No TDS liability can be imposed for notional provision reversed afterwards

We have heard the rival submissions. This Tribunal, in the case cited, supra, has set aside the matter to the AO as under :

“7. As per the above Para reproduced from the order of the Tribunal, it is seen that in that case, the tribunal has given a finding that as is evident from the record, the entry was reversed on the next working day and therefore, the amount so credited has never accrued to the payee. In the present case, no such evidence has been brought on record hat interest credited as per this software was only a notional provision and the same was reversed afterwards. But this is also an undisputed fact that the bank is using CBS software as in that case. Hence, we feel it proper that the matter should be restored back to the file of the AO for a fresh decision in the light of this Tribunal order rendered in the case of Bank of Maharashtra (Supra) and if the assessee is able to establish that it was only a notional provision which was reversed afterwards then no TDS liability can be imposed on the
assessee. We order accordingly .”

Following it, this issue is remitted back to the file of the AO for a fresh decision. If the assessee is able to establish that it was only a notional provision which was reversed afterwards, then no TDS liability can be imposed on the assessee. We order accordingly. For statistical purposes, the appeal is treated as allowed.

FULL TEXT OF THE ITAT JUDGMENT

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