Integlobe Aviation Ltd. Vs ITO (ITAT Delhi)
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) ruled that the bonafide assessee is not liable to pay the interest on the amount of shortfall in tax deducted at source (TDS).
The Assessee, M/s. Interglobe Aviation Ltd. claimed that short deduction in case of M/s. Federal Travel and Tour Pvt. Ltd. and M/s. GMR Hyderabad International, the lower TDS certificates issued to the deductees were originally valid, but the same were cancelled thereafter, without information to the deductor, which has resulted in the deduction of tax at lower rate, under bonafide belief. It was the submission of the assessee that tax authorities have not sent the lower TDS certificates directly to the deductor, as required by the law nor any intimation has been given on cancellation of the lower TDS certificate.
Undisputedly, a demand on account of short deduction of tax on account of interest under section 201(1A) has been raised against the assessee. It is also not in dispute that tax authorities have originally issued lower TDS certificates in case of M/s. Federal Travels and Tour Pvt. Ltd. and M/s. GMR Hyderabad International to the deductees not deductors. It is also not in dispute that lower TDS certificate issued to the deductees was cancelled by the revenue authorities without any intimation to the deductors and consequently deductor continue to deduct tax on lower rate under bonafide belief.
The coram of Judicial Member Kuldeep Singh and Accountant Member, Anil Chaturvedi found that when tax authorities have never given intimation as to the short deduction of tax to the assessee rather sent the same to the deductee and the assessee continued to deduct the tax at the lower rate, it is a bonafide belief on the part of assessee.
“Moreover the lower TDS certificate issued to the deductees which was originally valid, but same were cancelled without any intimation to the deductor. So, the entire exercise of short deduction of tax by the assessee is under bonafide belief,” the Tribunal noted.
Therefore, the ITAT held that the CIT(A) has erred in directing the AO to charge the interest from the date the tax was deductible till the date of filing the Income Tax Return by the deductor on the amount of shortfall in tax deductible under proviso to section 201(1A) of the Act. So, the demand raised on account of interest vide order passed by Ld. CIT(A) is not sustainable as the assessee is not liable to pay the interest on the amount of shortfall in tax deducted at source, hence deleted.
FULL TEXT OF THE ITAT JUDGEMENT
Appellant, M/s. Integlobe Aviation Ltd., (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 30.06.2016 passed by the Commissioner of Income-tax (Appeals)-41, New Delhi qua the assessment year 2014-15 on the grounds inter alia that :
““ 1. That on facts of the appellant’s case and in law, the order passed by Commissioner (Appeals) [“CIT A”] is bad, erroneous and contrary to the law in holding the appellant as “assessee-in-defaulf”.
2. That order of the CIT A is contrary to the law and the facts of the case as CITA erred in pronouncing decision (vide para 4.6.3 of CIT A’s order) on the basis of “practice followed by the department” and “presumption”, and not in accordance with the provisions of the Income Tax Act, 1961( Act)
3. That CIT A erred on facts and in law in not holding the intimation issued under section 200A of the Act void and liable to be quashed.
4. That CIT A erred in holding that appellant is liable for payment of interest under section 201(1 A) of the Act.
5. The appellant craves leave to add to or amend the aforesaid grounds before disposal of the appeal.”
2. By way of intimation u/s 200A of the Act a demand of Rs. 64,08,780.19/- has been raised due to short deduction of TDS by the assessee in respect of payments made to a various parties in quarter ended March, 2014. The balance demand of Rs. 9,23,969/-is the interest thereon as per section 201(1A). Detail of demand on the account of alleged short deduction of tax at source by the assessee is as under :-
