ITO, Ward-15(3), Hyderabad V. M/s Vijaya Bhargavi Chit Funds Private Limited, Hyderabad

ITA 387/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2881 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOPINATH
• Assessee Lawyers: D POORNACHANDRUDU
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 387/HYD/2013 ASSESSMENT YEAR 2010-11 THE INCOME TAX OFFICER WARD-15(3) HYDERABAD. VS. M/S. VIJAYA BHARGAVI CHIT FUNDS PVT. LTD., HYDERABAD PAN: AAACV8130B APPELLANT RESPONDENT APPELLANT BY: SRI GOPI NATH RESPONDENT BY: SRI D. POORNACHANDRUDU DATE OF HEARING: 19 .0 6 .2013 DATE OF PRONOUNCEMENT: 19 .0 6 .2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, HYDERABAD DATED 14.2.2013 FOR ASS ESSMENT YEAR 2010-11. 2. THE REVENUE RAISED THE FOLLOWING GROUND OF APPEAL: 'THE LEARNED CIT(A) ERRED IN LAW IN HOLDING THAT TH E CHIT DIVIDENDS PAID TO THE SUBSCRIBERS, DO NOT PARTAKE T HE CHARACTER OF INTEREST AND, CONSEQUENTLY, THE CHIT FUND COMPAN Y IS NOT LIABLE TO DEDUCT TAX UNDER SEC. 194A WHILE MAKING P AYMENT OF DIVIDEND TO THE SUBSCRIBERS.' 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF OPINION T HAT SAME ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSES SEES OWN CASE FOR A.YS. 2005-06 TO 2007-08 AND 2009-10 IN IT A NOS. 1036 TO 1039/HYD/2012. THE TRIBUNAL VIDE ORDER DAT ED 17.10.2012 HELD AS FOLLOWS: '4. WE HAVE HEARD THE LEARNED DR AND SHRI PURNACHAN DRA RAO, GENERAL MANAGER OF THE ASSESSEE COMPANY. ON GO ING THROUGH THE MATERIALS SUBMITTED BEFORE US, IT IS SE EN THAT FOR THE ITA NO. 387/HYD/2013 M/S. VIJAYA BHARGAVI CHIT FUNDS PVT. LTD. =============================== 2 PRECEDING ASSESSMENT YEAR I.E. 2004-05, THE AO PASS ED AN ORDER U/S 201 (1) AND 201(1A) BY TREATING THE ASSES SEE AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING THE TAX U/S 1 94A OF THE ACT ON THE CHIT DIVIDENDS PAID TO THE SUBSCRIBERS. THE CIT (A) ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE BY HOL DING THAT SINCE THE CHIT DIVIDEND DOES NOT PARTAKE THE CHARAC TER OF INTEREST AS DEFINED U/S 2(28A) OF THE ACT, THE ASSE SSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE U/S 194A OF THE AC T. THE DEPARTMENT CHALLENGED THE AFORESAID ORDER OF THE CI T (A) BEFORE THE ITAT. THE ITAT, HYDERABAD BENCH IN ITA NO.820/HYD/2011 DATED 26-12-2011 FOLLOWING DECISION OF THE HONBLE MADRAS HIGH COURT IN CASE OF BILAHARI INVES TMENTS PVT. LTD. VS. CIT (288 ITR 39) WHICH WAS CONFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. BILAHA RI INVESTMENTS PVT. LTD. (299 ITR 1) HELD IN THE FOLLO WING MANNER: IN VIEW OF THE ABOVE FINDINGS OF THE VARIOUS COURT S, WE ARE OF THE OPINION THAT THE CIT (A) IS JUSTIFIED IN HOLDIN G THAT THE PAYMENT OF DIVIDEND TO THE SUBSCRIBERS OF A CHIT TO WARDS DIVIDEND DOES NOT PARTAKE THE CHARACTER OF INTEREST AND ACCORDINGLY THE ASSESSEE IS NOT LIABLE TO DEDUCT TD S U/S 194A OF THE ACT AND NOT LIABLE FOR INTEREST U/S 201(1) A ND 201(1A) OF THE ACT. THIS BEING THE VIEW OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING A SSESSMENT YEAR, WE RESPECTFULLY FOLLOW THE SAME AND HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 194A ON T HE DIVIDENDS PAID TO THE SUBSCRIBERS OF THE CHITS. CONSEQUENTLY, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT U/S 201 (1) AND 201(1A) OF THE ACT. THE GROUNDS RAISED BY THE DEPAR TMENT ARE DISMISSED. ' 4. BEING SO, THIS ISSUE IS COVERED IN FAVOUR OF THE AS SESSEE. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL, WE ARE INCLINED TO DISMISS THE REVENUE APPEAL. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 19 TH JUNE, 2013 TPRAO ITA NO. 387/HYD/2013 M/S. VIJAYA BHARGAVI CHIT FUNDS PVT. LTD. =============================== 3 COPY FORWARDED TO: 1. THE INCOME TAX OFFICER, WARD - 15(3), INCOME TAX TOWERS, 4 TH FLOOR, D-BLOCK, HYDERABAD. 2. M/S. VIJAYA BHARGAVI CHIT FUNDS PVT. LTD., FLAT NO. 207, 208, 210 TO 212, SRI DATTA COMMERCIAL COMPLEX, RTC X ROADS, HYDERABAD-20. 3 . THE CIT(A) - II, HYDERABAD. 4 . THE CIT (TDS) , HYDERABAD. 5 . THE DR ' B ' BENCH, ITAT, HYDERABAD