The Tax Publishers2019 TaxPub(DT) 2932 (Pune-Trib)

INCOME TAX ACT, 1961

Section 271C

Once assessee was held to be not in default and demand was cancelled under section 201(1), then penalty imposed under section 271C for such default also failed and did not survive.

Penalty under section 271C - Failure to deduct tax at source - Non-survival of default under section 201(1) -

In the instant appeal revenue challenged the order of CIT(A) deleting the penalty imposed under section 271C. AO had held assessee-in-default in not deducting tax out of payments made, under section 201(1), for purchase of software license and for availing other related software. Held: The Tribunal in Capgemini Technology Services India Ltd. v. DDIT [ITA No. 2182/PUN/2014] : 2019 TaxPub(DT) 2502 (Pune-Trib)] held that payments made by assessee for use of software were not taxable as royalty and therefore, assessee had not defaulted in not deducting tax at source out of such payments. Consequently, there was no merit in raising the demand under section 201(1) and charging interest under section 201(1A). Similar stand was in respect of subscription charges, etc. Once assessee was held to be not in default and demand cancelled under section 201(1), penalty levied under section 271C for such default failed.

REFERRED : Capgemini Technology Services India Ltd. v. Dy. DIT [ITA No. 2182/PUN/2014] : 2019 TaxPub(DT) 2502 (Pune-Trib)

FAVOUR : In assessee's favour

A.Y. :



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