The Income-tax Officer, Jammu V. The Branch Manager, Jammu

ITA 148/ASR/2015

• Counselvise Citation: 14820914 RSA 2015
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDADR
• Section: 12A; 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR [JAMMU CAMP, JAMMU] BEFORE HONBLE SHRI A.D.JAIN, JUDICIAL MEMBER, AND HONBLE SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A. NOS. 145 TO 148(ASR)/2015 ASSESSMENT YEARS: 2009-10, 2011-12 & 2012-13 THE I . T .O , TDS CIRCLE, RAIL HEAD COMPLEX, JAMMU. VS. THE B RANCH MANAGER , THE J & K BANK LTD. MOVING SECTT BRANCH CIVIL SECTT. JAMMU TAN: AMRJI0878 A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.K. SHARDA(DR.) RESPONDENT BY: SHRI R.K. GUPTA, CA DATE OF HEARING: 01.12.2015 DATE OF PRONOUNCEM ENT: 03.12 .2015 ORDER PER A.D. JAIN, J.M:- THESE ARE DEPARTMENTAL APPEALS FOR A.YS. 2009-10, 2010-11, 2011-12 & 2012-13 CONTENDING THAT THE LD. CIT(A) HA S ERRED IN DELETING THE DEMAND OF RS. 2,11,19,843/- IN A.Y 200 9-10, RS. 1,35,84,394/- IN A.Y 2010-11, RS. 61,81,066/- IN A. Y 2011-12 AND RS. 37,29,690/- IN A.Y 2012-13 RESPECTIVELY, RAISED U/S 201(1) AND ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 2 INTEREST U/S 201(1A) OF THE INCOME-TAX ACT, 1961 [H EREINAFTER REFERRED TO AS THE ACT, FOR SHORT]. 2. FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A BRAN CH MANAGER OF MOVING SECRETARIAT BRANCH OF JAMMU AND KASHMIR BANK LTD. HE WAS HELD AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING TA X AT SOURCE ON ALLEGED DEPOSITS WHICH WERE FUNDS OF THE CENTRAL GO VERNMENT. THE LD. CIT(A), WHILE DELETING THE ADDITIONS IN ALL THE YEARS UNDER CONSIDERATION, HELD THAT THE ASSESSEE WAS NOT LIABL E TO DEDUCT TAX ON INTEREST ON DEPOSITS HELD BY THE BRANCH AND HE, THEREFORE, CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT. WHILE ARRIVING AT THIS CONCLUSION, THE LD. CIT(A) RELIED ON THE JUDGMENT O F THE ITAT JAIPUR BENCH IN THE CASE OF ITO VS. BRANCH MANAGER, STATE BANK OF BIKANER AND JAIPUR, JAIPUR IN ITA NO. 966 TO 973/JP/2011. AGGRIEVED, THE DEPARTMENT IS NOW IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A), JA MMU WAS NOT RIGHT IN DELETING THE DEMANDS OF RS. 2,11,19,843/- IN A.Y 2009-10, RS. 1,35,84,394/- IN A.Y 2010-11, RS. 61,81,066/- I N A.Y 2011-12 AND RS. 37,29,690/- IN A.Y 2012-13 RAISED U/S 201(1 ) AND INTEREST ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 3 U/S 201(1A) OF THE ACT BY RELYING ON THE ORDER OF T HE ITAT JAIPUR BENCH IN THE CASE OF BRANCH MANAGER [SUPRA]. HE FU RTHER CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING TH AT THE PR WAS NOT LIABLE TO DEDUCT TAX ON INTEREST AND CANNOT BE TREA TED AS AN ASSESSEE IN DEFAULT. 4. ON THE OTHER HAND, THE LD. AR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. ATTENTION HAS BEEN DRAWN TO TH E DECISION IN THE CASE OF BRANCH MANAGER [SUPRA], COPY OF WHICH H AS BEEN PLACED ON RECORD FOR READY REFERENCE IN THE ASSSESSEES PA PER BOOK AT PAGES 6 TO 16. POINTED REFERENCE HAS BEEN MADE TO PARA 11 OF THE SAID ORDER. 5. HAVING HEARD THE PARTIES, WE FIND THAT THE ASSES SEE WAS HELD TO BE A PERSON RESPONSIBLE LIABLE TO DEDUCT TAX FOR THE FOLLOWING REASONS: (I) CHAPTER 13 OF THE FINANCE AND ACCOUNTS MANUAL O F THE NATIONAL RURAL ROAD DEVELOPMENT AGENCY GIVES THE ACC OUNTING PROCEDURE FOR TREATMENT OF GROSS INTEREST AND TAX DE DUCTED AT SOURCE. ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 4 (II) J & K RURAL ROADS DEVELOPMENT AGENCY IS LIABLE TO FILE RETURN OF INCOME AND IT IS NOT REGISTERED U/S 12A OF THE ACT. IT HAS NOT GIVEN ANY DECLARATION U/S 197 OF THE ACT AND ALSO NOT A NOTIFIED ORGANIZATION IN TERMS OF NOTIFICATIO N NO. 3489 DATED 22.10.1970. 6. NOW, AS CORRECTLY TAKEN INTO CONSIDERATION BY TH E LD. CIT(A), AS PER THE PMGSY [A SCHEME OF THE MINISTRY OF RURAL DEVELOPMENT], ANY INTEREST INCOME ACCRUED ON SURPLUS FUNDS OF THE PROJECT PARKED IN THE BANK WOULD BE OF MINISTRY OF ROAD DEVELOPMEN TS AND STATE RURAL ROAD DEVELOPMENT AGENCY WOULD NOT HAVE ANY RI GHT OVER THE INTEREST INCOME. CHAPTER X OF THE ACCOUNTING MANUAL OF PMGSY SCHEME IS EXPLICIT IN THIS REGARD AND THE AO ERRED IN RELYING ON CHAPTER XIII OF THE SAID MANUAL. WHEREAS, THE SAID CHAPTER XIII DEALS WITH THE CONCEPT OF TDS ON INTEREST INCOME AN D ACCOUNTING TREATMENT TO BE GIVEN WITH REGARD THERETO. IT REMA INS UNDISPUTED THAT SUCH ACCOUNTING TREATMENT OF TDS, AS GIVEN IN THE ACCOUNTING MANUAL IS OF RESIDUARY NATURE AND IT CONSTITUTES ME RELY A GUIDELINE IN THE EVENT OF TDS BY THE BANK. CHAPTER X OF THE A CCOUNTING MANUAL IS SPECIFIC WITH REGARD TO THE NATURE AND ST ATE OF INTEREST INCOME, STATING THE INTEREST INCOME AS BELONGING TO THE MINISTRY OF ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 5 RURAL DEVELOPMENT. THE STATE RURAL ROAD AGENCY DOES NOT HAVE ANY CONTROL WHATSOEVER ON THE INTEREST INCOME. THAT BE ING SO, THE CONTENTS OF CHAPTER XIII OF THE ACCOUNTING MANUAL, A S RIGHTLY HELD BY THE LD. CIT(A), CANNOT OVER RIDE THOSE OF CHAPTER X OF THE MANUAL. 7. FURTHER, APROPOS THE APPLICABILITY OF THE PROVIS IONS OF SECTION 194A(3)(III)(F) OF THE ACT TO J&K SRRDA, CBDT NOTI FICATION NO. 3489 DATED 22.10.1970, DILATES ON THIS ASPECT. AS PER T HIS NOTIFICATION, ANY CORPORATION ESTABLISHED BY THE CENTRAL, STATE O R PROVISIONAL ACT, IS COVERED BY THIS NOTIFICATION. DESPITE THIS, THE AO WAS OF THE VIEW THAT THE ASSESSEE CORPORATION HAD TO APPLY SEPARATE LY FOR EXEMPTION AND THIS WAS TO BE NOTIFIED IN THE OFFICIAL GAZETTE AFTER BEING APPROVED BY THE CENTRAL GOVERNMENT. THIS MATTER WA S AT ISSUE IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY. THE LD. CI T(A) HELD THAT EVEN IN THE CASE OF A CORPORATION, NO SEPARATE NOTI FICATION IS REQUIRED. THE TRIBUNAL, VIDE ORDERS DATED 24.04.20 12 AND 09.07.2012 IN ITA NOS. 206 TO 210/ASR/2011 AND 623 TO 624/ASR/2011 UPHELD THIS DECISION OF THE LD. CIT(A) , BY HOLDING AS UNDER: ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 6 WE ALSO HOLD THAT EXCEPTION PROVIDED IN SECTION 194A(3)(III)(F) OF THE ACT AND AS PER NOTIFICATION, THE JAMMU DEVELOPMENT AUTHORITY IS A CREATION OF J &K DEVELOPM ENT ACT AND SATISFIES THE ENTRY NO. 39 OF THE SAID NOTIFICA TION AND WE HOLD THAT NO TAX WAS DEDUCTIBLE ON INTEREST ACCRUED ON FDRS OF JAMMU DEVELOPMENT AUTHORITY WITH J & K BANK LTD. KEEPING IN VIEW THE ABOVE DISCUSSION, WE HOLD THAT N O INTERFERENCE IS CALLED FOR IN WELL REASONED IMPUGNE D ORDER PASSED BY THE FIRST APPELLATE AUTHORITY AND ACCORDIN GLY WE HOLD THE SAME. 8. IN THE ASSESSEES CASE, THE LD. CIT(A) HELD THAT THE J & K STATE RURAL ROAD AGENCY IS A BODY ESTABLISHED BY THE GOVE RNMENT OF JAMMU AND KASHMIR, REGISTERED UNDER THE SOCIETIES A CT AND IS FULLY FUNDED BY THE GOVERNMENT. IT WAS POINTED OUT THAT, ACCORDING TO SL. NO. 40 OF THE NOTIFICATION ISSUED IN PURSUANCE TO SECTION 195A(3)(III)(F), ANY UNDERTAKING OR BODY INCLUDING SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, FINANCE D WHOLLY BY THE GOVERNMENT ARE EXEMPT FROM DEDUCTION OF TAX ON INT EREST ON THEIR DEPOSITS. RELYING ON THE DECISION OF THE CHANDIGAR H BENCH OF THE TRIBUNAL IN THE CASE OF ITO(TDS), SHIMLA VS. STATE BANK OF PATIALA, HP SECTT, SHIMLA [2014] 146 ITD 497 [CHD] IN ITA NO S. 1306 - 1307/CHD/2012 THE LD. CIT(A) HAS HELD THAT SOCIETIE S WHICH ARE ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 7 BEING WHOLLY FUNDED BY GOVERNMENT WOULD QUALIFY FOR NON DEDUCTION OF TAX U/S 194A IN ACCORDANCE WITH NOTIFI CATION NO. 3489 DATED 22.10.1970. THE LD. CIT(A) HELD THAT NO TAX WAS REQUIRED TO BE DEDUCTED, J & K STATE RURAL DEVELOPMENT AGENCY B EING A SOCIETY COVERED BY SL. NO. 40 OF NOTIFICATION NO. 3489 DATE D 22.10.1970. 9. THESE EXPLICIT AND DIRECT FINDINGS OF FACT RECOR DED BY THE LD. CIT(A) HAVE NOT BEEN SUCCESSFULLY REPELLED BY THE D EPARTMENT BEFORE US. THUS, IT REMAINS AN UNDISPUTED FACT THA T THE J&K STATE RURAL ROAD AGENCY IS A BODY ESTABLISHED BY THE GOVE RNMENT OF J & K, REGISTERED UNDER THE SOCIETIES REGISTRATION ACT AND IS FULLY FUNDED BY THE GOVERNMENT AND IT IS NOT REQUIRED TO MAKE TDS. 10. THEN, IN ITO VS. BRANCH MANAGER [SUPRA], THE JA IPUR BENCH OF THE TRIBUNAL HAS HELD THAT FOR INTEREST ON SUCH LIK E DEPOSITS, TDS PROVISIONS OF SECTION 194A OF THE ACT ARE NOT ATTRA CTED. THIS DECISION WAS ALSO TAKEN NOTE OF BY THE LD. CIT(A) W HILE DELETING THE DEMAND RAISED. ALSO, NO CONTRARY DECISION HAS BEEN PRESSED INTO SERVICE BEFORE US ON BEHALF OF THE DEPARTMENT. ITA NO. 145 TO 148(ASR)/2015 A.YS 2009-10 TO 201 2-13 8 11. IN VIEW OF THE ABOVE, WE FIND THE ORDER OF THE LD. CIT(A) WITH REGARD TO ALL THE YEARS UNDER CONSIDERATION TO BE O N ALL FOURS. THE SAME IS, THEREFORE, HEREBY CONFIRMED. 12. IN THE RESULT, ALL THE FOUR APPEALS FILED BY TH E DEPARTMENT STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER, 2015. SD/- SD/- (T.S. KAPOOR) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD NDECEMBER, 2015 VL/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE DEPARTMENT 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.