a. Long battle to “Reassessment of AY 2013-14/2014-15 valid after TOLA”?
Notices were issued under Section 148/148A for AYs 2013-14 and 2014-15 taking benefit of time extension under TOLA. Delhi HC had taken a view that until Jun 30, 2021, the notices can be issued in light of TOLA whereas the Allahabad High Court had taken a contrary view holding the notices issued to have been barred by limitation. SC issues notice on Revenue’s SLP against Allahabad HC judgment on reassessment controversy, grants stay on the judgment of Allahabad HC and dismisses Assessee’s SLP against Delhi HC judgment in Salil Gulati’s case where the reassessment proceedings under the new regime for AY 2013-14 were held to be valid.
b. Can penalty be levied on belated remittance of TDS?
In the lead matter, Assessee was subjected to penalty u/s 271C(1)(a) for delay (5 days to 10 months) in depositing TDS pertaining to the salary of about 700 employees, contract payments, etc. totalling to Rs.1.10 Cr. for AY 2003-04. The penalty order was upheld by the Kerala HC and appeal was filed before SC. It was held that ‘fails to deduct’ occurring in Sec 271C(1)(a) would not include the payer who caused delay in remittance of TDS deducted by him.
c. Resident payer will be in default if TDS is not deducted but non-resident payee is liable to pay tax in India?
In the given case, revenue held that expense is not allowable u/s 40(a)(i) as no TDS deducted u/s 195. Both CIT(A) and ITAT upheld the disallowance. The HC held that the obligation to deduct tax would arise only when the payment made to a non-resident is chargeable to tax in India and if in assessment proceedings of the recipient if it is ultimately held that the sum received by the recipient was chargeable to tax in India, the assessee may be treated as in default. SC held that “once the assessees herein are held to be not liable to deduct the tax at source at all merely because subsequently the foreign company VOAMC is held liable to be taxed in India, the assessees herein cannot be treated as assessees in default.”.