INCOME TAX ACT, 1961

Section 201(1A)

Interest under section 201(1A) - Leviability - Assessee not deducted tax on basis of NIL certificate produced by payee -

Assessee-company received Nil rate certificate from telecommunication company and did not deduct tax at source in accordance with the same. Subsequently, TDS Officer cancelled the Nil rate certificate. However, assessee came to know about this cancellation only in the end by which time payments were already made by assessee to the payee without deducting tax at source. Upon receipt of the intimation about the withdrawal of exemption certificate, assessee then recovered tax at source at the normal rate of 10% from telecommunication company in relation to the payments made to them and paid the same to the Government and furnished TDS certificates to the payee. Meanwhile telecommunication company filed a writ petition on such abrupt withdrawal of the TDS exemption certificate. However, AO levied interest under section 201(1)(A) for delay in remittance of TDS. Held: It was not in dispute that TTML filed Writ Petition No. 2701 of 2017 before High Court who quashed the order passed by AO withdrawing the exemption certificate issued to assessee for NIL deduction of TDS. By virtue of the order of High Court quashing the withdrawal order passed by the TDS Officer, certificate issued by AO for NIL rate of tax got revived whereby the position prior to cancellation of the certification was restored. Further, in view of a fresh certificate issued for NIL TDS and was applicable for the period 28-4-2017 to 31-3-2018 NIL certificate got revived and the question of deduction of TDS would not arise and in that case there cannot be any delay. Thus, AO was directed to delete the interest levied under section 201(1A).

Relied:Tata Teleservices (Maharashtra) Ltd. v. DCIT & Ors. 2018 TaxPub(DT) 0667 (Bom-HC)

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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