17 July 2010
While reading bare act of income tax which goes as follows:-
"In the case of income in respect of which provision is not made under this chapter for deducting income tax at the time of payment, and in any case where income tax has not been deducted in accordance with the provisions of this chapter, income tax shall be payable by *ASSESSEE* direct."
>>>>>> My question to Experts::--
Sir, Who is the ASSESSEE in above case....??? **Is it Payee (Assessee) or, **Is it Payer (Assessee in default)...???
>>>>>> In my view there are two cases:- 1. Where TDS is not to be deducted on income, and 2. Where TDS is to be deducted but actually not deducted OR if deducted then not paid to the pocket of govt.
Now I say in first case the ASSESSEE is the normal assessee i.e the Payee who is going to get the income in his hands,
While in the second case its the ASSESSEE IN DEFAULT i.e the Payer who paid the income to another one.
AM I RIGHT OR WRONG...??? PLEASE DO THE WORK OF HEAD-ACHE MEDICINE. :)
18 July 2010
You are right. My observation to concur with your view is based on the corollary of the explantion to section 191 inserted by the Finance Act,2008 w.r.e.f June 1,2003.
18 July 2010
Sir, actually my friend had a argument on the interpretation of Sec 191 with explanation.
He is of the view that the expression ASSESSEE in sec 191 will always be the receiver of income. He says that Only PAYEE will pay DIRECT PAYMENT of tax as per the section 191.
>>>> I told him that in case where TDS not to be deducted according to the chapter of Income tax then only it will be the Payee.
But in case where TDS is to be deducted but not deducted then it will be the PAYOR and payor only.
>>>> So according to your expertise can there be any case where the PAYEE will make the direct payment of tax rather than PAYER in case TDS not deducted....???
18 July 2010
Explanation is a statement included to describe facts or law in a comprehensible manner. Exception can be included in an explanation. For example see explanation to section 73(4) of the Income tax Act,1961.
18 July 2010
Supreme Court in Hindustan Cococola Beverage (P) Ltd vs CIT (293 ITR 226)held that if the deductee had paid the tax, there can be no question of recovering the same once again from the deductor.
This judgement can be relied upon though delivered not in the context of section 191 but had an indirect influence on the amendment of the explanation to section 191. However my first observation with respect to section 191 still requires no change.
If there is a company who has made some payment outside India (UK), but not deducted tax although it requires to deduct the tax. (if it has paid, the third party was entitle for credit of the same as per Article 24 of DTAA with UK) Now after 2 years company received a notice,
Can we take help of the section 191 and the aforesaid decision of Hon'ble High court?? Is there anything specific certificate required, to prove that the third party has paid the tax in its country!
CAclubindia
