Case Law Details

Case Name : State Bank of Mysore Vs Income-tax Officer (TDS) (ITAT Panaji)
Appeal Number : ITA No. 207 TO 210/PAN/2016
Date of Judgement/Order : 13/02/2017
Related Assessment Year : 2011–12, 2012–13, 2013–14, 2014–15
Courts : All ITAT (4430) ITAT Panaji (8)

In respect of TDS not deducted by Assesee on Interest Income of Trust which was disclosed in his return of Income by deductee Trust and on which taxes alongwith interest been paid by deductee trust  it was held by ITAT that In respect of levy of interest under Section 201(1A) of the Act the interest is to be computed for the period from the date from which the tax was deductable to the date of filing of the return by the deductee (VTU). This is because once any income is liable for TDS then in the hands of the deductee no interest under Section 234A, 234B & 234C can be levied in respect of such income. Therefore till such income is disclosed by the deductee in its return the liability of the tax rests on the deductor. Once the deductee has filed his return disclosing such income then for such return to become valid the taxes of such return should have been paid and the liability in respect of such taxes and the credit for such taxes goes to the deductee only.

Full ITAT Order is as follows

1. ITA No. 207/PAN/2016 to ITA.NO.210/PAN/2016 are appeals filed by the assessee State bank of Mysore, Main branch against the orders of Learned CIT(A) Belagavi in appeal no. ITA No.592/BGM/2014-15 dated 29/08/2016 and ITA No.591/BGM/2014-15 dated 29/08/2016, ITA No.590/BGM/2014-15 dated 29/08/2016 and ITA No.594 /BGM/2014 – 15 dated 29/08/2016 for the assessment years 2011-12, 2012-13, 2013-14 and 2014-15 respectively. ITA No.207 & 208/PAN/2016 for the assessment years 2011-12 & 2012-13 are against the confirmation of the levy of interest under Section 201(1A) and ITA No. 209 & 210/PAN/2016 for the assessment years 2013-14 and 2014-15 are against the confirmation of the levy under Section 201(1) of the Act. ITA No.211/PAN/2016 to ITA.NO.215/PAN/2016 are appeals filed by the M/s State Bank of Mysore, Hindwadi Branch against the orders of the Learned. CIT(A) in appeal No ITA No.560/BGM/2014-15 dated 29/08/2016, ITA No.561/BGM/2014-15 dated 29/08/2016, ITA No.567/BGM/2014-15 dated 29/08/2016 and ITA No.564/BGM/2014-15 dated 29/08/2016 for the assessment years 2011-12, 2012-13, 2013-14 and 2014-15 respectively.

2. It was the submission that in respect of ITA’s 211/PAN/2016 and 212/PAN/2016 the appeals were against the confirmation of the levy of interest under Section 201(1A) and in respect of ITA.NO. 213/PAN/2016, ITA.NO.214/PAN/2016 and ITA.No.215/PAN/2016 it was against the confirmation of the levy under section 201(1) of the Act. Shri Manjit Singh represented on behalf of the Revenue and Shri Shivprasad S Parnatti, CA represented on behalf of the Assessee.

3. It was submitted by the Learned Authorized Representative of the assessee that M/s Vishveshvaraya Technological University (hereinafter in short VTU) being an university established in 1998 through the statute of the Karnataka Government had maintained certain deposits with the assessee bank and its other branches. It was submitted that VTU was not filling its return of income and was not paying any tax in so far as it was claiming exemption under Section 10(23) of the Act. During the year 2011 the Assessments of VTU was reopened for the assessment years 2004 – 05 to 2009 – 10 wherein it was held that it was not entitled to benefit of exemption under Section 10(23C) of the Act. The matter was carried by VTU till the Hon’ble’ Supreme Court and in 2016 the Hon’ble Supreme Court had upheld the finding that VTU was not eligible for the exemption under Section 10(23C) of the Act. For the assessment year 2016 – 17 VTU applied for registration under Section 12AA of the Act and the same was granted the registration as a Charitable Trust/ Society. Consequently VTU had filed an application under Section 119(2)(b) of the Act to the CBDT praying for retrospective recognition of the registration under Section 12AA of the Act. VTU had been granted the registration under Section 12AA and 80G vide order dated 08.12.2015. The application before the CBDT is pending till date.

3. It was submitted that consequent to VTU being denied the exemption under Section 10(23C) of the Act, the Assessee’s were held liable under Section 201 and 201(A) of the Act on account of the non deduction of TDS under Section 194A (3) in respect of the interest on the deposits. It was a submission that VTU has paid the 100% of the tax liability and for those assessment years the learned CIT(A) had deleted the liability under Section 201(1) by following the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd.v. CIT [2007] 293 ITR 226 . Further it was submitted by the Learned AR that the impact by the filing of the certificate as issued by the deductee in form 26A was also liable to be considered. It was submission that where VTU had not paid the 100% tax the CIT(A) had upheld the levy under Section 201(1). It was further submitted that the interest levied under Section 201(1A) had been confirmed by the learned CIT(A) for all the Assessment Years. It was a submission that the assessee was under the bonafide belief that TDS was not required to be done and in fact the assessee had also been given the form 26A by M/s VTU for the non deduction of tax. It was further submitted that VTU has paid not only the tax but also the interest in respect of the tax liability. It was submitted that the interest under Section 201(1A) was compensatory in nature and M/s VTU having already paid the interest on the tax liability, the levy of interest on the assessee bank was liable to be deleted.

4. In reply the Learned. DR submitted that for the Assessment Years 2013 – 14, 2014 – 15, 2015 – 16 the tax having not been paid in its entirety by M/s VTU, the assessee was liable as an assessee in default in respect of the levy under Section 201(1) of the Act. It was further submitted that in respect of the levy of interest Under Section 201(1A) the interest is compensatory in nature as has been held by the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. refer to(supra). It was submitted that the bonafide belief could not remove the liability for payment of interest under Section 201(1A) of the Act. In regard to the quantification of levy of interest under Section 201(1A) the issue could be restored to the file of the Assessing Officer to re-adjudicate the issue after considering the fact with form 26A.

5. In reply Learned Authorized Representative of the assessee submitted that he had no objection in restoring the issues to the file of the Assessing Officer for re-adjudication in respect of levy under Section 201(1). It was also submitted the levy of interest under Section 201(1A) must also be restored to the file of the Assessing Officer, in so far as the computation of the interest has been wrongly done. As per the proviso of the section 201(1A) the same was levyable only from the date from which the tax was deductable to the date of furnishing of return of income being the due date for the filing of the return under Section 139(1) of the Act. . Learned Departmental Representative did not raise any serious objection.

6. I have heard the rival submissions. Facts in the present case clearly show that M/s VTU has filed an application for retrospective recognition under Section 12AA of the Act to the CBDT under Section 119(2B) of the Act. In the event the CBDT accepts the claim of the assessee, then the liability of the assessee under Section 201(1) and 201(1A) of the Act would efface. This being so in the interest of natural justice the issues in these appeal are restored to the file of the Assessing Officer with the following directions:-

7. The Learned Assessing Officer is to await the decision of the CBDT in respect of the petition filed by the VTU in respect of the retrospection grant of registration under Section 12AA of the Act. In the event the application filed by the VTU is not considered favourably by the CBDT then in respect of the levy under Section 201(1) the Assessing Officer is to re-adjudicate the issue in line with the decision of the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. as referred (supra), as also after considering the impact of the certificate issued by the deductee (VTU) in form 26A. In respect of levy of interest under Section 201(1A) of the Act the interest is to be computed for the period from the date from which the tax was deductable to the date of filing of the return by the deductee (VTU). This is because once any income is liable for TDS then in the hands of the deductee no interest under Section 234A, 234B & 234C can be levied in respect of such income. Therefore till such income is disclosed by the deductee in its return the liability of the tax rests on the deductor. Once the deductee has filed his return disclosing such income then for such return to become valid the taxes of such return should have been paid and the liability in respect of such taxes and the credit for such taxes goes to the deductee only.

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Category : Income Tax (25503)
Type : Judiciary (10254)
Tags : ITAT Judgments (4610) TDS (922)

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