INCOME TAX ACT, 1961

Section 271C Section 273B

Penalty under section 271C - Failure to deduct tax at source - Assessee treated payment is payment in nature of share of revenue -

Assessee-university made payment to M/s. AD Educational and Research towards services provided in respect of procurement of students. AO held the payment to be in the nature of commission. Accordingly, AO levied penalty under section 271C on account of failure of assessee to deduct tax under section 194H. Assessee's case was that payment made was akin to sharing of revenues in the form of fees collected from students and not in the nature of commission liable for TDS under section 194H.Held: As apparent from terms of concerned MoU assessee has agreed to share fees as high as 50 per cent of association fees and 20 per cent of course fees with the service provider. Thus, payment in question seemed to be more in the nature of revenue-sharing, rather than payment of commission for services rendered by the service provider. Therefore, assessee could be said to be under a bona fide belief that such payment didn not call for TDS under section 194H. Also, the issue was clearly a debatable one, therefore, levy of penalty under section 271C was not justified in view of section 273B.

Followed :CIT v. Itochu Corporation 2004 TaxPub(DT) 1656 (Del-HC) : (2004) 268 ITR 172 (Del) : CIT v. Mitsui & Company Ltd. & Anr. 2005 TaxPub(DT) 0235 (Del-HC) :(2005) 272 ITR 545 (Del), Television Eighteen India Ltd. 2006 TaxPub(DT) 1144 (Del-Trib) : (2006) 101 TTJ (Del) 669

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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