Legal Reference Library

In ACIT v. M/s.Nokia Siemens Networks (P) Ltd, the Delhi ITAT held that assessee cannot be treated as Assessee-in-Default for Late payment of TDS due to system and connectivity issues at the bankers’ end. In the instant case, assessee was held as assessee-in-default for delay in deposit of TDS. Assessee maintained that the amount of TDS was debited from the bank account of the assessee on the due date i.e. 7.10.2009 and the delay in deposit of such tax by a day was on account of system and connectivity issues at the bankers’ end, which were beyond the control of the assessee. On appeal, the first appellate authority held in favour of assessee. However, it confirmed the levy of interest for late payment of TDS. Both the assessee and the Revenue preferred appeals against the order. Before the Tribunal, the Revenue contended that the first appellate authority erred in holding in favour of the assessee in view of the decision of the Supreme Court in the case of CIT Vs. Ogale Glass Work...

In The New India Assurance Co.Ltd. v. Hussain Babulal Shaikh, Petitioner-New India Assurance Company Limited filed instant petition challenging order passed by learned member of Maharashtra Accident Claims Tribunal, whereby an application of Respondent No.1 for issuance of warrant of attachment against Petitioner in execution of an award, for not depositing part of award amount, on ground that, same has been deducted as “tax deducted at source” (TDS), stands allowed. Issue which falls for consideration of the Court is 'whether the Petitioner would be justified in deducting tax at source (TDS) in respect of interest payment made under the award of the Tribunal. As per Section 194A of Income Tax Act, 1961, when any person not being an individual or Hindu undivided family who becomes responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall at time of credit of such income to the account of the payee or at the time o...

The Madras High Court has said compensation awarded by the Motor Accident Claims Tribunal or the interest accruing therein cannot be subjected to tax deducted at source (TDS). A civil revision plea was filed by the Managing Director, Tamil Nadu State Transport Corporation (Salem) Limited, Dharmapuri, against an order passed by Additional District Judge, Fast Track Court, directing the corporation to deposit the amount deducted as TDS to the MACT claimant. The Hon'ble court said that compensation awarded by the Motor Accident Claims Tribunal, and interest accruing thereon, is to ameliorate the sufferings of the victims and does not have the character of "income". If there is a conflict between a social welfare legislation and a taxation legislation, the social welfare legislation will prevail since it subserves larger public interest. Article referred: http://www.financialexpress.com/article/personal-finance/accident-compensation-cannot-be-subjected-to-tds-madras-hi...

“Reasonable cause” for the purpose of application of Section 271C in the backdrop of Section 273B has been explained by the Hon’ble Delhi High Court in the case of Woodward Governors India (P) Ltd. Vs. CIT (2002) 253 ITR 0745 to mean a probable cause, an honest belief founded on reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautious man, placed in the position of the person concerned to come to the conclusion that same was the right thing to do. The cause should not be found to be frivolous, without substance or foundation.

The Supreme Court in ITC LIMITED GURGAON vs. COMMISSIONER OF I.T. (TDS) DELHI, has categorically held that ‘tips’ received by Hotel employees does not amount to ‘salary’ from their employer and hence the employer need not deduct the tax at source under Section 192 of the Income Tax Act, though the same would be chargeable in the hands of the employees as“income from other sources”. Section 192 of the Income Tax Act states that any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the [rates in force] for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. Receipt of the tips by Hotel employees was treated by the Assessing officer as income under the head “salary” in the hands of the various employees and held that the assessee were liable to deduct t...

Income Tax — Tax at Source/TDS — Refund - Cases Reported in  2014 SCC Vol. 6 July 14, 2014 Part 3 - When collection is illegal, Revenue is obliged to refund such amount with interest as money so deposited is retained and enjoyed by it. Hence, resident/deductor who had deducted tax at source and deposited the same before remitting amounts payable to non-resident/foreign company is entitled to interest on such refund on par with assessee. No discrimination can be shown between assessee and resident/deductor in payment of interest on refund of tax. Further, such refund attracts interest from date of payment/deposit of the tax since it falls under “in any other case” in S. 244-A(1)(b) of IT Act, 1961. Money received and retained without right, carries with it right to interest. Whenever money received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course and the State is not exempted from payment of interest. Union of In...