Case Law Details
Canara Bank Vs ACIT (ITAT Mumbai)
The recent appeal filed by Canara Bank against the Assistant Commissioner of Income Tax (ACIT) before the Income Tax Appellate Tribunal (ITAT) Mumbai sheds light on the complexities surrounding the rectification of Tax Deducted at Source (TDS) demands. The appeal, stemming from an order dated 21-08-2023 issued by the National Faceless Appeal Centre (NFAC), Delhi, pertains to the assessment year 2020-21.
The crux of the matter revolves around the challenge to a demand of Rs. 1,64,95,826/- under section 200A for short deduction of TDS on interest payments made to Vodafone India Ltd., along with an interest under section 201(1A) amounting to Rs. 21,44,454/-. The dispute arises from the interpretation of lower TDS certificates issued by Vodafone India Ltd. (VIL) to Canara Bank.
During the financial year 2019-2020, Vodafone India Ltd. deposited funds with Canara Bank, furnishing a lower TDS Certificate (LDC) dated 22-05-2019. This certificate authorized TDS deductions at a reduced rate of 3% on interest payments up to Rs. 30 Crores. However, on 22-10-2019, VIL issued another certificate modifying the earlier limit to ‘0’, thus necessitating TDS deductions at a higher rate. Canara Bank subsequently deducted TDS at 1.50% on interest payments up to Rs. 30 Crores, as per the revised certificate, and at 10% on the remaining interest.
The dispute arises from the discrepancy in TDS deductions between the original and revised certificates, leading to a demand for short deduction of TDS and consequent interest under section 201(1A). Canara Bank contends that it acted in compliance with the certificates issued by VIL and fulfilled its TDS obligations accordingly. Moreover, it emphasizes that VIL has declared the interest income and produced a Certificate in Form 26A, absolving Canara Bank of any liability under section 201(1).
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