M/s. Krishnavaka Benefit Fund Ltd., Nagercoil V. ACIT, Nagercoil

CO 176/CHNY/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3544 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SUBRAMONIAN
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . ! , # $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ./ ITA NO.2653/MDS/2016 & C.O. NO.176/MDS/2017 (IN I.T.A. NO.2653/MDS/2016) & '& / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, 1 ST FLOOR, POPULAR BUILDING, MEAD STREET, W.C.C. ROAD, NAGERCOIL 629 001 KANYAKUMARI DISTRICT. V. M/S KRISHNAVAKA BENEFIT FUND LTD., SRI PARTHASARATHY TEMPLE CAMPUS, NANDAVANAM, THUCKALAY POST, KANYAKUMARI DISTRICT. PAN : AAACK 7258 D ()*/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) )* + , / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT -.)* + , / RESPONDENT BY : SHRI N. SUBRAMONIAN, CA / + 0# / DATE OF HEARING : 17.01.2018 12' + 0# / DATE OF PRONOUNCEMENT : 08.02.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, MADURA I, DATED 13.06.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13 DELETING THE 2 I.T.A. NO.2653/MDS/16 C.O. NO.176/MDS/17 DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE AS SESSEE HAS FILED CROSS-OBJECTION IN RESPECT OF THE SAME ORDER OF THE CIT(APPEALS). THEREFORE, WE HEARD BOTH THE APPEAL AND THE CROSS- OBJECTION TOGETHER AND DISPOSING OF THE SAME BY THI S COMMON ORDER. 2. THERE WAS A DELAY OF 16 DAYS IN FILING THE CROSS -OBJECTION BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FO R CONDONATION OF DELAY. WE HAVE HEARD THE LD. REPRESENTATIVE FOR TH E ASSESSEE AND THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAU SE FOR NOT FILING THE CROSS-OBJECTION BEFORE THE STIPULATED TIME. THEREF ORE, WE CONDONE THE DELAY AND ADMIT THE CROSS-OBJECTION. 3. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE IS A MU TUAL BENEFIT COMPANY ENGAGED IN THE BUSINESS OF FINANCE. THE CO MPANY WAS DECLARED AS NIDHI COMPANY BY MINISTRY OF CORPORATE AFFAIRS. ACCORDING TO THE LD. D.R., IN THE PROFIT & LOSS ACC OUNT, THE ASSESSEE CLAIMED AN AMOUNT OF 3,26,76,297/- AS EXPENDITURE TOWARDS INTEREST PAYMENT ON THE DEPOSITS. THE ASSE SSEE, HOWEVER, HAS NOT DEDUCTED TAX AS REQUIRED UNDER SECTION 194 OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO T HE LD. D.R., WHEN THE ASSESSEE PAID INTEREST TO PERSONS / DEPOSITORS EXCEEDING 3 I.T.A. NO.2653/MDS/16 C.O. NO.176/MDS/17 5000/- DURING THE FINANCIAL YEAR, THEN THE ASSESSEE IS REQUIRED TO DEDUCT TAX UNDER SECTION 194 OF THE ACT. THE ASSES SEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE DEPOSITORS FU RNISHED FORM 15G / 15H FOR NON-DEDUCTION OF TAX. REFERRING TO R ULE 29C OF INCOME-TAX RULES, 1962, THE LD. D.R. SUBMITTED THAT WHEN THE ASSESSEE ACCEPTS DECLARATION FORM 15G / 15H, THE SA ME SHALL BE DELIVERED TO THE CHIEF COMMISSIONER OR COMMISSIONER HAVING JURISDICTION TO ASSESS THE ASSESSEE. IN FACT, FORM 15G / 15H SHALL BE FURNISHED TO THE RESPECTIVE CHIEF COMMISSIONER / COMMISSIONER ON OR BEFORE 7 TH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH THE DECLARATION IS FURNISHED TO THE ASSESSEE. UNFO RTUNATELY, ACCORDING TO THE LD. D.R., THE ASSESSEE HAD NOT DEL IVERED THE COPIES OF FORM 15G / 15H TO THE RESPECTIVE COMMISSI ONER / CHIEF COMMISSIONER, THEREFORE, THERE IS NO JUSTIFICATION FOR NON-DEDUCTION OF TAX. HENCE, ACCORDING TO THE LD. D.R., THE ASSE SSING OFFICER HAS RIGHTLY DISALLOWED THE INTEREST PAYMENT TO THE EXTE NT OF 58,76,272/- UNDER SECTION 40(A)(IA) OF THE ACT. 4. ON THE CONTRARY, SHRI N. SUBRAMONIAN, THE LD. RE PRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE DEPOSITORS FU RNISHED FORM 15G / 15H, THEREFORE, THE ASSESSEE HAS NOT DEDUCTED ANY TAX AT SOURCE AT THE TIME OF PAYING OR CREDITING INTEREST ON THE DEPOSIT. REFERRING 4 I.T.A. NO.2653/MDS/16 C.O. NO.176/MDS/17 TO SECTION 40(A)(IA) OF THE ACT, THE LD. REPRESENTA TIVE SUBMITTED THAT IF THE LAW REQUIRES TO DEDUCT TAX AND THE ASSESSEE FAILS TO DEDUCT THE SAME, THEN THERE CAN BE DISALLOWANCE. IN THIS CASE , ACCORDING TO THE LD. REPRESENTATIVE, WHEN THE RECIPIENTS OF THE INTEREST ON THE DEPOSIT FILED FORM 15G / 15H, THEN THE LAW DOES NOT REQUIRE THE ASSESSEE TO DEDUCT TAX, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. REFERRING TO S ECTION 272A(2)(F) OF THE ACT, THE LD. REPRESENTATIVE SUBMITTED THAT T HIS SECTION PROVIDES FOR LEVY OF PENALTY IN CASE FORM 15G / 15H WAS NOT FURNISHED TO THE COMMISSIONER / CHIEF COMMISSIONER AS THE CASE MAY BE. SO, ACCORDING TO THE LD. REPRESENTATIVE, A T THE BEST, THE DEPARTMENT MAY LEVY PENALTY FOR NOT FURNISHING FORM 15G / 15H RECEIVED BY THE ASSESSEE FROM THE DEPOSITORS AND DE FINITELY THERE CANNOT BE ANY DISALLOWANCE OF INTEREST UNDER SECTIO N 40(A)(IA) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. D.R., THE ASSESSEE HAS NOT DED UCTED TAX AT THE TIME OF CREDITING OR PAYING INTEREST ON THE DEPOSIT S. WHEN THE ASSESSEE RECEIVED FORM 15G / 15H FROM THE DEPOSITOR S, THEN THE ASSESSEE CANNOT DEDUCT TAX. IT IS ALSO OBLIGATORY ON THE PART OF THE 5 I.T.A. NO.2653/MDS/16 C.O. NO.176/MDS/17 ASSESSEE TO FILE / FURNISH FORM 15G / 15H RECEIVED FROM THE DEPOSITORS TO THE RESPECTIVE COMMISSIONER / CHIEF C OMMISSIONER WITHIN THE PRESCRIBED TIME. IN THIS CASE, IT IS NO T IN DISPUTE THAT THE ASSESSEE RECEIVED FORM 15G / 15H BUT ADMITTEDLY IT WAS NOT FILED BEFORE THE COMMISSIONER / CHIEF COMMISSIONER BEFORE THE PRESCRIBED DATE. THEREFORE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT WHEN THE ASSESSEE RECEIVED FORM 15G / 15H, THERE IS NO NECESSITY TO DEDUCT TAX. THE LAW DOES NOT REQUI RE THE ASSESSEE TO DEDUCT TAX WHEN THE DEPOSITORS FILE 15G / 15H. HOWEVER, THERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNI SHING THE COPIES OF FORM 15G / 15H TO THE RESPECTIVE COMMISSIONER / CHIEF COMMISSIONER. AS RIGHTLY SUBMITTED BY THE LD. REPR ESENTATIVE FOR THE ASSESSEE, SECTION 272A(2)(F) OF THE ACT PROVIDE S FOR LEVY OF PENALTY IN CASE SUCH FORMS WERE NOT FURNISHED BEFOR E THE COMMISSIONER / CHIEF COMMISSIONER. THEREFORE, AT T HE BEST, PENALTY MAY BE LEVIED UNDER SECTION 272A(2)(F) OF T HE ACT AND DEFINITELY THERE CANNOT BE ANY DISALLOWANCE UNDER S ECTION 40(A)(IA) OF THE ACT. 6. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD TH E ORDERS OF THE LOWER AUTHORITIES. THE ORDERS OF BOTH THE AUTH ORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OF FICER IS DELETED. 6 I.T.A. NO.2653/MDS/16 C.O. NO.176/MDS/17 7. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS ONL Y IN SUPPORT OF THE ORDER OF THE CIT(APPEALS), THEREFORE, IT BEC OMES INFRUCTUOUS. 8. IN THE RESULT, BOTH THE APPEAL FILED BY THE REVE NUE AND THE CROSS-OBJECTION FILED BY THE ASSESSEE STAND DISMISS ED. ORDER PRONOUNCED ON 8 TH FEBRUARY, 2018 AT CHENNAI. SD/- SD/- ( . ! ) ( ... ) (M. BALAGANESH) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 8 TH FEBRUARY, 2018. KRI. + -056 76'0 /COPY TO: 1. )* /APPELLANT 2. -.)* /RESPONDENT 3. / 80 () /CIT(A)-3, MADURAI 4. PRINCIPAL CIT-2, MADURAI 5. 69 -0 /DR 6. :& ; /GF.