State Bank of Mysore, Bangalore V. Income tax Officer(TDS)LTU, Bangalore

ITA 1110/BANG/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8583 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 27-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 201; 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NOS.1110 & 1111(BANG) 2014 (ASSESSMENT YEARS : 2012-13 & 2013-14) STATE BANK MYSORE, RAJAJINAGAR BRANCH, BANGALORE -560 010 TAN: AABCM9868J APPELLANT VS THE INCOME TAX OFFICER (TDS) LTU, JSS TOWERS, 100FT RING ROAD, BANASHANKARI 3 RD STAGE, BANGALORE-560 085 RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI M.K.B IJU, JCIT DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 07-02-2017 O R D E R PER SHRI A.K.GARODIA, AM BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT (A), LTU, BANGALOR E DATED 27.06.2014 FOR ASSESSMENT YEARS 2012-13 & 2013-14. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE CONVENIENCE. ITA NOS.1110 & 1111(B)2014 2 2. IN BOTH THESE APPEALS, THE ASSESSEE HAS RAISED S EVERAL GROUNDS BUT ONLY ONE ISSUE IS INVOLVED I.E. LEVY OF INTERES T AMOUNTING TO RS.43,627/- U/S 201(1A) OF THE IT ACT FOR ASSESSMEN T YEAR 2012-13. SIMILARLY, LEVY OF INTEREST OF RS.4,190/- U/S 201(1 A) OF THE IT ACT, 1961 FOR ASSESSMENT YEAR 2013-14. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.111 0(B)/2014 ARE AS UNDER; 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- LTU (HEREINAFTER REFERRED AS CIT (A) FOR SHORT) TO THE EXTENT PREJUDICIAL TO THE APP E LLAN T I S B A D IN L AW AND LI A BL E T O BE QUA S HED. 2. THE L EA RN E D I NCO M E TA X OFFICER (TDS) L TU , BANGALORE (HEREINAFTER REFERRED AS ' AO ' FOR SHORT) HAS ERRED IN PASSING THE ORDER IN THE MANNER PASSED B Y HIM . THE ORDERS BEING BAD IN LAW ARE LIABLE TO BE QUASHED 3.THAT O N THE FACT S AND CIRCUMSTANCE OF THE CASE THE LEARNED ITO IS NOT JUSTIFIED IN LEVYING INTERES T ON NON - DEDUCTION OF TDS. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO. 4. THAT, THE LEARNED ITO HAS ERRED IN CONSIDERING T HAT THE INTEREST INCOME OF THE DEDUCTEE IS TAXABLE UNDER TH E ACT, THOUGH THE SAME IS EXEMPTED U / S 12 OF THE ACT . THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ITO IS NOT JU S T I FI E D IN L EVYI N G IN TE R ES T OF R S.43,627/- UNDER SECTION 20 I OF THE ACT . RELIANCE IS PLACED IN THE CASE OF HINDUSTAN COCO-CO LA BEVERAGE PVT . LTD VIS COMMISSIONER OF INCOME TAX. ITA NOS.1110 & 1111(B)2014 3 6. THAT THE LEARNED ITO HAS ERRED BOTH ON FACTS AND IN LAW BY IGNORING THE FACTS THAT THERE IS NO LIABILIT Y TO TAX WHEN THE ENTIRE INCOME OF THE DEDUCTEE IS EXEMPT FR OM TAX. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING TH E ACTION OF THE AO . 7. THAT , THE LEARNED ITO HAS ERRED BOTH ON FACTS AND IN LAW BY LEVYING THE INTEREST EVEN THOUGH THE DEDUCTO R IS NOT AN ASSESSEE IN DEFAULT . PRAYER BASED ON THE ABOVE GROUNDS AND SUCH OTHER GROUNDS T HE ASSESSEE MAY TAKE AT THE TIME OF THE PERSONAL HEARI NG THE ASSESSEE MOST RESPECTFULLY PRAYS THE HONORABLE APPELLATE AUTHORITY TO (1) TO SET ASIDE THE ORDER LEVYING THE INTEREST ON THE ASSESSEE. (2) TO GRANT SUCH OTHER RELIEFS THE ASSESSEE MAY BE ELIGIBLE. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUND S / SUB-GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE T O ONE ANOTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL , AT ANY TIME BEFORE OR AT, THE TIME OF HEARING , OF THE APPEAL , SO AS TO ENABLE INCOME TAX APPELLATE TRIBUNAL TO DECIDE T HE APPEAL ACCORDING TO LAW . 4. SIMILARLY, IN ITA NO.1111(B)/2014, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ITA NOS.1110 & 1111(B)2014 4 1 THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- LTU (HEREINAFTER REFERRED AS CIT (A) FOR SHORT) TO THE EXTENT PREJUDICIAL TO THE APP E LLAN T I S B A D IN L AW AND LI A BL E T O BE QUA S HED. 2. THE L EA RN E D I NCO M E TA X OFFICER (TDS) L TU , BANGALORE (HEREINAFTER REFERRED AS ' AO ' FOR SHORT) HAS ERRED IN PASSING THE ORDER IN THE MANNER PASSED B Y HIM . THE ORDERS BEING BAD IN LAW ARE LIABLE TO BE QUASHED 3. THAT O N THE FACT S AND CIRCUMSTANCE OF THE CASE THE LEARNED ITO IS NOT JUSTIFIED IN LEVYING INTERES T ON NON - DEDUCTION OF TDS. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO. 4. THAT, THE LEARNED ITO HAS ERRED IN CONSIDERING T HAT THE INTEREST INCOME OF THE DEDUCTEE IS TAXABLE UNDER TH E ACT, THOUGH THE SAME IS EXEMPTED U / S 12 OF THE ACT . THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ITO IS NOT JU S T I FI E D IN L EVYI N G IN TE R ES T OF R S.4,190/- UNDER SECTION 20 I OF THE ACT . RELIANCE IS PLACED IN THE CASE OF HINDUSTAN COCO-CO LA BEVERAGE PVT . LTD VIS COMMISSIONER OF INCOME TAX. 6. THAT THE LEARNED ITO HAS ERRED BOTH ON FACTS AND IN LAW BY IGNORING THE FACTS THAT THERE IS NO LIABILIT Y TO TAX WHEN THE ENTIRE INCOME OF THE DEDUCTEE IS EXEMPT FR OM TAX. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING TH E ACTION OF THE AO . 7. THAT , THE LEARNED ITO HAS ERRED BOTH ON FACTS AND IN LAW BY LEVYING THE INTEREST EVEN THOUGH THE DEDUCTO R IS NOT AN ASSESSEE IN DEFAULT . ITA NOS.1110 & 1111(B)2014 5 PRAYER BASED ON THE ABOVE GROUNDS AND SUCH OTHER GROUNDS T HE ASSESSEE MAY TAKE AT THE TIME OF THE PERSONAL HEARI NG THE ASSESSEE MOST RESPECTFULLY PRAYS THE HONORABLE APPELLATE AUTHORITY TO (1) TO SET ASIDE THE ORDER LEVYING THE INTEREST ON THE ASSESSEE. (2) TO GRANT SUCH OTHER RELIEFS THE ASSESSEE MAY BE ELIGIBLE. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUND S / SUB-GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE T O ONE ANOTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL , AT ANY TIME BEFORE OR AT, THE TIME OF HEARING , OF THE APPEAL , SO AS TO ENABLE INCOME TAX APPELLATE TRIBUNAL TO DECIDE T HE APPEAL ACCORDING TO LAW . 5. NONE APPEARED ON BEHALF OF THE ASSESSSEE ON THE APPOINTED DATE OF HEARING. AN APPLICATION HAS BEEN RECEIVED FROM SHRI ATUL K ALUR, ADVOCATE, THE LD. AR OF THE ASSESSEE REQUESTI NG FOR ADJOURNMENT, BUT NONE WAS PRESENT IN THE COURT TO PURSUE THE ADJ OURNMENT APPLICATION. THE ADJOURNMENT SOUGHT WAS REJECTED B ECAUSE IT WAS WITHOUT PROPER AND VALID REASONS AND THE APPEALS OF THE ASSESSEE WERE HEARD EX-PARTE QUA-THE ASSESSEE. 6. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NOS.1110 & 1111(B)2014 6 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW. WE FIND THAT THE FACTS IN THIS CASE ARE NOTED BY TH E LD. CIT(A) IN PARA-2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAK E OF READY REFERENCE; 2. THE FACTS OF THE CASE ARE THAT THE APPELLANT, WHICH IS A BRANCH OF THE PUBLIC SECTOR BANK CALLED STATE BANK OF MYSORE, HAD MADE PAYMENTS OF INTEREST AMOUNTING TO RS.3,49,247/- DURING FY: 2011-12 AND RS.18,17,795/- FOR AY: 2012-13 WITHOUT DEDUCTING TA X U/S 194A. THIS PAYMENT HAD BEEN MADE TO THE KARNATAKA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD (HEREINAFTER REFERRED TO AS THE BOARD ). THE REASON FOR SUCH NON-DEDUCTION AS STATED BEFORE THE AO WAS THAT THE APPELLANT CONSIDERED THE BOARD TO BE AN ENTITY EXEMPT FROM TDS PROVISIONS BASED ON T HE DECLARATION U/S 197A (1A) IN FORM 15H WHICH HAD BEEN SUBMITTED BY THE BOARD TO THE BANK. ADDITIONALLY THE ASSESSEE HAD PRODUCED FORM 26A DULY CERTIFIED BY THE CHARTERED ACCOUNTANT IN TERMS OF THE FIRST PROVISO TO SEC.201(1) WHERE IT WAS CERTIF IED THAT THE INTEREST PAYABLE/PAID BY THE BANK HAD BEEN INCLUDED IN THE TOTAL INCOME OF THE BOARD. CONSIDE RING THIS, ALONG WITH COPIES OF THE ACKNOWLEDGEMENT OF I T RETURN FILED BY THE BOARD. THE AO DID NOT TREAT THE ASSESSEE AS BEING IN DEFAULT U/S 201(1). SHE, HOWEV ER, LEVIED INTEREST U/S 201(1A). 8. FROM THE ABOVE PARA REPRODUCED FROM THE ORDER O F THE LD. CIT(A), IT COMES OUT THAT THIS IS THE CASE OF THE A SSESSEE THAT THE ITA NOS.1110 & 1111(B)2014 7 DEDUCTEE HAD FURNISHED DECLARATION U/S 197A(1A) IN FORM NO.15H TO THE ASSESSEE BANK. HENCE, WE NOW REPRODUCE PROVISI ONS OF SUB SEC.1A OF SEC.197A OF THE IT ACT, 1961. (1A) NOTWITHSTANDING ANYTHING CONTAINED IN (SEC.192A) OR SECTION 193 OR SECTION 194A OR SECTIO N 194D) (OR SECTION 194) OR SECTION 194K, NO DEDUCTIO N OF TAX SHALL BE MADE UNDER (ANY) OF THE SAID SECTIONS IN THE CASE OF A PERSON (NOT BEING A COMPANY OR A FIRM), I F SUCH PERSON FURNISHES TO THE PERSON RESPONSIBLE FOR PAYI NG AN INCOME OF THE NATURE REFERRED TO IN (SEC.192A) ( SECTION 193) OR SECTION 194A(OR SEC.194D) (OR SECTION 194) OR SECTION194K, AS THE CASE MAY BE, A DECLARATION IN WRITING IN DUPLICATE IN THE PRESCRIBED FORM AND VER IFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE TAX ON HIS ESTIMATED TOTAL INCOME OF THE PREVIOUS YEAR IN WHIC H SUCH INCOME IS TO BE INCLUDED IN COMPUTING HIS TOTA L INCOME WILL BE NIL. 9. FROM THE ABOVE PROVISIONS OF SUB SEC.1A OF SEC. 197A, IT IS SEEN THAT NO TDS IS REQUIRED TO BE DEDUCTED U/S 194 A OF T ACT, 1961 IF THE DEDUCTEE SUBMITTED A DECLARATION TO THE EFFECT THAT TAX ON ESTIMATED TOTAL INCOME WILL BE NIL. THIS IS AN ADMITTED POSITION OF THE FACT AS PER PARA-2 REPRODUCED ABOVE FROM THE ORDER OF THE LD. C IT(A) THAT THE SAID DECLARATION WAS FURNISHED BY THE DEDUCTEE IN THE PR ESENT CASE TO THE ASSESSEE BANK AND THEREFORE, IN OUR CONSIDERED OPIN ION, NO TDS WAS REQUIRED TO BE DEDUCTED BY THE ASSESSEE DEDUCTOR AN D IF NO TDS IS ITA NOS.1110 & 1111(B)2014 8 REQUIRED TO BE DEDUCTED THEN, NO INTEREST CAN BE CH ARGED U/S 201 (1A) OF THE IT ACT, 1961. 10. IN THIS VIEW OF THE MATTER, THE DEMAND OF INTE REST RAISED IN BOTH YEARS IS NOT AS PER LAW AND WE THEREFORE, CANC EL THE SAME. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. (LALIET KUMAR) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : .02.2017 AM * COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE ITA NOS.1110 & 1111(B)2014 9 1. DATE OF DICTATION 2. , , DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICT ATING MEMBER .. 3. !' # . $ %# / $ %# # & DATE ON WHICH THE APPROVED DRAFT COMES TO THE PS/SR .PS. 4. ''() & * + DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTAT ING MEMBER FOR PRONOUNCEMENT 5. * . %# / # . . %# # + DATE ON WHICH THE ORDER COMES BACK TO THE PS/SR.PS .. 6 * !', + DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. ! !', ' , - ) IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. .% / 0 + DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. * 1'2 / 34 & 5 + DATE ON WHICH ORDER GOES FOR XEROX &ENDORSEMENT 10. 0 6 / + DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 11. * 7 & 0 8 + THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. !) * 9() & 0 9() /#5 . + THE DATE ON WHICH THE FILE GOES TO DESPATCH SECTION FOR DESPATCH OF THE TRIBUNAL ORDER 13. * 9() + DATE OF DESPATCH OF ORDER .