The Income Tax Officer, Jammu V. The Chief Manager, Jammu

ITA 369/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9578 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.369(ASR)/2016 ASSESSMENT YEAR:2014-15 PAN : AMRCI0373G INCOME TAX OFFICER, VS. THE CHIEF MANAGER, TDS CIRCLE, JAMMU. CANARA BANK, (PERSON RESPONSIB LE), SHALIMAR ROAD, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RAHUL DHAWAN, DR RESPONDENT BY: SH. JOGINDER SINGH, CA DATE OF HEARING: 14/09/2016 DATE OF PRONOUNCEMENT: 16/09/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), JAMMU, DATED 31.03.2016, RELATING TO ASSESS MENT YEAR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) IS RIGHT IN HOLDING THAT PR WAS NOT LIABLE T O DEDUCT TAX AT SOURCE U/S 194A IN RESPECT OF INTEREST PAID TO S HRI MATA VAISHNO DEVI SHRINE BOARD. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS RIGHT IN HOLDING THAT PR WAS NOT LIABLE T O DEDUCT TAX AT SOURCE U/S 194A IN RESPECT OF INTEREST PAID TO R EGISTRAR OF HIGH COURT, JAMMU. 3. THE ORDER OF LD. CIT(A) IS ERRONEOUS TO THE EXTE NT THAT THE ISSUE OF DISCREPANCY IN THE FIGURES OF INTEREST AMO UNT LESS ITA NO.369/ASR/2016 A.Y. 2014-15 2 THAN RS.10,000/- AT THE TIME OF APPELLATE STAGE ALS O STANDS UNRESOLVED AS THE ORDER OF THE CIT(A) IS SILENT ON THIS ISSUE. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THE COUR SE OF INSPECTION ON 11.11.2013, IT WAS NOTICED BY THE AO THAT THE PR W AS DEDUCTING TDS ON INTEREST OTHER THAN INTEREST ON SECURITIES AT THE TIME OF PAYMENT OF INTEREST OR ON THE LAST DATE OF THE F.Y. THOUGH IN TEREST WAS BEING CREDITED ON QUARTERLY BASIS. THE PR WAS ASKED TO EXPLAIN AS TO WHY TDS WAS NOT BEING DEDUCTED ON QUARTERLY BASIS. IN RESPONSE, THE PR STATED THAT AS PER CANARA BANK CIRCULAR NO.106/2012 DATED 05.04.20 12, THE TDS ON FDR IS TO BE MADE AT THE TIME OF INTEREST PAYMENT A ND ON THE LAST DATE OF THE F.Y. FOR INTEREST ON ACCRUAL PART I.E. ACTUAL D ATE OF PAYMENT OF INTEREST. IT WAS NOTICED DURING INSPECTION THAT IN TEREST ON ACCRUAL BASIS HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT ON W HICH TDS HAS NOT BEEN MADE AT THE TIME OF ACCRUAL THOUGH PROVISION T O THAT EFFECT HAS BEEN MADE IN THE BOOKS OF ACCOUNT ON QUARTERLY BASIS. AC CORDINGLY, DEMAND OF RS.1,65,11,170/- WAS CREATED. 3. BEING AGGRIEVED WITH THE ORDER OF THE AO, THE AS SESSEE FILED THE APPEAL BEFORE THE LD. CIT(A), WHO ALLOWED THE APPEA L OF THE ASSESSEE. 4. NOW, AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE THIS BENCH. 5. THE LD. DR PLACED STRONG RELIANCE ON THE ORDER O F THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WAS NOT R IGHT IN HOLDING THAT PR WAS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194A IN RESPECT OF INTEREST ITA NO.369/ASR/2016 A.Y. 2014-15 3 PAID TO SHRI MATA VAISHNO DEVI SHRINE BOARD. HE, TH EREFORE, PRAYED THAT THE ORDER OF THE A.O. MAY BE RESTORED. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSI ONS MADE BEFORE HIM. HE ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CASE: I) ITO, WARD 2(2), KOTA VS. M/S. BADE MATHURESHJI T EMPLE BOARD, PATANPOE, KOTA, (ITAT, JAIPUR BENCH) IN ITA NOS. 773 & 74/JP/2012 DATED 22.01.2014. II) UCO BANK VS. UNION OF INDIA & ORS (DELHI HC), D ATED 11.11.2014, PASSED IN W.P. (C)3563/2012 & CM NO.7517/2012 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. WE HAVE ALSO GONE THROUGH THE ORD ER OF THE LD. CIT(A) AND FOUND THAT THE LD. CIT(A) HAS PASSED A WELL REA SONED, DETAILED AND ELABORATE ORDER BY CONSIDERING ALL THE ASPECTS, WHI CH DOES NOT REQUIRE ANY INTERFERENCE. THE RELEVANT PORTION OF THE FINDI NGS OF THE LD. CIT(A) IS AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF T HE ITO, TDS, SUBMISSIONS MADE DURING APPELLATE PROCEEDINGS, REMA ND REPORT SUBMITTED BY ITO, TDS AND FURTHER REJOINDER SUBMITT ED BY THE APPELLANT ON 29.03.2016. IT IS FOUND FROM THE REMAN D REPORT SUBMITTED BY THE ITO, TDS DATED 18.03.2016 THAT ITO , TDS HAS ACCEPTED THE CALCULATION OF TDS AMOUNT GIVEN BY THE APPELLANT IN HIS SUBMISSION DATED 23.11.2015. THUS, THE CONTENTION O F THE APPELLANT IS ACCEPTED. HOWEVER, THE ITO, TDS IN HIS REMAND REPORT DATED 18 .03.2016 HAS NOT AGREED TO THE APPELLANT'S SUBMISSION THAT S HRI MATA VAISHNO DEVI SHRINE BOARD AND OTHER CONCERNS/REGISTRAR OF H IGH COURT OF JAMMU ETC. SHOULD BE TREATED AS EXEMPT. ITA NO.369/ASR/2016 A.Y. 2014-15 4 THE APPELLANT, HOWEVER, IN ITS REJOINDER HAS SUBMIT TED THAT CBDT CIRCULAR NO.4/2002, DATED 16-7-2002 WHICH READS AS UNDER:- 1183. WHETHER PRESCRIBED SELF-DECLARATION UNDER SEC TION 197A CAN BE SUBMITTED BY ENTITIES WHOSE INCOME IS EXEMPT UND ER SECTION 10 1. SUBSEQUENT TO THE AMENDMENT TO SECTION 197A MADE B Y THE FINANCE ACT, 2002 WHEREBY A NEW SUB-SECTION (IB) HA S BEEN INSERTED WITH EFFECT FROM 1ST JUNE, 2002, REPRESENT ATIONS HAVE BEEN RECEIVED SEEKING CLARIFICATION WHETHER THE PRE SCRIBED SELF- DECLARATION UNDER THE SAID SECTION CAN BE SUBMITTED BY ENTITIES EXEMPT FROM TAX UNDER SECTION 10 EVEN IF THE PAYMEN TS REFERRED TO IN SUB-SECTION (I A ) TO BE MADE TO THEM EXCEED THE THRESHOLD LIMIT NOT SUBJECT TO TAX. 2. THIS MATTER HAS BEEN EXAMINED BY THE BOARD. IT HAS BEEN DECIDED THAT IN CASE OF THOSE FUNDS OR AUTHORITIES OR BOARDS OR BODIES, BY WHATEVER NAME CALLED, WHOSE INCOME IS UN CONDITIONALLY EXEMPT UNDER SECTION 10 OF THE INCOME-TAX ACT AND W HO ARE STATUTORILY NOT REQUIRED TO FILE RETURN OF INCOME A S PER SECTION 139 OF THE INCOME-TAX ACT, THERE WOULD BE NO REQUIREMENT F OR TAX DEDUCTION AT SOURCE SINCE THEIR INCOME IS ANYWAY EXEMPT UNDER THE INCOME-TAX ACT. THE INSTITUTIONS WHOSE INCOME IS UNCONDITIONAL LY EXEMPT UNDER SECTION 10 AND WHO ARE STATUTORILY NOT REQUIRED TO FILE RETURN OF INCOME AS PER THE PROVISIONS OF SECTION 139 ARE : (I) 'LOCAL AUTHORITY', AS REFERRED TO IN THE EXPLAN ATION TO CLAUSE (20); II) REGIMENTAL FUND OR NON-PUBLIC FUND ESTABLISHED BY THE ARMED FORCES OF THE UNION REFERRED TO IN CLAUSE (23 AA); III) FUND, BY WHATEVER NAME CALLED, SET UP BY THE L IFE INSURANCE CORPORATION OF INDIA ON OR AFTER 1ST AUGUST, 1996, OR BY ANY OTHER INSURER REFERRED TO IN CLAUSE (23AAB); IV)AUTHORITY (WHETHER KNOWN AS THE KHADI AND VILLAG E INDUSTRIES BOARD OR BY ANY OTHER NAME) REFERRED TO IN CLAUSE ( 23BB); V. BODY OR AUTHORITY REFERRED TO IN CLAUSE (23BBA); VI) SAARC FUND FOR REGIONAL PROJECTS SET UP BY COLOMBO DECLARATION REFERRED TO IN CLAUSE (23BBC); ITA NO.369/ASR/2016 A.Y. 2014-15 5 VII) SECRETARIAT OF THE ASIAN ORGANIZATION OF THE S UPREME AUDIT INSTITUTIONS REFERRED TO IN CLAUSE (23BBD) TILL ASS ESSMENT YEAR 2003- 2004; VIII) LNSURANCE REGULATORY AND DEVELOPMENT AUTHORIT Y REFERRED TO IN CLAUSE {23BBE); IX) PRIME MINISTER'S NATIONAL RELIEF FUND REFERRED TO IN SUB-CLAUSE (I), PRIME MINISTER'S FUND (PROMOTION OF FOLK ART) REFERRED TO IN SUB- CLAUSE (II), PRIME MINISTER'S AID TO STUDENTS FUND REFERRED TO IN SUB- CLAUSE (HI), NATIONAL FOUNDATION FOR COMMUNAL HARMO NY REFERRED TO IN SUB-CLAUSE (IIIA), ANY UNIVERSITY OR OTHER EDUCA TIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAB) AND ANY HOSPITAL OR OTHER INSTITUTION FOR THE RECEPTION AND TREATMENT OF PERSONS AS REFER RED TO IN SUB- CLAUSE (IIIAC) OF CLAUSE (23C); X) CREDIT GUARANTEE FUND TRUST FOR SMALL SCALE IND USTRIES REFERRED TO IN CLAUSE (23EB) TILL ASSESSMENT YEAR 2 006-2007; XI) PROVIDENT FUND TO WHICH THE PROVIDENT FUNDS AC T, 1925 (19 OF 1925) REFERRED TO IN SUB-CLAUSE (I), RECOGNISED PRO VIDENT FUND REFERRED TO IN SUB-CLAUSE (II), APPROVED SUPERANNUATION FUND S REFERRED TO IN SUB-CLAUSE (III), APPROVED GRATUITY FUND REFERRED T O IN SUB-CLAUSE (IV) AND FUNDS REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE ( 25); XII) EMPLOYEES' STATE INSURANCE FUND REFERRED TO I N CLAUSE (25A); XIII) CORPORATIONS REFERRED TO IN CLAUSE (26BB) XIV) BOARDS REFERRED TO IN CLAUSE (29A). THE APPELLANT HAS ALSO CITED VARIOUS RULINGS OF THE ITATS WHICH HAVE STATED THAT THE TDS LIABILITY DOES NOT ARISE IF THE INCOME OF THE RECIPIENT OF INTEREST IS EXEMPT FROM TAX. I HAVE GONE THROUGH THE CBDT CIRCULAR AND ALSO CONS IDERED VARIOUS RULINGS OF THE RULING OF THE COURTS AND TRIBUNALS AND I AM OF THE OPINION THAT APPELLANT HAS RIGHTLY NOT DEDUCTED TDS FROM SHRI MATA VAISNO DEVI SHRINE BOARD, REGISTRAR OF HIGH COURT O F J&K AND OTHER SIMILAR CATEGORY. IN EFFECT, THE APPEAL IS ALLOWED. 7. THE RELIANCE PLACED BY THE LD. COUNSEL FOR THE A SSESSEE ON THE AFORESAID DECISIONS I.E., M/S. BADE MATHURESHJI TEM PLE BOARD, KOTA ITA NO.369/ASR/2016 A.Y. 2014-15 6 (SUPRA) AND UCO BANK (SUPRA) IS APPLICABLE TO THE PRESENT CASE, AS THE ISSUE INVOLVED AND FACTS AND CIRCUMSTANCES OF THOSE CASES ARE IDENTICAL. IN VIEW OF THE FACT THAT THE ASSESSEE WAS NOT LIABL E TO DEDUCT TAX ON INTEREST PAYMENTS TO MATA VAISHNO DEVI TRUST, THE D ISCREPANCY IN THE AMOUNT OF INTEREST DOES NOT MATTER. 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE V IEW THAT THERE IS NO VALID GROUND TO INTERFERE WITH THE WELL REASONED AN D ELABORATE FINDINGS GIVEN BY THE LD. CIT(A). ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/09/201 6. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 16/09/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE CHIEF MANAGER, CANARA BANK, JAMMU 2. THE ITO (TDS), JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.