDS), LTU,
Bengaluru. ... Respondent
Appellant by : Shri V.K.Gurunathan, Advocate.
Respondent by : Shri M.K.Biju, JCIT(DR).
Date of hearing : 01/11/2017
Date of pronouncement : 17/01/2018
O R D E R
Per INTURI RAMA RAO, AM :
These are appeals filed by the assessee-company directed against the orders of the learned Commissioner of Income- tax(Appeals), LTU Bangalore, dated 16/04/2014 and the learned Commissioner of Income-tax(Appeals)-14, LTU, Bangalore, dated 16/12/2015 for the assessment years 2012-13 and 2013-14.
ITA No.1195/B/2014 & 474/B/2016 Page 2 of 62. Since common issue is involved, both the appeals were heard together and are disposed of by this common order for the sake of convenience.
3. Briefly facts of the case are that the assessee is a company incorporated under the provisions of the Companies Act 1956. It is engaged in the business of manufacturing and sale of tractors, trailers, bus chassis, road machinery and construction equipment. The TDS Officer had noticed that in the return of income filed for the assessment year 2012-13, the assessee-company made certain disallowances suo motu u/s 40(a)(i)and 40(a)(ia) of the Income Tax Act 1961 [hereinafter referred to as 'the Act'']. Based on this information, the TDS officer had inferred that the assessee had failed to deduct tax at source on those payments and therefore called upon the assessee-company to furnish details of payment as well as TDS remitted to the Government account. In response to the same, the assessee had furnished reply vide his letter dated 28/10/2013 along with Form 3CD, filed along with return of income, indicating the amount of disallowance. The TDS officer again issued another letter dated 07/01/2014 directing the assessee to file information party-wise and details of deduction of TDS and remittance to the Government account. The appellant had only reiterated the submissions made vide its letters dated 28/10/2013. The only submission made vide above letter is that provisions were made on ad hoc basis for the services received during the month of March and these provisions were reversed in the subsequent month i.e. in the month of April. Therefore tax was not deducted at source. The above submission of the assessee company has been rejected by the TDS officer and held the assessee as 'assessee in default' for non deduction of tax at source of on sum of Rs.4,08,80,302/- TDS amount of Rs.98,11,272/- and interest for delay in the remittance of Rs.28,55,445/- was levied vide order dated 11/03/2014.
4. Being aggrieved by the above order, an appeal was preferred before the ld.CIT(A), LTU, contending that the provisions made were in the nature of contingent liability as the identity of the recipients was ITA No.1195/B/2014 & 474/B/2016 Page 3 of 6 not known and in the absence of income in the hands of the recipient, the question of tax deduction at source does not arise. Reliance in this regard was placed in support of this on the decision of the coordinate bench in the case of IDBI vs. ITO (107 ITD 45). The ld.CIT(A) placing reliance on the decision of the Cochin Bench in the case of Agreenco Fibre Foam Pvt. Ltd. vs. ITO (35 taxmann.com 155) wherein the decision of the Mumbai bench in the case of Pfizer was Ltd., was distinguished and not followed by holding that the express provisions contained in section 194A were not considered. Further the ld.CIT(A) had not accepted the contention that provision made is only on ad hoc basis and therefore TDS provisions are not attracted, as the liability was already created for services already received by vendors in terms of contract with identified parties and the liability was also recognized in the books of account. However, ld.CIT(A) directed the TDS officer to reduce the amount of tax on TDS on the amounts on which subsequently TDS was deducted.
5. Being aggrieved by this order of the ld.CIT(A), the assessee is before us in the present appeal raising the following grounds of appeal for the assessment year 2012-13.
ITA No.1195/B/2014 & 474/B/2016 Page 4 of 66. The learned counsel for the assessee submitted that ad hoc provisions were created at the year-end in conformity with the accounting principles and no payee was identified. Therefore the question of tax deducted at source does not arise and reliance in this regard was placed on the decision of the coordinate bench of Bangalore in ITA No.3/Bang/2015 the case of M/s.TE Connectivity India Pvt. Ltd. vs. ITO(LTU)TDS (where the Hon'ble Accountant Member is the author).
7. On the other hand learned Departmental Representative placed reliance on the orders of the lower authorities and submitted that having regard to the plain provisions of section 194A, the TDS provisions are clearly applicable as the services are rendered.
8. We heard rival submissions and perused material on record. The only issue in the present appeal is whether the assessee can be held to be in default for non-compliance with the TDS provisions in the facts of present case. It is undisputed fact that the provisions are made at the end of the year in respect of which services were received and no TDS deduction was made. It is not the case of the assessee that the services were not rendered by the vendors. Therefore, it can be said that the liability had already crystallized and there exists an ITA No.1195/B/2014 & 474/B/2016 Page 5 of 6 obligation to pay this amount and no uncertainty is involved in the transaction. Once services are received by the assessee, the payee or recipients of the payments are clearly identified and therefore the contention that the payees are not identifiable cannot be accepted. Furthermore, the provisions of section 194A and 194 C which are applicable to the payments in question contains Explanation clarifying that any amount credited to any account called "payable account" or "suspense account" or by any other name in the books, the same shall constitute credit of income to the account of the payee and the provisions of TDS are applicable. The facts in the case of M/s.TE Connectivity India Pvt. Ltd.(supra) relied upon by the learned counsel for the assessee are clearly distinguishable. In that case, payees were not identifiable and provisions were made on ad hoc basis whereas in the present case, payees were identified and from the details of provisions made available before us, in the paper book, it is clear that it is not an ad hoc provision as the provisions contained odd figure also and it is also clear that the payees were clearly identified as the services were already received. Therefore, the ratio of the decision of this Tribunal in the case of M/s.TE Connectivity India Pvt. Ltd. (supra) is not applicable.
9. In the result the appeal filed by the assessee for assessment year 2012-13 is dismissed.
10. Since identical facts are involved in the appeal filed by the assessee bearing ITA No.474/Bang/2016, for parity of reasons stated in ITA No.1195/Bang/2014, the appeal filed by the assessee for assessment year 2013-14 is also dismissed.
Order pronounced in the open court on 17th January, 2018.
Sd/- sd/- (LALIT KUMAR) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Place : Bengaluru Date : 17/01/2018 Srinivasulu, sps ITA No.1195/B/2014 & 474/B/2016 Page 6 of 6 Copy to : 1 Appellant 2 Respondent 3 CIT(A) 4 CIT 5 DR, ITAT, Bangalore. 6 Guard file By order Senior Private Secretary Income-tax Appellate Tribunal Bangalore