Income Tax Appellate Tribunal - Pune
John Deere Equipments Pvt. Ltd. vs Income Tax Officer (Tds) on 28 September, 2007
ORDER
Pramod Kumar, Accountant Member
1. The only issue raised in these appeals is whether or not the CIT(A) was justified in sustaining the impugned demands raised by the Assessing Officer (TDS) under Sections 201(1) and 201(1A) of the Income Tax Act. 1961. The relevant assessment years are 2001-02 to 2005-06.
2. During the course of hearing, it was, inter alia, noticed that there are no tax demands on the recipient of the amounts from which taxes were alleged required to be deducted, nor the authorities have invoked primary taxability in the hands of the recipient In the assessment years in question, and yet the appellant is being held to be an assessee in default in respect of non deduction of tax at source from the payments made to the recipient. When attention of the learned Departmental Representative was invited to this aspect of the matter, he submitted that the assessment of income embedded in the impugned payments has not yet reached finality and particularly so in respect of the assessment year in which the tax liability will arise. It was also pointed out that the stand of the Assessing Officer having jurisdiction over the recipient of payments, cannot, In any event, prejudice the stand of the Assessing Officer (TDS). For the reasons we shall now state, it is not necessary to go any further into facts of this case.
3. Parties ere heard and records have been perused.
4. The law is well settled that tax deduction at source liability is only a reasons liability and when primary liability itself is extinguished, vicarious liability cannot be invoked. There are a series of judgments by the Hon'ble High Courts on this line of reasoning, and now. In the racent case of Hindustan Coca Cola Beverages Ltd. v. Commissioner of Income Tax [Cass No. Appeal (Civil) 3785 of 2007; judgment 16th August 2007 source www.itatoline.org.], Hon'ble Supreme Court has approved the same proposition Those were the cases In which primary liability was discharged by the recipient. The case before us is also that there are no taxes due from the recipients in those assessment years. As a matter of facts, in the present case, the primary liability us non existent inasmuch as in these assessment years, there are no tax demands in respect of the receipt in question. The TDS liability is a proxy or vicarious liability and when the primary liability does not exist, this vicarious liability also does not survive. We, therefore, direct the Assessing Officer to cancel these impugned demands.
5. In view of the above discussions, we see no need to address ourselves to very elaborate and very (sic) contentions, on merits, of the case, by the distinguished representatives of the parties. I these issues are academic and infructous at this stage we leave it at that.
6. We, however, make it clear that the revenue authorities will be at (sic) to take up the proceedings under Section 201 afresh, after the taxability in the hands of the recipient attains finality. In the result, all the appeals are allowed in the terms indicated above. It was so pronounced in the open court upon conclusion of hearing.