INCOME TAX ACT, 1961

Section 194C r/w Section 194J

Tax deduction at source under section 194C or 194J - Short deduction of TDS - Allegation that higher rate of tax was required to be deducted under section 194J -

Assessee was engaged in the marketing and distribution of home video VCDs and DVDs, etc. Upon perusal of various TDS returns filed by assessee for assessment year 2006-07, it was alleged that on certain transactions, though higher rate of tax was required to be deducted under section 194J, tax was deducted at lower rates under section 194C. Therefore, assessee committed a default for not deducting TDS at proper and applicable rates and hence to be treated as assessee-in-default under section 201(1) / 201(1A). In the absence of any satisfactory details forthcoming from assessee, the details of alleged default transactions were tabulated by AO against five parties. Held: As per the directions of CIT(A), remand proceedings were initiated against assessee which were duly responded to by AO. In remand report, a finding was rendered by AO that charges paid to the aforesaid parties would rightly fall under section 194C and therefore, the TDS was correctly deducted. The fact of remand proceedings was well elaborated by assessee before CIT(A) in its submissions wherein the attention was brought to the fact that assessee's submissions during remand proceedings were considered, deliberated and verified by AO and a finding was rendered that TDS was deducted at correct rates under section 194C. Therefore, CIT(A) had erred in not considering the findings rendered by AO in the remand proceedings wherein it was clearly stated that tax was correctly deducted under section 194C.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2006-07 to 2009-10

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