What the courts have decided on section 191, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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DIT v Mitsubishi Corporation
Supreme CourtCuts both ways
My Indian payer did not deduct tax at source and paid me gross. The Assessing Officer says I should have paid advance tax and has charged s.234B interest. Which years can he do that for?
Only from financial year 2012-13 onwards. The Supreme Court held that for every assessment up to and including financial year 2011-12, s.209(1)(d) entitled the assessee to reduce, in computing its advance tax, the income-tax that WOULD BE deductible at source, even though it had in fact received the full amount without deduction — so no s.234B interest could be charged. The proviso to s.209(1)(d) inserted by the Finance Act 2012 with effect from 1 April 2012 reverses that, and from financial year 2012-13 the assessee cannot reduce tax that the payer failed to deduct.
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Jagran Prakashan Ltd v DCIT (TDS)
High CourtHelps taxpayer
I publish a newspaper and allow accredited advertising agencies the standard 15 per cent trade discount. The TDS officer says that is commission under section 194H and has raised a demand on me. Is that right?
No, on the reasoning available in this judgment. The Allahabad High Court held that section 194H applies only where the recipient acts on behalf of the payer, and here there was no agreement between the newspaper and the advertising agencies and no agency had ever been appointed. The Kerala decision in Director, Prasar Bharati, on which the department relied, turned on a written agency agreement containing an express clause about withholding tax, and was held to be inapplicable. The Delhi High Court had already decided the same question against the department in Living Media India, and the Supreme Court had dismissed the department's special leave petition against it on 11 December 2009.
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Statutory position — s.192(1C), s.191(2) and s.156(2): the eligible start-up ESOP deferral, its three triggers, the fourteen-day period, and the fact that it defers the employee's own tax too
CBDT Circulars & InstructionsCuts both ways
My client works for a start-up and has exercised his options. He has no cash and the shares cannot be sold. Is there any deferral, and does it cover his own tax or only his employer's TDS?
This is stage one — the perquisite on exercise — and yes, there is a deferral, but only where the employer is an eligible start-up referred to in s.80-IAC. It covers BOTH sides. Section 192(1C) defers the employer's obligation to deduct or pay tax on the perquisite, and s.191(2) defers the employee's own obligation to pay income-tax on it directly, in identical terms; s.156(2) defers payment of the tax or interest included in a notice of demand on the same income. In every one of the three, the tax must be paid within FOURTEEN DAYS of the EARLIEST of three events: the expiry of forty-eight months from the end of the relevant assessment year; the date of sale of the specified security or sweat equity share; and the date the employee ceases to be the employee. All three sub-sections apply to income of an assessment year beginning on or after 1 April 2021, and all three were inserted by the Finance Act, 2020, which came into force on 1 April 2020.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
