Bank of Maharashtra, Anand V. The Income tax Officer, TDS, Anand

ITA 2419/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8785 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-03-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 04-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SRDR
• Assessee Lawyers: SUNIL H TALATI
• Keywords: TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.2419/AHD/2007 ASSESSMENT YEAR: 2002-03 DATE OF HEARING:16.3.10 DRAFTED:17.3.10 BANK OF MAHARASHTRA, ANAND BRANCH, STATION ROAD, ANAND PAN NO.AACCB0774B V/S. INCOME TAX OFFICER, TDS, ANAND (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SUNIL H TALATI, AR RESPONDENT BY:- SMT. NEETA SHAH, SR-DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-IV, BARODA IN APPEAL NO.CAB/IV- A-182/06-07 DATED 24-03- 2007. THE ASSESSMENT WAS FRAMED BY THE ITO, TDS ANA ND U/S.201 R.W.S. 194A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 27-02-2004 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN PASSI NG ORDER U/S.201 R.W.S 194A OF THE ACT FOR RECOVERING TDS OF RS.3,24,890/- AND INTERES T OF RS.1,21,834/- U/S.201(1A) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS NO.2, 3, 4 & 5 :- 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO OF PASSING ORDER U/S.201 RWS 194A OF THE ACT RECOVERING TDS OF RS.3,24,890 AND INTEREST OF RS.1,21,834, TREATING YOUR APPELLANT AS ASSESSE E IN DEFAULT. YOUR APPELLANT ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 2 SUBMITS THAT PROVISIONS OF SECTION 1294A ARE NOT AP PLICABLE IN THE CASE OF YOUR APPELLANT. YOUR APPELLANT HAS ALREADY DEDUCTED AND PAID THE TDS ON YEARLY BASIS IN ACCORDANCE WITH PROVISIONS OF LAW. THEREFO RE, THE ORDER PASSED BY THE AO BE HELD NULL AND VOID AB INITIO AND BE CANCELLED. 3. THE LEARNED AO AND CIT(A) HAS ERRED IN TREATING THE PROFORMA ENTRY OF PROVISION OF INTEREST ACCRUED ON 30.9.2001 MADE O NLY FOR ASCERTAINING BANKS PROFIT AND LOSS FOR THE HALF YEARLY ENDED ON 30.09. 2001 AS BEING COVERED BY PROVISO TO SECTION 194A OF THE I T ACT. 4. THE LEARNED AO AND CIT(A) HAS FAILED TO APPRECIA TE THAT THE ENTRY PASSED BY THE BANK WAS NOT FOR ANY INTEREST DUE AND PAYAB LE ON ANY DEPOSIT AND THAT ENTRY WAS REVERSED ON VERY NEXT DAY I.E. ON 1.10.20 01 NULLIFYING THE PROFORMA ENTRY MADE ON 30.9.2001 . 5. THE LEARNED AO AND CIT(A) HAS FAILED TO FOLLOW T HE OPINION OF CBDT GIVEN TO INDIAN BANK ASSOCIATION IN THE LETTER NO.F NO.13 1/51/95-TPL OF CBDT CLARIFYING THAT PROFORMA ENTRIES MADE ONLY FOR MANA GEMENT INFORMATION SYSTEM AND WHERE INTEREST IS NOT DUE AND PAYABLE ON THE DE POSIT, NO DEDUCTION OF TAX IS OBLIGATORY. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS A SCHEDULE BANK HAVING ITS BRANCH AT ANAND, GUJARAT. THE ASSES SING OFFICER FOR VERIFICATION OF TDS DEDUCTION AND PAYMENTS, CARRIED OUT SURVEY ON 1 7-10-2003, AND FROM THE RECORDS, IT IS NOTICED THAT INTEREST EXPENSES ON AC COUNT OF CUMULATIVE DEPOSITS WERE RECEIVED AND DEBITED IN THE PROFIT & LOSS A/C. PREP ARED AS ON 29-09-2001 AT RS.31,85,187/- BUT NO TAX WAS DEDUCTED BY THE ASSES SEE-BANK. THE AO ORDERED FOR RECOVERY OF THE TDS AND ALSO CHARGED INTEREST. AGG RIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) ALSO CONFIRMED THE ACTION OF THE AO BY GIVING FOLLOWING FINDING IN PARA-7 AND 7.1 TO 7.3 :- 7. I HAVE CONSIDERED THE ORDER OF THE ASSESSING OF FICER AND SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. THE BASIC SUBMISSION OF THE A.R STATES THAT IT IS A NOTIONAL LIABILITY WHEREIN, THE PERSON IN WHOSE ACCOUNT THE LIABILITY IS TO BE CREDITED IS NOT KNOWN. SINCE THE IDENTIFY OF THE PERSON IN WHOSE HANDS IT IS INCLUDIBLE, CANNOT BE ASCERTAINED , T.D.S. LIABILITY CANNOT ARISE. THE RELIANCE IS PLACED BY THE LEARNED AUTHOR IZED REPRESENTATIVE ON THE DECISION OF THE MUMBAI I.T.A.T. IN THE CASE OF I.D. B.I. VS. I.T.O. (SUPRA). THE FACTS OF THE PRESENT CASE ARE CLEARLY IDENTIFIABLE WITH THAT OF THE ABOVE CITATION. THE CASE OF THE IDBI DEALT WITH REGULAR RETURN BOND S ISSUED BY THE ASSESSEE WHICH WERE TRANSFERABLE BY SIMPLE ENDORSEMENT AND D ELIVERY AND THE RELEVANT REGISTRATION DATE FELL SUBSEQUENT TO THE CLOSURE OF BOOKS OF ACCOUNT. SINCE THE APPELLANT COULD NOT HAVE ASCERTAINED THE IDENTITY O F THE OWNER AT THE POINT OF TIME WHEN THE PROVISION OF INTEREST ACCRUED BUT NO T DUE WAS MADE BY IT, NO TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE IN RESPEC T OF SUCH PROVISION. ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 3 7.1 IN THE APPELLANTS CASE, INTEREST ACCRUED BUT N OT DUE HAS BEEN CREDITED TO A SUSPENSE ACCOUNT ON ACCOUNT OF CUMULATIVE DEPOSIT RECEIPTS RECEIVED BY THE BANK FROM DIFFERENT PERSONS. THE AMOUNT RECEIVED IN EACH INDIVIDUAL ACCOUNT IS CLEARLY IDENTIFIABLE BY THE BANK. THE PROVISION OF INTEREST IS MADE ON THE BASIS OF THIS INFORMATION ONLY. 7.2 THIS PROVISION WAS INSERTED BY THE FINANCE ACT, 1987 W.E.F. 1/6/1987. PRIOR TO THE INSERTION OF THE EXPLANATION, DEDUCTION OF T AX AT SOURCE WAS TO BE MADE AT THE TIME OF PAYMENT OR CREDIT TO THE ACCOUNT OF THE PAYEE. WITH A VIEW TO PREVENT POSTPONEMENT OF LIABILITY RELATING TO SUCH DEDUCTION OF TAX AT SOURCE, THE AMENDMENTS WERE MADE TO THESE SECTION. AS SECTI ON 194A STANDS TODAY TAX WILL BE DEDUCTED AT SOURCE ON ACCRUAL OF INTERE ST AT THE END OF THE ACCOUNTING YEAR, OR AT THE TIME OF PAYMENT, OR AT T HE TIME OF CREDIT TO THE ACCOUNT BY WHATEVER NAME CALLED IN THE BOOKS OF ACC OUNT OF THE PAYER, WHICHEVER IS EARLIER. 7.3 BY NOT DEDUCTING T.D.S. AT THE TIME OF MAKING A PROVISION, THE APPELLANT HAS VIOLATED THE EXPLANATION TO SECTION 194A OF THE INCOME TAX ACT. I THEREFORE, HOLD THAT THE ORDER PASSED BY THE ASSESS ING OFFICER TREATING THE APPELLANT AS AN ASSESSEE IN DEFAULT, U/S.201 R.W.S. 194A OF THE INCOME TAX ACT IS CORRECT AND DESERVES TO BE SUSTAINED. THE ORDER IS THEREFORE, CONFIRMED. HOWEVER, THE ASSESSING OFFICER IS DIRECTED TO GIVE CREDIT FOR TDS DEDUCTED AT THE YEAR END AFTER VERIFICATION OF ACCOUNTS. 4. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE FACTS OF THE CASE, WE FIND THAT ACCOUNTS OF THE BRANCH OF THE ASSESSEE-BA NK ARE FINALIZED AT THE YEAR END OF EACH FINANCIAL YEAR. HOWEVER, AS PER THE INSTRUCTIO N FROM CENTRAL OFFICE, A NOTIONAL PROVISION FOR HALF YEARLY INTEREST ON ACCOUNT OF CU MULATIVE DEPOSIT WAS SHOWN IN THE GENERAL LEDGER AS ON 29-09-2001 AND SAME IS REVERSE D ON 1ST OCTOBER, 2001. THE CENTRAL OFFICE ALSO DIRECTED THE BRANCH THAT NO TDS HAS TO BE DEDUCTED ON SUCH HALF YEARLY PROVISION FOR INTEREST ACCRUED BUT NOT DUE A ND SHOWN IN THE GENERAL LEDGER. THE ITO-TDS DURING THE TDS VERIFICATION CALLED FOR EXPLANATION AS TO WHY TAX IS NOT DEDUCTED AT SOURCE ON SUCH NOTIONAL PROVISIONS AS T HE SAME ATTRACTS PROVISIONS OF SECTION 194A OF THE ACT. THE ASSESSEE REPLIED THAT INTEREST ACCRUED DURING THE YEAR ON INDIVIDUAL CUMULATIVE DEPOSIT RECEIPTS (CDR IN S HORT) IS CREDITED TO INDIVIDUAL CDR ANNUALLY I.E. 31 ST MARCH EVERY YEAR AND NOT ON 30 TH SEPTEMBER. THE RATE OF INTEREST DIFFERS FROM TIME TO TIME AS PER THE RATE SCHEDULE RECEIVED FROM THE CENTRAL OFFICE. THE INTEREST ACCRUED ON SUCH INDIVIDUAL CDR IS CALCULATED ON QUARTERLY COMPUTATION BASIS AS PER THE RATE OF INTEREST APPLI CABLE AND SUCH ACCRUED INTEREST IS CREDITED TO INDIVIDUAL CDR ON 31 ST MARCH EVERY YEAR AS PER OUR CENTRAL OFFICE DIRECTIVES. THE INFORMATION IS SOUGHT BY AO IN RES PECT OF INTEREST PAID ON CDR ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 4 OUTSTANDING AS ON 30 TH SEPTEMBER 2001, 2002 AND 2003 FOR INTEREST ABOVE RS.5,000/- AND PERSONS WHO HAVE SUBMITTED FORM NO.1 5H. HOWEVER, ON 30 TH SEPTEMBER, IN RESPECTIVE YEARS AS MENTIONED ABOVE, THE ASSESSEE-BANK HAS NOT PAID ANY INTEREST, WHICH IS CREDITED OR MERGED WITH INDIVIDUAL CDR ACCOUNT OR CREDITED TO ANY ACCOUNT TO PAY SUCH INTEREST. THE A SSESSEE-BANK REITERATED, THAT NOTIONAL PROVISION WAS MADE, WHICH WAS RESERVED ON THE NEXT WORKING DAY AS PER THE DETAILS ALREADY SUBMITTED. THE PROVISION FOR HALF Y EAR IS MADE AS PER THE INSTRUCTIONS RECEIVED FROM OUR CENTRAL OFFICE. COPY OF CIRCULAR IS ENCLOSED IN THE ASSESSEES PAPER BOOK, DATED 02-09-2002 AND 03-09-2002 AND THE AMOUNT WAS NOT CREDITED TO ANY ACCOUNT TO PAY SUCH INTEREST. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE FILED A C OPY OF CBDT LETTER NO.AX1/AIFM/TDS/611/2006 DATED AUGUST 4, 2006 AND T HE RELEVANT COPY READS AS UNDER:- BANK OF MAHARASHTRA ACCOUNTS INVESTMENT & FUNDS MANAGEMENT DEPT. CENTRAL OFFICE, LOKMANGAL 1501, SHIVAJINAGAR, PUNE 411 005 PHONE: [phone] FAX: [phone] EMAIL:BOMCOACC@MAHABANK CO.IN AX1/AIFM/TDS/611/2006 AUGUST 4, 2006 THE BRANCH MANAGER BANK OF MAHARASHTRA ANAND BRANCH STATION ROAD ANAND (GUJARAT) DEAR SIR, RE: TDS ON HALF YEARLY INTEREST PROVISION ON CDR. WITH REFERENCE TO YOUR LETTER NO. AG19/INCOME TAX/T DS/2006-07 DATED 03.08.2006, WE WOULD LIKE TO INFORM YOU AS UNDER:- 1. AS PER THE PROVISIONS OF SECTION 194A OF THE INC OME TAX ACT, 1961, THE TAX IS DEDUCTIBLE AT SOURCE AT THE TIME OF CREDIT OR PAYME NT OF INTEREST OVER RS.5,000/- ON THE DEPOSITS. 2. AS PER THE CONTRACT, THE INTEREST ON CDR IS PAYA BLE TO THE DEPOSITOR ONLY ON THE MATURITY DATE OF CDR. HENCE, AS PER THE RULES, THE TDS ON INTEREST ON ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 5 CDR IS LEVIABLE ONLY ON THE MATURITY OF CDR. THE IN TEREST PROVISION ON CUMULATIVE DEPOSIT IS MADE AT THE END OF EACH QUART ER ONLY FOR THE PURPOSE OF ARRIVING AT THE CORRECT POSITION OF THE PROFIT O F THE BANK AND IT HAS NOTHING TO DO WITH PAYMENT OF INTEREST TO THE DEPOSITOR & THE ENTRY IS REVERSED ON THE NEXT DAY. 3. CBDT IS, HOWEVER, OF THE VIEW THAT IF TAX IS DED UCTED AT SOURCE AT THE TIME OF MATURITY, ON PAYMENT BASIS ONLY, IT WILL AMOUNT TO FORCING THE DEPOSITOR TO OFFER THE INCOME ON RECEIPT BASIS ONLY, WHICH MAY NOT BE ACCEPTABLE TO THE DEPOSITOR. THEREFORE, TAX SHALL BE DEDUCTED AT SOUR CE ON ACCRUAL OF INTEREST AT THE END OF THE. ACCOUNTING YEAR, OR AT THE TIME OF CREDIT TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT, WHICHEVER IS EARLI ER. ACCORDINGLY, TAX IS BEING DEDUCTED BY OUR BRANCHES ON ACCRUED BASIS ON CDR, AT THE END OF EVERY ACCOUNTING YEAR. FOR YOUR BENEFIT, WE QUOTE FROM LETTER NO.F.NO.131/ 51/95-TPL OF CBDT ADDRESSED TO SECRETARY, IBA, MUMBAI. QUOTE 1 TDS ON REINVESTMENT DEPOSITS: IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194A, TAX IS DEDUCTIBLE AT TH E TIME OF CREDIT OR PAYMENT OF INTEREST, WHICHEVER IS EARLIER. HOWEVER, IF THE TAX IS DEDUCTED AT SOURCE AT THE TIME OF MATURITY, ON PAYMENT BASIS ONLY, IT WIL L AMOUNT TO FORCING THE DEPOSITOR TO OFFER THE INCOME ON RECEIPT BASIS ONLY , WHICH MAY NOT BE ACCEPTABLE TO THE DEPOSITORS. IN VIEW OF THIS, TAX SHALL BE DEDUCTED AT SOURCE ON ACCRUAL OF INTEREST AT THE END OF THE ACCOUNTING YEAR OR AT THE TIME OF THE CREDIT OF THE ACCOUNT OF PAYEE OR AT THE TIME OF PA YMENT, WHICHEVER IS EARLIER. 2. APPLICABILITY OF TDS PROVISIONS ON PRO FORMA ACCOUN T: BANKS HAVE TO MAKE PROVISIONS FOR THE PURPOSES OF MANAGEMENT INFO RMATION SYSTEM, WHERE CREDIT OF INTEREST IS NOT MADE TO THE DEPOSITORS A CCOUNT, TAX DEDUCTION AT SOURCE SHALL NOT BE OBLIGATORY, AS NO ACTUAL PASSIN G ON THE INTEREST TO THE DEPOSITORS ACCOUNT TAKES PLACE. HOWEVER, THE BANKS SHALL HAVE TO DEDUCT TAX AT SOURCE ON ACCRUAL OF INTEREST AT THE END OF THE ACCOUNTING YEAR OR AT THE TIME OF CREDIT TO PAYEES ACCOUNT OR AT THE TIME OF PAYMENT, WHICHEVER IS EARLIER AS ALREADY HINTED ABOVE. UNQUOTE. 6. FURTHER, LD. COUNSEL FOR THE ASSESSEE FILED COPY OF RECENT CIRCULAR NO.3 OF 2010, DT, 2 ND MARCH, 2010, WHICH READS AS UNDER:- CIRCULARS INCOM E TAX CIRCULAR NO.3 OF 2010, DT. 2 ND MARCH, 2010 SUB : TAX DEDUCTION AT SOURCE ON PAYMENT OF INTERES T ON TIME DEPOSITS UNDER SECTION 194A OF THE INCOME-TAX ACT, 1961 BY BANKS F OLLOWING CORE. BRANCH BANKING SOLUTIONS (CBS) SOFTWARE-REG. AS PER PROVISIONS OF SECTION 194A OF THE INCOME-TAX ACT, 1961, INCOME-TAX HAS TO BE DEDUCTED AT SOURCE AT THE TIME OF CREDIT OF INTEREST INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THER EOF IN CASH OR BY ISSUE OF A ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 6 CHEQUES OR DRAFT OR BY ANY OTHER MODE, AT THE RATES IN FORCE IF SUCH INTEREST AMOUNT EXCEEDS SPECIFIED LIMIT. FURTHER, EXPLANATIO N TO SECTION 194A STATES THAT FOR THE PURPOSE OF THIS SECTION, WHERE ANY INCOME BY WAY OF INTEREST AS AFORESAID IS CREDITED TO ANY ACCOUNT, WHETHER CALLE D INTEREST PAYABLE ACCOUNT OR SUSPENSE ACCOUNT OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SH ALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. 2. REPRESENTATIONS HAVE BEEN RECEIVED FROM INDIAN B ANKS ASSOCIATION (IBA) SEEKING CLARIFICATION REGARDING DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF INTEREST ON TIME DEPOSITS BY BANKS USING CORE-BRANC H BANKING SOLUTIONS (CBS) SOFTWARE. IN CASE OF BANKS USING CBS SOFTWARE INTEREST PAYABLE ON TIME DEPOSITS IS CALCULATED GENERALLY ON DAILY BASIS OR MONTHLY BASIS AND IS SWEPT & PARKED ACCORDINGLY IN THE PROVISIONING ACCOUNT FOR THE PURPOSES OF MACRO- MONITORING ONLY. HOWEVER, CONSTRUCTIVE CREDIT IS GI VEN TO THE DEPOSITORS/PAYEES ACCOUNT EITHER AT THE END OF TH E FINANCIAL YEAR OR AT PERIODIC INTERVALS AS PER PRACTICE OF THE BANK OR A S PER THE DEPOSITORS/PAYEES REQUIREMENT OR ON MATURITY OR ON ENCASHMENT OF TIME DEPOSITS; WHICHEVER IS EARLIER. 4. THE MATER HAS BEEN CONSIDERED BY THE BOARD. EXPL ANATION TO SECTION 194A WAS INTRODUCED WITH EFFECT FROM 1.4.1987 BY THE FIN ANCE ACT. 1987 TO PLUG THE LOOPHOLE OF AVOIDING DEDUCTION OF TAX AT SOURCE BY CREDITING INTEREST INN THE BOOKS OF ACCOUNT UNDER ACCOUNTING HEADS INTEREST PAYABLE ACCOUNT OR SUSPENSE ACCOUNT INSTEAD OF TO THE DEPOSITORS/PAYEES ACCOUNT. TH EREFORE, THE EXPLANATION IS NOT MEANT TO APPLY IN CASES OF B ANKS WHERE CREDIT IS MADE TO PROVISIONING ACCOUNT ON DAILY/MONTHLY BASIS FOR THE PURPOSES OF MACRO MONITORING ONLY BY THE USE OF CBS SOFTWARE. 5. IN VIEW OF THE ABOVE POSITION, IT IS CLARIFIED T HAT SINCE NO CONSTRUCTIVE CREDIT TO THE DEPOSITORS/PAYEES ACCOUNT TAKES PLACE WHILE C ALCULATING INTEREST ON TIME DEPOSITS ON DAILY OR MONTHLY BASIS IN THE CBS SOFTW ARE. 7. IN VIEW OF THE ABOVE CIRCULAR OF CBDT CLARIFYING TDS PROVISIONS BY BANKS USING CORE-BRANCH BANKING SOLUTIONS SOFTWARE (CBS ), THE POSITION IS VERY CLEAR THAT WHILE DEDUCTING TAX AT SOURCE FROM THE PAYMENT S OF INTEREST ON TIME DEPOSITS BY BANK USING CBS SOFTWARE, INTEREST PAYABLE ON TIME D EPOSITS USUALLY CALCULATED ON DAILY BASIS OR MONTHLY BASIS AND IS SWEPT AND PARKE D IN PROVISIONING ACCOUNT FOR THE PURPOSES OF MACRO-MONITORING. ACTUALLY, THE CREDIT IS GIVEN TO THE DEPOSITORS ACCOUNT EITHER AT THE END OF FINANCIAL YEAR OR ON A FIXED PERIODIC INTERVALS AS PER PRACTICE OR RULES FRAMED FOR THE SAME, OR AS PER TH E DEPOSITORS REQUIREMENT OR ON MATURITY OR ENCASHMENT OF TIME DEPOSITS, AS THE CAS E MAY BE. IN SUCH A SITUATION, THE TDS IS NOT POSSIBLE AT THE TIME OF CALCULATION OF INTEREST PAYABLE ON DAILY BASIS OR MONTHLY BASIS UNDER THE SCHEME OF SWEPT AND PARKED IN PROVISIONING ACCOUNT FOR THE PURPOSES OF MACRO-MONITORING. THE BOARD HAS CLEARL Y CLARIFIED THE POSITION AND THE ITA NO.2419/AHD/2007 A.Y. 2002-03 BOM ANAND BR. V. ITO TDS ANAND PAGE 7 FACTS ARE EXACTLY IDENTICAL IN THE PRESENT CASE THA T THE INTEREST CREDITED AS PER NOTIONAL ENTRY DATED 29-09-2001 IS ONLY PROVISIONIN G IN THE ACCOUNTS FOR THE PURPOSES OF MACRO-MONITORING AND IT IS NOT ACTUAL CREDIT OR PAYMENT OF INTEREST TO THE DEPOSITORS. THIS NOTIONAL PROVISION WAS MADE AND A S IS EVIDENT FROM RECORD, WHICH WAS REVERSED ON NEXT WORKING DAY, THE AMOUNT SO CRE DITED WAS NEVER ACCRUED TO THE PAYEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LO WER AUTHORITIES, I.E. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS CARRIED THE MATTE R UNDER MISCONCEPTION AND WRONG PRESUMPTIONS. ACCORDINGLY, THIS ISSUE OF THE ASSES SEES APPEAL IS ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16/03/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVI R SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED :16/03/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD