COMMISSIONER OF INCOME TAX Vs. DEWAN CHAND

JUDGEMENT

(1.) CM Nos. 15568, 15569 and 15577 of 2008 (for exemption) Allowed subject to all just exceptions. CMs stand disposed of. ITA Nos. 1273, 1274, 1280 and 1284 of 2008 1711/Del/2006 pertaining to financial years 2001 -02 to 2004 -05. All these appeals raise issues relating to ss. 201(1) and 201(1A) of the IT Act, 1961.

(2.) TWO points arise for consideration. The first point is with regard to the deduction of tax at source in respect of amounts paid to persons who have already paid tax on the said receipts. The AO noted that if the deductees had already paid tax on the income received from the assessee (deductor), the same would not be recoverable from deductor. The AO, however, noted that it was for the deductor to prove that the deductee had declared the payments received from the deductor as income of the deductee in its income -tax returns for the respective years and it was for the deductor to furnish evidence to that effect. According to the AO, such evidence had not been produced before him and, therefore, he held that the assessee/deductor was an assessee in default.

(3.) BOTH the CIT(A) and the Tribunal have examined this issue in detail and have concluded on facts that the assessee had furnished confirmations from the payees wherein they had given their PAN/ acknowledgement of their returns and they confirmed that they had included the amount received from the assessee as their income and have also paid the taxes due on such income. In fact, the CIT(A) categorically observed that in the absence of any contrary evidence on record, it is to be held that the assessee had duly discharged the onus that lay upon him to prove that the tax stands paid on the amounts paid by him to various payees/deductees. In view of this categorical finding returned by the CIT(A) and confirmed by the Tribunal, we cannot find fault with the conclusion of the Tribunal that the assessee cannot be regarded as one under default in terms of s. 201(1) of the said Act. The Tribunal also placed reliance on the decision of the Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. vs. CIT (2007) 211 CTR (SC) 545 : (2007) 293 ITR 226 (SC) in concluding that once the payees had paid the tax on the amount received by them, the assessee/ deductor cannot be treated as an assessee in default under s. 201(1) and the tax required to be deducted cannot be which would indicate that in case, in such a situation, tax is to be recovered from the assessee, it would be an exercise in futility as, on the one hand, the assessee would be required to pay the tax and, on the other hand, the payee would be required to claim the refund. We see no error in the Tribunal's order on this aspect of the matter.