The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the provisions of TDS not applicable to recovery of late payment charges and Service Tax.
The assessee, M/s. Prithvi Outdoor Publicity LLP made payment to M/s Andhra Pradesh Road Transport Corporation (APSRTC) to the tune of Rs.10,48,125/-. The AO has held that the assessee has not deducted the TDS on the same and therefore, disallowed the claim of the assessee.
The assessee contended that amount of Rs.10,48,125 /- consists of late fee to the tune of Rs.9,77,429/- and service tax to the tune of Rs.1,16,155/-. Therefore, it was contended that there is no provision under the Act to deduct TDS on late fee and service tax, hence no addition should be made.
A division bench of the ITAT consisting Dr. Arjun Lal Saini, Accountant Member and Ms. Madhumita Roy, Judicial Member observed that “the ld Counsel submitted that assessee had paid Rs.2,27,56,222/- to APSRTC and out of this, the TDS on payment of Rs.2,17,08,097/- was deducted and balance amount of Rs.10,48,125/- (Rs.2,27,56,222-Rs.2,17,08,097) was adjusted by APSRTC towards recovery of late payment charges, service tax etc. and therefore assessee did not deduct TDS on the same, being penal in nature. Apart from this, ld Counsel also submitted that payee has included the sum of Rs.10,48,125/- in its income and offered for tax. Since, the said amount pertains to late fee and service tax, therefore the provisions of TDS does not apply to the late fee and service tax, hence we delete the addition of Rs.10,48,125/-, made by the Assessing Officer.”
Shri Bandish Soparkar, Advocate appeared for the assessee.
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