YES BANK LTD, MUMBAI V. ITO (TDS)3(5), MUMBAI

ITA 2889/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2655 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2014
• Court: TRIBUNAL
• Department Lawyers: HARSHAD S VENGRULEKAR
• Assessee Lawyers: YOGESH A THAR
• Section: 201(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.2889/MUM./2014 ( ASSESSMENT YEAR : 20 08 09 ) M/S. YES BANK LIMITED 9 TH FLOOR, NEHRU CENTRE DR. A.B. ROAD, WOR LI MUMBAI 400 018 PAN AAACY2068D .. APPELLANT V/S INCOME TAX OFFICER (TDS) 3(5) AAYAKAR BHAWAN, 101, M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : SHRI YOGESH A. THAR REVENUE BY : SHRI HARSHAD S. VENGRULEKAR DATE OF HEARING 20 . 10 .2015 DATE OF ORDER 30.10.2015 O R D E R PER SAKTIJIT DEY , J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 20 TH JANUARY 2014 , PASSED BY THE L EARNED COMMISSIONER (APPEALS) - 16 , MUMBAI, FOR THE ASSESSMENT YEAR 20 08 09 . THE ASSESSEE IS BASICALLY AGGRIEVED WITH THE DEMAND RAISED UNDER SECTION 201 AND LEVY OF INTEREST UNDER SECTION 201(1A) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR SHORT DEDUCTION OF TAX AT SOURCE. M/S. YES BANK LIMITED 2 2. BRIEFLY STATED THE FACTS ARE , THE ASSESSEE IS A BA NKING COMPANY. ON VERIFYING THE TDS RETURN FILED BY THE ASSESSEE FOR THE F.Y. 2007 08, THE ASSESSING OFFICER FOUND THAT IN THE SECOND QUARTER OF THE RELEVANT F.Y., THE ASSESSEE HAS MADE SHORT DEDUCTION OF TAX TO THE EXTENT OF ` 23,69,430. HE, THEREFORE, IS SUED SHOW CAUSE NOTICE TO THE ASSESSEE TO RECONCILE THE SAME. HOWEVER, AS OBSERVED BY THE ASSESSING OFFICER, AS THE ASSESSEE FAILED TO RECTIFY THE DEFECT IN TERMS WITH THE SHOW CAUSE NOTICE, THE ASSESSING OFFICER PASSED AN ORDER ON 8 TH JANUARY 2011, RAISIN G A DEMAND OF ` 23,69,403, ON ACCOUNT OF SHORT DEDUCTION OF TAX AND LEVIED INTEREST THEREON UNDER SECTION 201(1A) OF AN AMOUNT OF ` 9,64,420. HE FURTHER LEVIED INTEREST ON SHORT PAYMENT AMOUNTING TO ` 3,57,520. THUS, THE TOTAL DEMAND RAISED BY THE ASSESSEE WAS TO THE TUNE OF ` 36,91,370. BEING AGGRIEVED OF THE AFORESAID ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE RECONCILING THE ALLEGED SHORT DEDUCTION OF TAX AT SOURCE ST ATED THAT DUE TO WRONG MENTIONING OF DEDUCTEE CODE FOR NON CORPORATE DEDUCTEE, TDS WAS CALCULATED AT HIGHER RATE OF 20.60% INSTEAD OF 10.30% AND 11.33% WHICH RESULTED IN TAX DEMAND OF ` 10,59,539. IT WAS SUBMITTED THIS ERROR WAS RECTIFIED BY THE ASSESSEE B Y FILING A REVISED STATEMENT BEFORE THE ASSESSING OFFICER, HOWEVER, WHICH W AS NOT TAKEN INTO ACCOUNT BY THE ASSESSING OFFICER. THEREFORE, THE ASSESSEE HAS FILED RECTIFICATION M/S. YES BANK LIMITED 3 PETITION UNDER SECTION 154 OF THE ACT WHICH IS STILL PENDING. IN RESPECT OF OTHER DEDUCTEES ALSO, THE ASSESSEE SUBMITTED EXPLANATION / RECONCILING THE ALLEGATION OF SHORT DEDUCTION OF TAX. AS FAR AS SHORT DEDUCTION OF TAX IN RESPECT OF INTEREST PAYMENT TO TATA MOTORS LTD., IT WAS SUBMITTED BY THE ASSESSEE THAT IT RECEIVED FD/TERM DEPOS IT FROM A TRUST WHICH HAS BEEN MANAGING FUND FOR OTHER BENEFICIARIES. IT WAS SUBMITTED , AT THE TIME OF RECEIVING DEPOSITS FROM THE TRUST THE ASSESSEE WAS NOT AWARE AS TO WHO IS THE FINAL BENEFICIAR Y , THEREFORE, THE ASSESSEE DEDUCTED TAX @ 10.30% ON THE INT EREST PAID. IT WAS SUBMITTED THE ASSESSING OFFICER NOTICING THAT THE FINAL BENEFICIARY IS A COMPANY I.E., TATA MOTORS LTD., A CORPORATE DEDUCTEE AND THE RATE AT WHICH TAX SHOULD HAVE BEEN DEDUCTED IS 20.60% RAISED A DEMAND ON THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT AS PER EXPLANATION TO SECTION 191, A DEDUCTOR WOULD BE TREATED AS AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT IF THE DEDUCTEE HAS ALSO FAILED TO PAY SUCH TAX DIRECTLY. IT WAS SUBMITTED BY THE ASSESSEE THAT SINCE THE DEDUCTE E TATA MOTORS LTD. HAS DECLARED INTEREST INCOME RECEIVED FROM THE ASSESSEE IN ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR AND PA ID TAX THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. IN SUPPORT OF SUCH CO NTENTION, THE ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCACOLA BEVERAGES PVT. LTD V/S CIT M/S. YES BANK LIMITED 4 [ 2007 ] 293 ITR 226 (SC) AND THE DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN VODAFON ESSAR LTD. V/S DY. COMMISSIONER OF INCOME TAX, 45 SOT 82 (URO). 4. AS FAR AS OTHER INSTANCES OF SHORT DEDUCTION OF TAX ARE CONCERNED, THE LEARNED COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFICER TO VERIFY ASSESSEES CLAIM. HOWEVER, AS FAR AS SHORT DEDUCTION OF TAX IN RESPECT OF INTEREST PAYMENT TO TATA MOTORS LTD. IS CONCERNED, THE LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THE ASSESSEE ITSELF HAS ADMITTED THAT THE CORRECT RATE AT WHICH TAX SHOULD HAVE BEEN DEDUCTED IS 20.60%. HE OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT THE DEDUCTEE HAS DISCLO SED THE INTEREST INCOME IN THE RETURN OF INCOME AND PAID TAXES THEREON IS NOT BORNE OUT FROM THE CONFIRMATION OF TATA MOTORS LTD. WHICH MERELY STATES THAT THE INTEREST RECEIVED FROM THE ASSESSEE BANK WAS SHOWN IN THE RETURN OF INCOME, HOWEVER, WHETHER TAXE S HAVE BEEN PAID THEREON HAS NOT BEEN MENTIONED. HE, THEREFORE, SUSTAINED THE DEMAND RAISED BY THE ASSESSING OFFICER UNDER SECTION 201(1) ON ACCOUNT OF SHORT DEDUCTION OF TAX ON THE INTEREST PAYMENT TO TATA MOTORS LTD. AS FAR AS LEVY OF INTEREST IS CONCERN ED, THE LEARNED COMMISSIONER (APPEALS) OBSERVED THAT EVEN IN CASE OF COCACOLA BEVERAGES PVT. LTD . (SUPRA) , THE LIABILITY TO CHARGE INTEREST UNDER SECTION 201(1A) OF THE ACT IS APPROVED. M/S. YES BANK LIMITED 5 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE STAND TAKEN BEF ORE THE FIRST APPELLATE AUTHORITY, SUBMITTED THAT THE INTEREST PAYMENTS ON WHICH SHORT DEDUCTION OF TAX IS ALLEGED BY THE ASSESSING OFFICER WAS MADE TO A TRUST WHOSE BENEFICIARY IS TATA MOTORS LTD. IT WAS SUBMITTED THAT THOUGH, ASSESSEE WAS REQUIRED TO DED UCT TAX @ 20.60% CONSIDERING THE CORPORATE STATUS OF THE BENEFICIAR Y BUT THAT FACT WAS NOT KNOWN TO ASSESSEE AT THE TIME OF MAKING PAYMENT. IT WAS SUBMITTED, AS THE DEDUCTEE HAS DECLARED THE INTEREST INCOME RECEIVED FROM THE ASSESSEE IN THE RETURN OF INCOME FILED THE ASSESSEE CANNOT BE TR EATED AS AN ASSESSEE IN DEFAULT I N VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCACOLA BEVERAGES PVT. LTD . (SUPRA). IT WAS FURTHER SUBMITTED , TO P ROVE SUCH FACT, ASSESSEE HAS ALSO FURNISHED THE CONFIRMATION FROM TATA MOTORS LTD. BEFORE THE FIRST APPELLATE AUTHORITY. 6. AS FAR AS LEVY OF INTEREST IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE RELYING UPON THE DECISION OF THE HONBLE GUJARAT HIGH CO URT IN CIT V/S RISHIKESH APARTMENT CO OPERATIVE SOCIETY LTD., [2002] 253 ITR 310 (GUJ.) , SUBMITTED THAT EVEN INTEREST UNDER SECTION 201(1A), CANNOT BE LEVIED IF THE DEDUCTEE HAS SHOWN THE INCOME AND PAID TAXES THEREON. M/S. YES BANK LIMITED 6 7. THE LEARNED DEPARTMENTAL REPRESENTAT IVE THOUGH AGREED ON THE PROPOSITION THAT NO DEMAND UNDER SECTION 201(1 ) CAN BE RAISED IF THE DEDUCTEE HAS SHOWN THE INCOME AND PAID TAXES THEREON IN VIEW OF THE PRINCIPLE LAID DOWN IN HINDUSTAN COCACOLA BEVERAGES PVT. LTD . (SUPRA), BUT HE SUBMITTED, ASSE SSEE IS LIABLE TO PAY INTEREST UNDER SECTION 201(1A) OF THE ACT. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN, DISPUTE IN THE PRESENT APPEAL IS WITH REGARD TO SHORT DEDUCTION OF TAX ON INTEREST PAID TO TATA MOTORS LTD. BEFORE THE FIRST APPELLATE AU THORITY, THOUGH THE ASSESSEE ACC E P TED THAT THE PROPER RATE AT WHICH TAX SHOULD HAVE BEEN DEDUCTED IS 20.60% BUT AT THE SAME TIME IT WAS STATED THAT SINCE THE DEDUCTEE HAS SHOWN THE INTEREST INCOME IN THE RETURN OF INCOME FILED , THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT UNDER SECTION 201(1). FROM THE CONFIRMATION LETTER OF TATA MOTORS LTD., SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY, IT IS VERY MUCH CLEAR THAT THE DEDUCTEE HAS ADMITTED THAT INTEREST PAYMENT OF ` 1,87,33,461, RECEIVED FROM THE ASSESSEE BANK WAS OFFERED TO TAX IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2008 09. IN THE SAID CONFIRMATION, TATA MOTORS LTD., ALSO FU RNISHED THEIR ASSESSMENT PARTICULARS. THUS, FROM THE CONFIRMATION LETTER OF THE DEDUCTEE, IT IS VERY MUCH CLEAR THAT THE M/S. YES BANK LIMITED 7 INTEREST PAYMENT ON WHICH SHORT DEDUCTION WAS ALLEGED WAS DECLARED AS INCOME BY DEDUCTEE IN ITS RETURN OF INCOME FILED FOR THE ASSESSME NT YEAR 2008 09. THUS, IT PRE SUPPOSES THAT TAX DUE ON SUCH INCOME RETURNED MUST ALSO HAVE BEEN PAID BY THE DEDUCTEE. THEREFORE, THE LEARNED COMMISSIONER (APPEALS), IN OUR VIEW, WAS NOT JUSTIFIED IN REJECTING ASSESSEES CLAIM ON THE OBSERVATION THAT WHETHE R TAX PAID ON SUCH INCOME BY THE DEDUCTEE WAS NOT MENTIONED. WHEN THE INCOME TAX ASSESSMENT PARTICULARS OF TATA MOTORS LTD. WAS FURNISHED IN THE CONFIRMATION LETTER , IF THE LEARNED COMMISSIONER (APPEALS) HAD ANY DOUBT WITH REGARD TO PAYMENT OF TAX BY TATA M OTORS LTD., HE COULD HAVE VERIFIED FROM THE DEPARTMENTAL AUTHORITIES. WHEN THE CONFIRMATION LETTER CLEARLY STATES THAT DEDUCTEE HAS OFFERED INTEREST INCOME TO TAXATION IN THE RETURN OF INCOME FILED THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN HI NDUSTAN COCACOLA BEVERAGES PVT. LTD . (SUPRA) CLEARLY APPLIES. EVEN THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO ACCEPTS SUCH PROPOSITION . IN VIEW OF THE AFORESAID, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT FOR THE PURPOSE OF RAISING DEMAND UNDER SECTION 201(1) OF THE ACT IN RESPECT OF INTEREST PAYMENT TO TATA MOTORS LTD. HOWEVER, AS FAR AS CHARGING OF INTEREST UNDER SECTION 201(1A) IS CONCERNED, WE ARE UNABLE TO ACCEPT ASSESSEES CONTENTION , BECAUSE THE DECI SION OF THE HONBLE GUJARAT HIGH COURT IN RISHIKESH APARTMENT CO M/S. YES BANK LIMITED 8 OPERATIVE SOCIETY LTD. (SUPRA) IS PRIOR TO THE DECISION OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCACOLA BEVERAGES PVT. LTD . (SUPRA), WHEREIN THE HON'BLE SUPREME COURT UPHELD THE APPLICABIL ITY OF CIRCULAR NO.275/201/95 IT(V) DATED 29 TH JANUARY 1997, ISSUED BY THE CBDT STATING THAT LIABILITY TO CHARGE INTEREST UNDER SECTION 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAX BY THE DEDUCTEE WOULD REMAIN. WE, THEREFORE, WHILE DELETING THE DEMAN D UNDER SECTION 201(1) OF THE ACT, DIRECT THE ASSESSING OFFICER TO COMPUTE INTEREST UNDER SECTION 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAX BY THE DEDUCTEE. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2015 SD/ - ASHWANI TAEAJA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.10.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI