Assessee cannot be held in default if there is reasonable cause for non-deduction of TDS

IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH : BANGALORE

BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SMT. BEENA PILLAI, JUDICIAL MEMBER

ITA No.2865 & 2866/Bang/2018
Assessment Year : 2013-14 & 2014-15

Biocon Ltd.,
20th KM, Hosur Road,
Electronic City,
Bengaluru-560 100.
PAN – AAACB 7416 R
APPELLANT 

Vs.

The Income-Tax Officer
(TDS),
LTU,
Bengaluru.
RESPONDENT

Revenue by : Smt. R Premi, JCIT
Assessee by : Shri P.C Khincha, C.A

Date of Hearing : 06-04-2021
Date of Pronouncement : 14-06-2021

ORDER

PER BEENA PILLAI, JUDICIAL MEMBER

 Present appeals have been filed by assessee against order dated 10/08/2018 passed by the Ld.CIT(A)-3, Bangalore for assessment year 2013-14 on following grounds of appeal:

“The grounds mentioned herein below are independent and without prejudice to the other grounds preferred by the Appellant.

1. That on facts and circumstances of the case and in law, the order passed by the Learned Commissioner of Income-tax Appeals ["CIT(A)"] to the extent prejudicial to the Appellant, is bad in law and facts and liable to be quashed.

2. That on facts and circumstances of the case, the Learned CIT (A) erred in upholding the action of the Learned Assessing officer ("the Learned AO") that  tax ought to have been deducted at source in respect of year- end provisions debited to the profit and loss account.

3. That on the facts and circumstances of the case, the Learned CIT(A) erred in disregarding the submission of the Appellant that the year-end provisions are made based on fair estimates in the light of applicable accounting standards and generally accepted accounting principles and the same is an estimated liability subject to adjustments based on production of vendor invoices.

4. That on the facts and circumstances of the case, the Learned CIT(A) erred in disregarding the submission of the Appellant that such year-end provisions were reversed in the immediately subsequent month by crediting the profit and loss account and therefore income does not accrue in the hands of payee.

5. That on the facts and circumstance of the case, the Learned CIT(A) erred in disregarding the submission of the Appellant that upon crystallisation of liability, the amounts paid or credited to the payee were recorded as liabilities due to the respective parties at which point in time taxes were deducted at source.

6. That on the facts and circumstances of the case, the Learned CIT(A) erred in not accepting the Appellant's contention that the obligation to deduct taxes at source would have to be determined as per the relevant withholding tax provisions under Chapter XVJI-B of the Act. Merely because an amount is disallowed under section 40(a)(i)/(ia) of the Act, the same cannot be subject to levy of interest under section 201(1A) of the Act.

7. Without prejudice to the above ground, the Learned CIT(A) erred in not appreciating the fact that the amount suo moto disallowed by the Appellant under section 40(a)(ia) of the Act should not be further subjected to the provisions of section 201 of the Act in the hands of the deductor.

8. That on the facts and circumstances of the case, the Learned CIT(A) erred in upholding the action of the Learned AO on levy of interest under section 201(1A) of the Act.

The assessee craves leave to add, alter, vary, omit, substitute or amend the above grounds, at any time before or at the time of hearing. Each of the above grounds is independent and without prejudice to the other grounds preferred by the assessee.” 

2. Brief facts of the case are as under:

 The assessee is a private limited company engaged in the manufacture and sale/licensing of active pharmaceutical ingredients and trading of certain pharma formations. 

To know more in details find the attachment file