Canara Bank, Jalandhar V. DCIT (TDS), Ludhiana

ITA 1/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1304 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 01-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Section: 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBE AND MS. ANNAPURNA GUPTA, ACCOUNTANTMEMBER ITA NOS. 1 TO 4/CHD/2018 ASSESSMENT YEARS : 2013-14 TO 2016-17 CANARA BANK, VS. THE DCIT (TDS), GORAYA, LUDHIANA DISTRICT JALANDHAR, (TAN NO. JLDC00270E) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M.R. SHARMA, ADVOCATE RESPONDENT BY : SMT.CHANDERKANTA, ADDL. CIT DATE OF HEARING : 03.08.2018 DATE OF PRONOUNCEMENT : 07.09. 2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE AS SESSEE FOR DIFFERENT ASSESSMENT YEARS AGAINST THE SEPARATE ORD ERS OF THE COMMISSIONER OF INCOME TAX(A)-1, LUDHIANA [HEREINA FTER REFERRED TO AS CIT(A)] DATED 14.12.2017, AGITATING THE CONFI RMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 201 AND INTERES T DEMAND U/S 201(1A) OF THE ACT. 2. SINCE THE ISSUES RELATING TO LEVY OF PENALTY U/ S 201 / 201A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') INVO LVED IN ALL THE APPEALS ARE IDENTICAL, THESE HAVE BEEN HEARD TOGE THER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, THE ITA NO. 1/CHD/2018 IS TAKEN AS A LEAD CASE FOR NARRATION OF FACTS. ITA NOS. 1 TO 4/CHD/2018- CANARA BANK, JALANDHAR 2 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE BANK WHILE MAKING PAYMENT OF INTEREST TO I.K. GUJRAL PU NJAB TECHNICAL UNIVERSITY, JALANDHAR (IN SHORT PTU) DID NOT DEDU CT TDS AS REQUIRED AS PER THE PROVISIONS OF SECTION 194A OF THE INCOME-TAX ACT. ON BEING ASKED TO EXPLAIN IN THIS RESPECT, TH E ASSESSEE EXPLAINED THAT IT HAD NOT DEDUCTED THE TDS BECAUSE THE INCOME OF THE DEDUCTEE PTU WAS EXEMPT AS PER THE PROVISI ONS CONTAINED IN SECTION 10(23C)((IIIAB) OF THE ACT. IT WAS ALSO CL AIMED THAT THE SAID DEDUCTEE (PTU) HAD DULY ACCOUNTED FOR THE INTEREST PAID BY THE ASSESSEE BANK IN ITS BOOKS OF ACCOUNT AND A CERTIFI CATE TO THIS EFFECT WAS ALSO ISSUED U/S 201(1) OF THE INCOME TAX ACT, W HICH WAS FURNISHED BEFORE THE ASSESSING OFFICER. HOWEVER, T HE ASSESSING OFFICER NOTED THAT THE PTU WAS NOT ELIGIBLE TO C LAIM EXEMPTION U/S 10(23C) (IIIAB) OF THE ACT ON THE GROUND THAT THE SAME WAS NOT WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. FURTHER, THAT FURTHER THE UNIVERSITY HAD NOT PROVIDED ANY CERTIFI CATE TO THE ASSESSEE BANK. A CERTIFICATE WAS REQUIRED TO BE IS SUED BY THE ASSESSING OFFICER OF THE PAYEE OF NO DEDUCTION OR D EDUCTION AT A LOWER RATE AS PER THE PROVISIONS OF SECTION 197 OF THE ACT, WHICH WAS NOT DONE SO. THE ASSESSING OFFICER, THEREFORE, LEV IED THE PENALTY ON THE ASSESSEE U/S 201 AND ALSO FASTENED INTEREST DEM AND U/S 201(1A) AGAINST THE ASSESSEE. IN THE APPEAL, THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER. THE ASSESSEE, TH US, HAS COME IN APPEAL BEFORE US. 4. THE ASSESSEE IN THIS CASE HAS RELIED UPON THE FI RST PROVISO TO SECTION 201 PROVIDING THAT WHERE THE ASSESSEE / DED UCTOR FAILS TO ITA NOS. 1 TO 4/CHD/2018- CANARA BANK, JALANDHAR 3 DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDAN CE WITH THE PROVISIONS OF CHAPTER XVII ON THE SUM PAID TO A RES IDENT, HE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPE CT OF SUCH TAX, IF SUCH RESIDENT HAS FURNISHED HIS RETURN U/S 139 AND HAS TAKEN INTO ACCOUNT SUCH SUM IN COMPUTING INCOME IN SUCH RETURN OF INCOME AND HAS PAID THE TAX DUE ON INCOME DECLARED BY HIM IN S UCH RETURN OF INCOME. IN THE CASE IN HAND, THE LD. COUNSEL HAS R ELIED ON A CERTIFICATE ISSUED BY THE ACCOUNTANT CERTIFYING THA T THE PTU HAD TAKEN INTO ACCOUNT THE SUM I.E. THE INTEREST RECEIV ED ON FIXED DEPOSITS WITH THE BANK, WHILE COMPUTING ITS TAXABLE INCOME I N THE RETURN OF INCOME FILED BY THE PTU, HOWEVER, IN THE COLUMN OF TAXABLE AMOUNT, IT HAS BEEN MENTIONED THAT THE TAXABLE AMO UNT IS NIL AS THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. NOW THE STAND OF THE REVENUE AUTHORITIES IS THAT THE PA YEE IN THIS CASE WAS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. 5. AS PER THE PROVISIONS OF SECTION 194A OF THE INC OME TAX ACT, ANY PERSON, NOT BEING AN INDIVIDUAL OR HINDU UNDIVI DED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF ANY INTEREST, SHALL, AT THE TIME OF CREDIT OF SUCH INCO ME INTO ACCOUNT OF PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR ANY OTHER MODE SHALL DEDUCT INCOME TAX THEREON AT THE RATES IN FOR CE. HOWEVER, AS PER THE SECTION 197 OF THE INCOME TAX ACT, SUCH A PERSON IS ABSOLVED FROM THE LIABILITY TO DEDUCT TAX AT SOURCE IF THE DEDUCTEE FURNISHES A CERTIFICATE ISSUED BY THE ASSESSING OFFICER OF THE DEDUCTEE THAT THE DEDUCTEE IS LIABLE TO PAY TAX AT A LOWER RATE OR NO TAX, AS THE CASE MAY BE. SUCH A CERTIFICATE IS ISSUED BY THE ASSESSING O FFICER OF THE ITA NOS. 1 TO 4/CHD/2018- CANARA BANK, JALANDHAR 4 RECIPIENT IF HE IS SATISFIED THAT THE TOTAL INCOME OF THE RECIPIENT JUSTIFY THE DEDUCTION OF INCOME TAX AT ANY LOWER RA TE OR NO DEDUCTION OF INCOME TAX AS THE CASE MAY BE, ON THE APPLICATIO N MADE BY THE ASSESSEE / RECIPIENT IN THIS BEHALF. HOWEVER, THE PROVISO TO SECTION 201 IS FURTHER EXCLUSIONARY PROVISO TO ABSOLVE A PE RSON FROM THE RIGOR OF THE PENALTY LEVIABLE U/S 201 OF THE ACT, IF ULT IMATELY IT IS FOUND THAT NO LOSS HAS OCCURRED TO THE REVENUE FOR NON-D EDUCTION OF TDS BY THE DEDUCTOR / PERSON BECAUSE THE DEDUCTEE HAS FURNISHED THE RETURN OF INCOME AND HAS TAKEN INTO ACCOUNT THE REC EIPTS FROM SUCH PERSONS FOR COMPUTING ITS TAXABLE INCOME AND HAS PA ID THE TAXES DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN. 6. NOW COMING TO THE CASE IN HAND, THE DEDUCTEE PT U HAD NOT FURNISHED ANY CERTIFICATE TO THE ASSESSEE BANK U/S 197 OF THE ACT. THE ASSESSEE BANK IN THIS CASE WANTS TO TAKE BENEFIT UN DER THE RESIDUARY EXCLUSIONARY CLAUSE / PROVISO TO SECTION 201 OF THE INCOME TAX ACT. AS PER THE RELEVANT PROVISIONS, AS DISCUSSED ABOVE, IT IS NOT MERE ASSERTION OF THE DEDUCTEE THAT IT IS NOT LIABLE TO PAY TAX. THE DEDUCTOR IS ABSOLVED OF ITS LIABILITY TO DEDUCT TAX ONLY ON FURNISHING OF A CERTIFICATE ISSUED BY THE ASSESSING OFFICER OF THE DEDUCTEE AS PER THE PROVISIONS OF SECTION 197 OF THE ACT. EVEN OTH ERWISE, THE BENEFIT OF EXCLUSIONARY PROVISO, I.E PROVISO TO SECTION 20 1 CAN BE CLAIMED, IF ULTIMATELY IT IS FOUND THAT THERE WAS NO LOSS TO TH E REVENUE ON ACCOUNT OF NON-DEDUCTION OF TDS BY THE DEDUCTOR, TH E DEDUCTEE HAVE TAKEN INTO ACCOUNT SUCH RECEIPTS IN HIS COMPUTATI ON OF INCOME AND HAVING PAID DUE TAXES. ITA NOS. 1 TO 4/CHD/2018- CANARA BANK, JALANDHAR 5 7. IN THE CASE IN HAND, THE FACT ON THE FILE IS THA T THE DEDUCTEE PTU HAD FILED THE RETURN OF INCOME FOR THE ASSESS MENT YEAR UNDER CONSIDERATION. HOWEVER, IT IS NOT ON RECORD THAT U LTIMATELY WHETHER THE CLAIM OF THE PTU OF EXEMPTION U/S 10(23C)(III AB) WAS ACCEPTED BY THE ASSESSING OFFICER OR NOT AND WHETHER THAT I SSUE HAS BEEN RAISED IN APPEAL BEFORE THE HIGHER AUTHORITIES OR W HETHER THE SAME HAS ATTAINED FINALITY OR NOT. IN VIEW OF THIS, THE MATT ER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO V ERIFY FROM THE ASSESSING OFFICER OF THE DEDUCTEE AS TO WHETHER THE CLAIM OF TAX EXEMPTION OF THE DEDUCTEE U/S 10(23C)(IIIAB) OR UND ER ANY OTHER PROVISION OF THE ACT, AS THE CASE MAY BE, WAS ALLO WED FOR THE YEAR UNDER CONSIDERATION OR NOT. IF THE DEDUCTEE IS FOU ND TO BE NOT LIABLE TO PAY TAX FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION, THEN NO PENALTY / DEMAND WILL BE PAYABLE BY THE ASSESSEE U/ S 201 / 201A OF THE INCOME TAX ACT. HOWEVER, IF IT IS FOUND THAT T HE CLAIM OF THE DEDUCTEE FOR TAX EXEMPTION WAS REJECTED AND THE DED UCTEE WAS HELD LIABLE FOR ASSESSMENT OF ITS INCOME, THEN THE ASSES SEE-DEDUCTOR WOULD CERTAINLY BE LIABLE TO PAY THE DEMAND RAISED BY THE ASSESSING OFFICER U/S 201/ 201A OF THE INCOME TAX ACT. WITH THE ABOVE DIRECTIONS, THE AFORESAID APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2018 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07.09.2018 RKK ITA NOS. 1 TO 4/CHD/2018- CANARA BANK, JALANDHAR 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR