Rajasthan Urban Development Fund Vs ITO (ITAT Jaipur)
HUDCO Paid the Tax, So Deductor Cannot Be Asked to Pay It Again: ITAT Applies Proviso to Section 201(1), Subject to Revised Form 26A
Interest of ₹10.25 Crore Paid to HUDCO
Rajasthan Urban Development Fund was an authority created by the Rajasthan Government to financially support urban local bodies in implementing projects sanctioned under various schemes. Its management was controlled by the Executive Director of RUIFDCO.
During survey proceedings conducted in the case of Housing and Urban Development Corporation Ltd. (HUDCO), Jaipur, the TDS Wing noticed that certain parties had not deducted tax from interest paid to HUDCO before the issuance of Gazette Notification No.26/2019 dated 20.03.2019.
Information concerning such payments was forwarded to the respective jurisdictional TDS officers.
The assessee-authority had paid interest of ₹10,25,88,043 to HUDCO on loans obtained for financing urban local bodies. No tax was deducted u/s 194A from the payment.
AO Proposes TDS Demand of ₹1.02 Crore
The AO issued a show-cause notice u/s 201(1) & 201(1A), proposing to treat the assessee as an assessee in default.
According to the AO, tax of ₹1,02,58,804, representing 10% of the interest payment, should have been deducted u/s 194A.
The assessee furnished written submissions & relied upon Form No.26A, certified by a Chartered Accountant. The certificate stated that HUDCO had taken the interest receipts into account while computing its taxable income & paid the tax due on the income declared.
