Panjab National Bank, Dehradun V. The Assistant Commissioner of Income Tax (TDS), Dehradun

ITA 11/DDN/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8992 (ITAT-DEHRADUN)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C UPADHYAYA
• Assessee Lawyers: VIMAL KISHORE
• Keywords: Non-deduction of tax; TDS
• Section: 201(1); 194A; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 10/DDN/2020 : ASSTT. YEAR: 2011-12 ITA NO. 11/DDN/2020 : ASSTT. YEAR: 2012-13 ITA NO. 12/DDN/2020 : ASSTT. YEAR: 2013-14 ITA NO. 13/DDN/2020 : ASSTT. YEAR: 2014-15 ITA NO. 14/DDN/2020 : ASSTT. YEAR: 2015-16 PUNJAB NATIONAL BANK, SUBHASH ROAD BRANCH, DEHRADUN VS ACIT(TDS), DEHRADUN (APPELLANT T (RESPONDENT) PAN NO. MRTP02168F ASSESSEE BY : SH. VIMAL KISHORE, CA REVENUE BY : SH. N. C. UPADHYAYA, SR. DR DATE OF HEAR ING: 12 . 07 .20 21 DATE OF PRONOUNCEMENT: 06 .0 8 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AGAINST THE ORDERS OF LD. CIT (A), DEHRADUN DATED 1 1.10.2019, 14.10.2019 AND 16.10.2019. 2. SINCE, THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDENTICAL, THEY WERE HEARD TOGETHER. 3. IN ITA NO. 10/DDN/2020, FOLLOWING GROUNDS HAVE B EEN RISED BY THE ASSESSEE: 1. FOR THAT THE LEARNED CIT APPEAL FAILED TO APPRE CIATE THE FACT THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TA X AT SOURCE U/S 194A ON PAYMENT OF INTEREST OF RS 21,95, 687/- (ERRONEOUSLY STATED AS RS 27,95,687/- IN THE APPELL ATE ITA NOS. 10 TO 14/DEL/2020 PUNJAB NATIONAL BANK 2 ORDER) MADE TO UTTARAKHAND CO-OPERATIVE SUGAR FACTO RIES FEDERATION LIMITED EMPLOYEES CONTRIBUTORY PROVIDENT FUND TRUST SINCE THE SAME IS RECOGNIZED BY THE COMMISSIO NER OF INCOME TAX UNDER SUB-RULE (1) OF RULE 3 OF PART A O F THE FOURTH SCHEDULE OF THE INCOME TAX ACT 1961. CIRCULA R NO 004 OF 2002 DATED 16-7-2002 ISSUED BY THE CBDT PROV IDES FOR NON-DEDUCTION OF TAX AT SOURCE IN RESPECT OF EN TITIES WHOSE INCOME IS UNCONDITIONALLY EXEMPT FROM TAX AND SPECIFIES RECOGNIZED PROVIDENT FUND TRUST IN PARA 2 (XI) AS ELIGIBLE TO RECEIVE INCOME WITHOUT DEDUCTION OF TAX AT SOURCE. 2. FOR THAT THE LEARNED CIT APPEAL FAILED TO APPREC IATE THE FACT THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TA X AT SOURCE U/S 194A ON PAYMENT OF INTEREST OF RS 26,13, 300/- MADE TO UTTARAKHAND CO-OPERATIVE SUGAR FACTORIES FEDERATION LIMITED SINCE THE SAME IS SET UP, FINANC ED AND IS UNDER THE CONTROL OF GOVERNMENT OF UTTARAKHAND. SECTION 194A(3)(F) PROVIDES THAT THE PROVISIONS OF SECTION 194A WILL NOT APPLY TO SUCH INSTITUTIONS OR CLASS O F INSTITUTIONS THAT THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICIAL GAZETTE. THE CENTRAL GOVERNMENT VIDE NOTIF ICATION DATED 15-5-1987 NOTIFIED INSTITUTIONS FOR THE PURPO SE OF THE AFOREMENTIONED SECTION. ENTRY NO 41 OF THE NOTI FICATION SPECIFIES ANY UNDERTAKING OR BODY WHOLLY FINANCED B Y THE GOVERNMENT. 3. FOR THAT THE LEARNED CIT (APPEALS) IGNORED THE F ACT THAT THE RECIPIENT OF INTEREST, NAMELY UTTARAKHAND CO- OPERATIVE SUGAR FACTORIES FEDERATION LIMITED EMPLOY EES CONTRIBUTORY PROVIDENT FUND TRUST BEING AN EXEMPT E NTITY U/S 10(25) WAS NOT LIABLE TO FILE RETURN OF INCOME U/S 139 OF THE ACT. THE LEARNED CIT (APPEAL) REJECTED THE A LTERNATE CLAIM OF THE APPELLANT TO TAKE ON RECORD FORM 26A PRESCRIBED UNDER RULE 31ACB FOR THE PURPOSE OF FIRS T PROVISO TO SECTION 201(1) ONLY BECAUSE THE RETURN O F INCOME WAS NOT FILED BY THE UTTARAKHAND CO-OPERATIV E SUGAR FACTORIES FEDERATION LIMITED EMPLOYEES CONTRI BUTORY PROVIDENT FUND TRUST. 4. FOR THAT THE LEARNED CIT (APPEALS) IGNORED THE R EPORT SUBMITTED BY THE RESPONDENT, NAMELY ACIT (TDS), REQUISITIONED BY HIM DURING THE APPELLATE PROCEEDIN GS. THE ACIT (TDS) HAD HERSELF AGREED THAT THE APPELLANT WA S NOT LIABLE TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO THE UTTARAKHAND CO-OPERATIVE SUGAR FACTORIES FEDERATION LIMITED EMPLOYEES CONTRIBUTORY PROVIDENT FUND TRUST AND TO UTTARAKHAND CO-OPERATIVE SUGAR FACTORIES FEDERAT ION LIMITED. ITA NOS. 10 TO 14/DEL/2020 PUNJAB NATIONAL BANK 3 4. THE CORE ISSUE REVOLVES AROUND THE FAILURE OF TH E ASSESSEE TO DEDUCT TDS U/S 194 OF THE INCOME TAX ACT, 1961 O N THE PAYMENTS MADE TO INTEREST ON TERM DEPOSITS TO M/S U TTARKHAND CO-OPERATIVE SUGAR FACTORIES FEDERATION LTD. (USFL) AND EMPLOYEES CONTRIBUTORY PF TRUST (PF TRUST). 5. THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER WITH REGARD TO THE INTEREST PAID TO PF TRUS T AND DELETED THE LIABILITY INCURRED ON ACCOUNT OF USFL AND CONFI RMED THE ACTION PERTAINING TO THE PF TRUST ON THE GROUNDS TH AT NO RETURN HAS BEEN FILED AND NO COPY HAS BEEN PRODUCED BEFORE THE REVENUE AUTHORITIES. 6. ON PERUSAL OF THE RECORD BEFORE US AND THE PAPER BOOK FILED, WE FIND THAT M/S UTTARKHAND CO-OPERATIVE SUG AR FACTORIES FEDERATION LTD. AND EMPLOYEES CONTRIBUTORY PF TRUST HAS BEEN ACCORDED RECOGNITION VIDE ORDER U/S 154 OF THE INCO ME TAX ACT, 1961 DATED 22.05.2011 W.E.F. 28.12.2010. FURTHER, T HE CBDT CIRCULAR NO. 004/2002 DATED 16.07.2002 CLARIFIED TH E NON- REQUIREMENT OF TAX DEDUCTION AT SOURCE IN CASE OF E NTITIES WHOSE INCOME IS EXEMPT U/S 10 OF THE IT ACT. THE PROVISIO N RELEVANT TO THE ASSESSEE BEFORE US IS MENTIONED AT PARA XI WHIC H READS AS PROVIDENT FUND TO WHICH THE PROVIDENT FUND ACT, 19 25 (19 OF 1925) REFERRED TO IN SUB-CLAUSE (I), RECOGNIZED PRO VIDENT FUND REFERRED TO IN SUB-CLAUSE (II), APPROVED SUPERANNUA TION FUNDS REFERRED TO IN SUB-CLAUSE (III), APPROVED GRATUITY FUND REFERRED TO IN SUB-CLAUSE (IV) AND FUNDS REFERRED TO IN SUB- CLAUSE (V) OF CLAUSE (25). ITA NOS. 10 TO 14/DEL/2020 PUNJAB NATIONAL BANK 4 7. IN VIEW OF THE APPARENT PROVISIONS OF THE ACT, C IRCULAR OF THE CBDT, THE RECOGNITION ACCORDED BY THE LD. CIT, DEHRADUN, THE OBSERVATION OF THE REVENUE AUTHORITIES THAT NO TAX EXEMPTION CERTIFICATE WAS EVER SOUGHT BY THE DEPART MENT IS INCORRECT ON THE SPECIFICS OF RECORD, WE STRAIGHTAW AY HOLD THAT THE ASSESSEE IS NOT LIABLE TO ANY ACTION U/S 201(1) AND SECTION 201(1A) OF THE INCOME TAX ACT, 1961. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/08/2021. SD/- SD/- (AMIT SHUKLA) (D R. B. R. R. KUMAR) JUDICIAL MEMBER ACCOU NTANT MEMBER DATED: 06/08/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR