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Tax Publishers ITO v. S.S. Netcom (P) Ltd. [ITA No. 461/Gau/2019, dt. 18-11-2020] : 2020 TaxPub(DT) 4821 (Gau.-Trib.) Payments to Tribals whose income is exempt under section 10(26) whether hit by TDS obligation disallowance? *Facts:* Assessee had made payments to certain Tribal vendors on which no TDS was done. These were disallowed by assessing officer on appeal the Commissioner (Appeals) allowed the same on the premise that under section 10(26) their incomes were exempt and once there was no tax liability for them the obligation to do TDS does not arise applying GE India Technology Centre (P) Ltd. v. CIT, (2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC) decision. Aggrieved revenue went in appeal -- Held against the revenue that when the income was exempt in the hands of the recipient no TDS obligations arose in the hands of the payer. The order of Commissioner (Appeals) does not call for interference. *Editorial Note:* The GE Technology Apex Court decision was rendered in the realm of section 195 which has a phrase "or any other sum chargeable under the provisions of this Act", a similar phrase is also seen in section 194C/194J but with a different wording "of such sum on income comprised therein" or the word "income" is simply used as in section 194A/194-I. The word income is referred to in section 2(24) where it is also an agreed fact that incomes which fall under section 10 are not treated as taxable income or do not fall under the head of income per se. It was this principle which was drawn here. Nonetheless TDS being a vicarious responsibility if the actual recipient has discharged the tax obligation the payer cannot be called to make good the same tax once again. At best interest loss for time value of money may be fastened.

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ITO v. S.S. Netcom (P) Ltd. [ITA No. 461/Gau/2019, dt. 18-11-2020] : 2020 TaxPub(DT) 4821 (Gau.-Trib.)

Payments to Tribals whose income is exempt under section 10(26) whether hit by TDS obligation disallowance?

Facts:

Assessee had made payments to certain Tribal vendors on which no TDS was done. These were disallowed by assessing officer on appeal the Commissioner (Appeals) allowed the same on the premise that under section 10(26) their incomes were exempt and once there was no tax liability for them the obligation to do TDS does not arise applying GE India Technology Centre (P) Ltd. v. CIT, (2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC) decision. Aggrieved revenue went in appeal --

Held against the revenue that when the income was exempt in the hands of the recipient no TDS obligations arose in the hands of the payer. The order of Commissioner (Appeals) does not call for interference.

Editorial Note: The GE Technology Apex Court decision was rendered in the realm of section 195 which has a phrase "or any other sum chargeable under the provisions of this Act", a similar phrase is also seen in section 194C/194J but with a different wording "of such sum on income comprised therein" or the word "income" is simply used as in section 194A/194-I. The word income is referred to in section 2(24) where it is also an agreed fact that incomes which fall under section 10 are not treated as taxable income or do not fall under the head of income per se. It was this principle which was drawn here. Nonetheless TDS being a vicarious responsibility if the actual recipient has discharged the tax obligation the payer cannot be called to make good the same tax once again. At best interest loss for time value of money may be fastened.