DCIT, TDS, Dehradun V. State Bank of India, Dehradun

ITA 3936/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77792 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDER
• Keywords: Recovery proceedings; Business income; Salary income; Period of limitation; Deemed to accrue or arise in india; Non-deduction of tax; Competent authority; Tax effect; Time period of passing order
• Section: 194C; 201(1); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG : JUDICIAL MEMBER ITA NOS. 3936, 3937 & 3938/DEL/2013 ASSTT. YRS: 2010-11, 2011-12 & 2012-13 DCIT, TDS, VS. STATE BANK OF INDIA, DEHRADUN. TEL BHAWAN, DEHRADUN. PAN: AAACS 8577 K AND ITA NOS. 3924, 3914 & 3915/DEL/2013 ASSTT. YRS: 2010-11, 2011-12 & 2012-13 STATE BANK OF INDIA, VS. DCIT, TDS, TEL BHAWAN, DEHRADUN. DEHRADUN. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : SHRI RAMESH CHANDER CIT(DR) ASSESSEE BY : SHRI BISHWAJIT BHATTACHARYA SR. A DV. SHRI O.P. SAPRA ADV. SHRI JEETAN NAGPAL FCA SHRI SANJAY ARORA FCA DATE OF HEARING : 13-05-2014 DATE OF ORDER : 18-07-2014. O R D E R PER S.V. MEHROTRA, A.M: : THESE CROSS-APPEALS, FILED BY THE REVENUE AS WELL A S THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF CIT(A) RELATIN G TO A.YS. 2010-11, 2011- 12 & 2012-13. SINCE IDENTICAL ISSUES ARE INVOLVED F OR ADJUDICATION IN ALL THESE APPEALS, THE SAME ARE HEARD AND DISPOSED OF B Y A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 2 2. THE ASSESSING OFFICER CARRIED OUT A SURVEY ON 19 -2-2013 ON THE BRANCH MANAGER, STATE BANK OF INDIA, TEL BHAWAN, DEHRADUN (SBI), IN RESPECT OF TDS ON INTEREST ACCRUED/ PAID TO THE ONGC LTD., DE HRADUN ON SITE RESTORATION FUND ACCOUNT (SRF), MAINTAINED BY ONG C WITH THE BANK. ON THE BASIS OF SUBMISSIONS/ EXPLANATIONS/ DETAILS PRO VIDED BY THE BRANCH MANAGER, SBI (HEREINAFTER REFERRED TO AS DEDUCTOR IN THE INSTANT CASE), IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSE SSEE/ DEDUCTOR HAD MADE THE FOLLOWING PAYMENTS TO ONGC LTD., DEHRADUN (HERE -IN-AFTER REFERRED TO AS THE DEDUCTEE IN THE INSTANT CASE) ON ACCOUNT OF INTEREST ACCRUED IN YEARS MENTIONED AGAINST EACH FINANCIAL YEARS. FINANCIAL YEAR INTEREST PAID/ ACCRUED 2009-10 RS. 424,59,73,344/- 2010-11 RS. 66,44,41,84,836/- 2011-12 RS. 765,01,81,407/- 2.1. THE ASSESSING OFFICER OBSERVED THAT THE ASSESS EE/ DEDUCTOR HAD NOT DEDUCTED TDS ON THE ABOVE PAYMENTS U/S 194A OF THE I.T. ACT. ACCORDINGLY, SHOW CAUSE NOTICE U/S 201/201(1)(A) WAS ISSUED TO T HE ASSESSEE. THE ASSESSEE VIDE REPLY DATED 25-2-2013 ADVANCED FOLLOWING SUBMI SSIONS: 2.2. THE ASSESSEE POINTED OUT THAT IT WAS MAINTAINI NG AN ACCOUNT UNDER THE NAME AND STYLE OF SITE RESTORATION ACCOUNT (SRA IN SHORT) FOR ONGC AS PER THE PROVISIONS OF CLAUSE (B) OF SUB-SECTION (1) OF SECTION 33ABA OF THE I.T. ACT. IT WAS POINTED OUT THAT AS PER THE THIRD PROVISO TO SUB-SECTION (1) OF SECTION 33ABA, THE AMOUNT OF INTEREST PAID ACCRUED WAS TO BE TREATED AS DEPOSIT AND, THEREFORE, THE PROVISIONS OF SECTION 1 94A WERE NOT ATTRACTED. THE ASSESSEE FURTHER SUBMITTED THAT THIS IS FURTHER CLARIFIED IN EXPLANATION (B) TO SECTION 33ABA, AFTER SUB-SECTION (9) AS PER WHIC H AMOUNT STANDING TO THE CREDIT OF THE ASSESSEE THE SRA INCLUDES INTEREST AC CRUED TO SUCH ACCOUNT. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 3 REFERRING TO SUB-SECTIONS (3) AND (5) OF SECTION 33 ABA, IT WAS SUBMITTED THAT AS PER THESE PROVISIONS THE ONGC WAS NOT ENTIT LED TO DRAW THE AMOUNT STANDING TO THE CREDIT IN THE SRA EXCEPT FOR THE PU RPOSES SPECIFIED IN THE SCHEME AND THE AMOUNT WAS TO BE TAXED IN THE YEAR I N WHICH IT WAS WITHDRAWN UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION. 2.3. THE ASSESSEE FURTHER SUBMITTED THAT DEPOSIT HE LD IN SRF A/C IS NOT IN THE NATURE OF TIME DEPOSIT (STDR) AND, THEREFORE, IN VIEW OF THE PROVISIONS CONTAINED U/S 194A(3)(VII) READ WITH EXPLANATION (1 ) BELOW SUB-SECTION (3), NO TDS WAS REQUIRED TO BE MADE. IT WAS POINTED OUT THAT SRA IS A SPECIAL ACCOUNT WHICH IS PROVIDED ONLY BY STATE BANK OF IND IA AT ITS DESIGNATED BRANCHES ONLY TO THOSE ASSESSEES WHO ARE CARRYING O N THE BUSINESS OF MINERAL OIL EXPLORATION AND HAVE ENTERED INTO A CONTRACT WI TH THE GOVERNMENT OF INDIA. IT WAS POINTED OUT THAT SRA IS GOVERNED BY T HE PROVISIONS OF SECTION 33ABA READ WITH THE SITE RESTORATION FUND SCHEME 19 99 FRAMED UNDER THE SAID SECTION BY THE MINISTRY OF PETROLEUM AND, THER EFORE, THE TDS PROVISIONS OF THE I.T. ACT ARE TO BE APPLIED IN VIEW OF THE PR OVISIONS CONTAINED U/S 33ABA. THE ASSESSEE ALSO EXPLAINED THAT SRF A/C DOE S NOT COME WITHIN THE TERM TIME DEPOSIT. IT WAS FURTHER POINTED OUT THA T ONGC WAS PAYING ADVANCE TAX DURING THE FINANCIAL YEAR ITSELF BY INC LUDING THE AMOUNT CREDITED BY THE BANK TO SRF A/C AS ITS INCOME AND OFFERING I T FOR TAX PURPOSE, AS CONFIRMED BY ONGC. THEREFORE, SINCE THE DEDUCTEE HA D INCLUDED THE SAME IN ITS INCOME AND OFFERED THE SAID INCOME FOR TAX, THE DEDUCTOR CANNOT BE HELD TO BE AN ASSESSEE IN DEFAULT AS PER THE PROV ISIONS OF SECTION 201(1). IN SUM AND SUBSTANCE AS PER ITS WRITTEN SUBMISSIONS, T HE ASSESSEES SUBMISSIONS WERE AS UNDER:- 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 4 F. THE AMOUNT CREDITED BY WAY OF INTEREST TO THE S ITE RESTORATION ACCOUNT IS DEEMED TO BE A DEPOSIT AND N OT INTEREST INCOME; SINCE IT IS NOT IN THE NATURE OF INCOME, THEREFORE, IT IS NOT TAXABLE UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961, AS DISCUSSED IN PARA 1 ABOVE AND HENCE THE RESPONSI BILITY TO DEDUCT TAX AT SOURCE DOES NOT ARISE; G. THE AMOUNT SO CREDITED IS TAXABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES THE PROVISIONS OF SECTION 194A REQUIRES TAX TO BE D EDUCTED ONLY FROM INTEREST INCOME, AND SINCE THE AMOUNT IS LIABLE TO BE TAXED AS PROFIT FROM BUSINESS AND PROFESSION, RESPONSIBILITY TO DEDUCT TAX AT SOURCE UNDER SECTIO N 194A DOES NOT ARISE; H. THE AMOUNT STANDING TO THE CREDIT OF SITE RESTOR ATION ACCOUNT, BECOMES INCOME ONLY IN THE YEAR IN WHICH I T IS WITHDRAWN. SINCE NO AMOUNTS HAVE BEEN WITHDRAWN IN THESE FINANCIAL YEARS, THEREFORE THERE IS NO INCOME LIABLE FOR TAXATION. I. THE PROVISIONS OF SECTION 194A ARE APPLICABLE ON LY TO AMOUNT OF INTEREST PAID BY A BANKING COMPANY ON TIM E DEPOSIT ACCOUNT. SINCE DEPOSIT IN SITE RESTORATION ACCOUNT IS NOT IN THE NATURE OF TIME DEPOSIT THE PR OVISIONS OF SECTION 194A ARE NOT APPLICABLE. 2.4. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTIONS FOR THE FOLLOWING REASONS: (A) INTEREST BECOME DEPOSIT ONLY ON THE REINVESTMENT OF THE SAME TO THE AMOUNT STANDING TO THE CREDIT OF THE DEDUCTEE. FOR THE PURPOSES OF THE ASSESSEE/ DEDUCTOR THIS IS PAYMENT OF INTERE ST, EITHER ON 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 5 ACCRUAL BASIS OR ON PAYMENT BASIS, ON THE FUND PARK ED IN ITS ACCOUNTS. (B) THE TREATMENT OF INCOME IN THE HANDS OF THE PAYEE IS NOT WITHIN THE PURVIEW OF DEDUCTOR WHILE MAKING PAYMENT I.E. T O SAY THAT THE TREATMENT GIVEN BY THE DEDUCTEE HAS NO RELEVANCE FO R THE APPLICATION OF SECTION 194A OF THE I.T. ACT IN THE HANDS OF DEDUCTOR. THUS, SECTION 33ABA HAS NO RELEVANCE IN T HIS CONTEXT. (C) NO CERTIFICATE U/S 197 FOR NON-DEDUCTION OF TAX ON THE INTEREST INCOME HAD BEEN OBTAINED BY THE PAYEE. (D) THE ONGC WAS SHOWING IT AS INCOME FROM OTHER SOURCE S. (E) THE ASSESSEES CONTENTION THAT IT IS NOT A TIME DEP OSIT IS ONLY AN AFTER THOUGHT. THE ASSESSING OFFICER POINTED OUT TH AT THE ASSESSEE TREATED THE ACCOUNT AS STDR BUT LATER DENIED ITS OW N SUBMISSIONS IN ITS LETTER DATED 1-3-2013, STATING THAT THIS WAS NOT IN THE NATURE OF STDR. (F) NO DOCUMENTARY EVIDENCE WAS FILED BY ASSESSEE TO DE MONSTRATE THAT ONGC HAD INCLUDED THE AMOUNT CREDITED BY BANK TO SRF A/C AS ITS INCOME AND OFFERED IT FOR TAX. 2.5. ACCORDINGLY, ASSESSING OFFICER DETERMINED THE SHORT DEDUCTION OF TAX THEREON AS UNDER: F.Y. PAYMENT ON A/C OF INTEREST (RS.) SHORT DEDUCTION (RS.) INTEREST ON SHORT DEDUCTION (RS.) APPROX 2009-10 4,24,59,73,344 42,45,97,334 22,92,82,560 2010-11 6,44,41,84,836 64,44,18,483 23,19,90,653 2011-12 765,01,81,407 76,50,18,140 13,77,03,265 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 6 3. LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APPEAL, REJECTED THE ASSESSEES CLAIM ON ALL COUNTS AND OBSERVED THAT T HE INTEREST CREDITED BY SBI IN SRA WAS SUBJECT TO TDS. HOWEVER, HE ACCEPTED THE ASSESSEES CLAIM THAT IF THE PAYEE HAD ACCOUNTED FOR THE INTEREST AND PAI D TAX THEREON, THEN IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. VS. CIT 293 ITR 226, NO INT EREST U/S 201(1A) COULD BE CHARGED. HE, ACCORDINGLY, DIRECTED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CONTENTION BEFORE THE AO AND FURTHER DIRECTED THE AO TO SATISFY HIMSELF ABOUT THE CORRECTNESS OF THE SAME AND MODIFY THE TAX DEMAND. 4. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), BO TH THE ASSESSEE AS WELL AS THE DEPARTMENT ARE IN APPEAL BEFORE US. 5. FOLLOWING COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN ITS APPEALS: 1. THAT THE LD. CIT (A) HAS ERRED IN NOT APPRECIAT ING THAT THE ORDER DATED 05.03.2013 [THE IMPUGNED ORDER} PASSED BY THE LD. DEPUTY COMMISSIONER OF INCOME-TAX (TDS) DEH RADUN [THE 'LD. AO'] UNDER SECTION 201(1)/20I(LA) OF THE ACT, IS WITHOUT JURISDICTION AND IS AGAINST LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE, SINCE SECTION 194A IS IN APPLICABLE FOR SITE RESTORATION FUND (SRF) UNDER SECTION-33ABA . 2. THAT THE LD. CIT (A)-I, DEHRADUN HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE-BANK WAS UN DER AN OBLIGATION TO DEDUCT TAX UNDER SECTION 194A ON INTE REST ACCRUED ON DEPOSIT UNDER THE SITE RESTORATION FUND MAINTAIN ED BY ONGC, INTER ALIA BECAUSE 2.1 THE PROVISION OF SECTION 194A HAD NO APPLICABIL ITY TO THE FACTS TO THE PRESENT CASE SINCE THE DEPOSIT MAINTAI NED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 33ABA CAN NOT BY ANY MEANS BE TERMED AS TERM DEPOSIT. ALSO INTEREST CREDITED 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 7 DOES NOT AMOUNT TO 'INCOME BY WAY OF INTEREST'. INT EREST CREDITED IS DEDUCTIBLE EXPENDITURE UP TO A LIMIT. U NDER SECTION- 33 ABA THE CONCEPT OF CHARGEABILITY OF INCOME COMES INTO PLAY ONLY WHEN ANY AMOUNT (INCLUDING THE INTEREST) IS WI THDRAWN FROM THE ACCOUNT ON ITS CLOSURE. THIS FOLLOWS FROM A PLAIN READING OF SECTION-33 ABA, WHICH IS A STANDALONE PR OVISION FOR SITE RESTORATION FUND (SRF). NO AMOUNT CAN BE WITHD RAWN WITHOUT SPECIFIC APPROVAL OF MINISTRY OF PETROLEUM & NATURAL GAS. 2.2 THAT THE LD. CIT (A) HAS COMPLETELY OVERLOOKED THE FACTUAL SUBSTRATUM OF THE CASE AS ALSO THE WRITTEN SUBMISSI ONS FURNISHED BY THE ASSESSEE WHEREIN THE ENTIRE GAMUT OF THE SRF SCHEME WAS EXPLAINED IN DETAIL AND ALSO THE FACT THAT THE DEPOSIT UNDER THE SAID SCHEME MAINTAINED WITH THE ASSESSEE-BANK C OULD NOT BE CLASSIFIED AS TERM DEPOSIT WITHIN THE MEANING OF EX PLANATION 1 TO SECTION 194A SO AS TO CREATE AN OBLIGATION TO DE DUCT TAX SOURCE. 2.3 THAT THE LD. CIT (A) HAS ALSO ERRED IN LAW IN N OT APPRECIATING THE FACT THAT THE ISSUE WHETHER THE DE POSIT UNDER SRF COULD BE CLASSIFIED AS TERM DEPOSIT WAS EXAMINE D BY THE DEPARTMENT IN THE YEAR 2003 AND AFTER DUE CONSIDERA TION THE DEPARTMENT HAD ACCEPTED THE ASSESSEE'S CONTENTION T HAT THE SAID DEPOSIT WERE NOT TERM DEPOSITS AND THEREFORE THERE WAS NO OBLIGATION TO DEDUCT TAX U/S 194A. 2.4 THE LD. CIT (A) HAS ERRED IN LAW IN NOT APPRECI ATING THAT THE WORD 'CHARGEABLE' HAS BEEN USED IN SECTION-33 A BA ONLY ONCE AND THAT IS IN SECTION-33 ABA (5) IN THE CONTE XT OF WITHDRAWAL OF ANY AMOUNT (INCLUDING INTEREST). TILL THIS POINT 'CHARGEABILITY' IS CONSPICUOUS BY ITS ABSENCE. AND THE CONCEPT OF CHARGEABILITY COMES IN TO PLAY ONLY IN THE CONTE XT OF 'INCOME' UNDER SECTION-4. CONSEQUENTLY, SECTION 194 A IS NOT APPLICABLE. IT IS THEREFORE, PRAYED THAT TO THE EXTENT STATED I N GROUND NO. I ABOVE THE ORDER OF THE LD. CIT (A) IS ERRONEOUS, AN D IT BE THUS HELD THAT THE ORDER MADE UNDER SECTION 201(1) AND 2 01(1A) OF INCOME-TAX ACT IS VITIATED BEING BAD BOTH IN FACTS AND IN LAW. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 8 3. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, AM END, MODIFY OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFO RE OR AT THE TIME OF HEARING. 6. SOLE EFFECTIVE COMMON GROUND TAKEN BY THE DEPART MENT IN ITS APPEALS IS AS UNDER: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING THE ASSESSEE TO FURNISH THE DOCUMENTARY EVIDENCE IN SUP PORT OF ITS CONTENTION AND ALSO DIRECTING THE AO TO SATISFY HE RSELF ABOUT THE CORRECTNESS OF THE SAME IN THE LIGHT OF THE DEC ISION OF THE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVER AGE PVT. LTD. VS. CIT (2007) 293 (SC) WITHOUT APPRECIATING T HE FACTS THAT THE SAME IS TANTAMOUNT TO SET ASIDE OF THE CASE. TH E TAX EFFECT WORKS OUT TO RS. 65,398,79,894/- IN A.Y. 2010-11; R S. 87,64,09,136/- IN A.Y. 2011-12; AND RS. 90,27,21,40 5/-. 7. FIRST WE TAKE UP THE ASSESSEES APPEALS. 8. AT THE OUT SET, LD. SR. COUNSEL, SHRI BISHWAJIT BHATTACHARYA, CLARIFIED THAT WRIT PETITION WAS FILED BEFORE THE HONBLE HIG H COURT OF UTTRAKHAND AGAINST THE ORDER PASSED U/S 201/201(1A) AS THE ASS ESSING OFFICER HAD REQUIRED THE ASSESSEE TO PAY THE DEMAND WITHIN A WE EK. THE HONBLE HIGH COURT OBSERVED AS UNDER: THE REMEDY IS BY WAY OF APPEAL AND WITH NECESSARY APPLICATION FOR INTERIM RELIEF AND INTERIM RELIEF C AN BE GRANTED BY THE APPELLATE AUTHORITY. IT SEEMS TO ME THAT TH E RESPONDENTS DEPARTMENT AHS INITIATED RECOVERY PROCEEDINGS ASKIN G THE PETITIONER TO PAY THE AMOUNT AFTER ASSESSMENT IS OV ER. I THINK THIS IS NOT THE WAY TO RECOVER THE AMOUNT. HERE, I FIND THE RECOVERY PROCEEDINGS HAS NOT BEEN INITIATED IN ACCO RDANCE WITH THE PROCEDURE LAID DOWN IN THE ACT AND RULE FRAMED THEREIN. IT APPEARS BY THE IMPUGNED NOTICE AND ORDER A THREAT H AS BEEN GIVEN TO RECOVER THE AMOUNT. I AM OF THE VIEW ANY A CTION TAKEN BY THE DEPARTMENT WITHOUT DUE AND PROPER RECOVERY PROCEEDINGS TANTAMOUNT TO HIGH HANDED ACTION, IF NO T, ARBITRARY. IF ANY ACTION NOT RECOGNIZED BY THE LAW, NOR FOLLOW ING THE LAW IS TAKEN BY ANY AUTHORITY WITH POWER, SUCH ACTION CAN ONLY BE 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 9 TERMED AS HIGH HANDED AND ARBITRARY. THIS WRIT PETI TION IS ENTERTAINED ON THE ALLEGATION OF HIGH HANDED ARBITR ARY ACTION BEING TAKEN. I DO NOT APPROVE OF THE ACTION TAKEN B Y THE RESPONDENTS. ACCORDINGLY, THE RESPONDENTS WILL BE FREE TO TAKE ACTION AS PER THE PROCEDURE ESTABLISHED FOR RECOVER Y. I THINK IN ORDINARY CIRCUMSTANCE THE RESPONDENTS SHOULD WAIT T ILL LIMITATION PERIOD IS OVER BECAUSE WITHIN THE PERIOD OF LIMITATION. THE ASSESSEE AHS EVERY RIGHT TO PREFER APPEAR WITHI N THE STATUTORY PERIOD. THE PERIOD OF LIMITATION IN CASE WILL BE OVER ON 6 TH APRIL 2013. THIS RECOVERY PROCEEDING MAY BE INITIA TED AFTER THE EXPIRY OF 6 TH APRIL, 2013. THE PETITIONER SHALL KEEP APART THE AMOUNT OF RS. 243 CRORES SECURED BY STDR AND SHALL NOT TOUCH AND APPROPRIATE IT. 8.1. LD. CIT(A), ACCORDINGLY, DECIDED THE APPEAL AN D NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8.2. LD. SR. COUNSEL SUBMITTED THAT THE MAIN DISPU TE IS WHETHER THE INTEREST ACCRUED ON SRF A/C MAINTAINED WITH THE STATE BANK OF INDIA AS PER THE PROVISIONS OF SEC. 33ABA IS SUBJECT TO PROVISIONS O F TDS U/S 194A OR NOT. 9. THE FIRST PLEA OF LD. SR. COUNSEL WAS THAT IN A. Y. 2002-03 THE ASSESSEE HAD APPLIED FOR CERTIFICATE U/S 197 FOR NON-DEDUCTI ON OF TAX, WHICH WAS GRANTED BY THE DEPARTMENT. LD. SR. COUNSEL FURTHER REFERRED TO PAGE 117 WHEREIN A LETTER DATED 25-3-2004 OF THE TAX CONSULT ANT, ADDRESSED TO THE ASTT. GENERAL MANAGER, STATE BANK OF INDIA, IS CONT AINED, IN WHICH IT WAS POINTED OUT AS UNDER: I HAVE ATTENDED THE COURT OF INCOME-TAX OFFICER (T DS), DEHRADUN ON 29-12-2003 AND DISCUSSED THE MATER AT L ENGTH. A REPLY HAS ALSO BEEN FILED DURING THE COURSE OF HEAR ING COPY OF WHICH IS BEING ENCLOSED FOR YOUR RECORD. ON 29-1-2004, THIS CASE WAS AGAIN DISCUSSED AND AFT ER DISCUSSION, THE INCOME TAX OFFICER (TDS), RANGE-1, DEHRADUN HAS CONSIDERED OUR SUBMISSION AND ACCORDINGLY NO FU RTHER 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 10 DEMAND HAS BEEN RAISED, AS PROPOSED IN HIS NOTICE D ATED 19-12- 2008. IN VIEW OF THE REPLY FILED BY ME, AS REFERRED ABOVE , AND AS PER PROVISO OF SECTION 33ABA OF THE INCOME TAX ACT, 196 1, TAX DEDUCTION AT SOURCE IS NOT REQUIRED ON THE INTEREST ON DEPOSITS UNDER SITE RESTORATION FUND SCHEME, 1999. 9.1. UNDER THESE CIRCUMSTANCES, SINCE THE CERTIFICA TE GRANTED U/S 197 WAS NOT WITHDRAWN, THE ASSESSEE DID NOT DEDUCT THE TAX . 10. THE SECOND PLEA OF LD. SR. COUNSEL WAS THAT AS PER SEC. 33ABA, ONLY SBI IS AUTHORIZED TO ACCEPT THESE DEPOSITS IN SITE RESTORATION FUND A/C. HE POINTED OUT THAT THE ACCOUNT WAS OPENED WITH SBI BY ONGC ON 21-3-2002 AND, THEREAFTER, EVERY YEAR ON 31 ST MARCH, THE INTEREST IS CREDITED IN THE SAID SRA A/C. HOWEVER, NO MATURITY PERIOD IS THERE AND, THEREFORE, IT IS NOT TIME DEPOSIT AS CONTEMPLATED IN EXPLANATION 1 TO SECTIO N 194A(3)(VII). 10.1. IN SUPPORT OF HIS ABOVE CONTENTION, LD. SR. C OUNSEL REFERRED TO SEC. 194A(1), WHICH IS REPRODUCED BELOW: [ INTEREST OTHER THAN INTEREST ON SECURITIES. 194A. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME [BY WAY OF INTEREST ON S ECURITIES], SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THERE ON AT THE RATES IN FORCE. .. (3) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT AP PLY .. [( VII ) TO SUCH INCOME CREDITED OR PAID IN RESPECT OF DEP OSITS (OTHER THAN TIME DEPOSITS MADE ON OR AFTER THE 1ST DAY OF JULY, 1995) WITH A BANKING COMPANY TO WHICH THE BANKING REGULATION ACT, 1949 ( 10 OF 1949) APPLIES (INCLUDING ANY BANK OR BANKING INSTITUTION REFERRED TO IN SECTION 51 OF THAT ACT); 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 11 10.2. LD. SR. COUNSEL SUBMITTED THAT PROVISIONS OF CLAUSE (VII) TO SECTION 194A(1), REPRODUCED ABOVE, MAKES IT CLEAR THAT THE PROVISIONS OF TDS ARE APPLICABLE ONLY WITH RESPECT TO INTEREST CREDITED/ PAID ON TIME DEPOSIT MADE AFTER 1-7-1995 AND NOT ON OTHER DEPOSITS. 10.3. LD. SR. COUNSEL, THEREFORE, SUBMITTED THAT TH E QUESTION WHICH CROPS UP FOR OUR CONSIDERATION IS WHETHER SRF DEPOSIT IS TIM E DEPOSIT OR NOT. 10.4. IN THIS REGARD, LD. SR. COUNSEL REFERRED TO E XPLANATION 1 BELOW SUB- SECTION (3) TO SECTION 194A, WHICH DEFINES THE TIME DEPOSITS AS UNDER: EXPLANATION 1.- FOR THE PURPOSES OF CLAUSES (I), ( VII) AND (VIIA), TIME DEPOSITS MEANS DEPOSITS EXCLUDING RECURRING DEPOSI T REPAYABLE ON THE EXPIRY OF FIXED PERIODS. 10.5. LD. SR. COUNSEL, THEREFORE, SUBMITTED THAT T IME DEPOSIT IS REPAYABLE ON THE EXPIRY OF FIXED PERIODS AND, THEREFORE, IT S HOULD HAVE AN EXPIRY DATE. LD. SR. COUNSEL REFERRED TO SRF SCHEME, 1999, CONTA INED AT PAGES 96 TO 111 OF THE PB TO DEMONSTRATE THAT NONE OF THE CONDITION S CONTEMPLATED IN REGARD TO TIME DEPOSITS ARE THERE IN THE SCHEME. 10.6. LD. SR. COUNSEL TOOK US THROUGH VARIOUS CLAUS ES OF THE SCHEME, E.G. MANNER OF DEPOSIT, WITHDRAWAL AND UTILIZATION OF AM OUNT DEPOSITED; PROCEDURE FOR WITHDRAWAL; AND CLOSURE OF ACCOUNT TO DEMONSTRATE THAT THE SCHEME DOES NOT CONTAIN ANY SUCH CLAUSES. HE POINTE D OUT THAT THE SCHEME HAS BEEN FRAMED UNDER THE INCOME-TAX ACT AND NOT BY RESERVE BANK OF INDIA. 10.7. LD. SR. COUNSEL REFERRED TO FORM A ( PAGE 1 02 OF PB), BEING APPLICATION FOR OPENING A NEW ACCOUNT, TO DEMONSTRA TE THAT THERE IS NO EXPIRY DATE ON THE SAME AND NO PERIOD HAS BEEN MENTIONED. 10.8. LD. SR. COUNSEL FURTHER REFERRED TO FORM B, CONTAINED AT PAGE 104 OF PB, WHICH IS THE CERTIFICATE OF DEPOSIT; FORM C WHICH IS CERTIFICATE OF 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 12 INTEREST CREDITED BY BANK AS ON 31 ST MARCH; FORM D, WHICH IS THE STATEMENT OF A/C ISSUED BY SBI GIVING DETAILS OF CREDITS AND DEPOSITS; FORM E, WHICH IS APPLICATION FOR WITHDRAWAL, CONTAINED AT PAGES 1 06 & 107 OF PB AND POINTED OUT THAT IT IS SPECIFICALLY MENTIONED IN THE FORM THAT WITHDRAWAL COULD BE MADE ONLY FOR MEETING EXPENDITURE MENTIONE D IN PARA 9 OF THE SRF SCHEME. HE POINTED OUT THAT WITHDRAWAL HAS TO BE AU THORIZED BY THE AUTHORIZED OFFICER OF THE MINISTRY OF PETROLEUM AN D NATURAL GAS OR THE AGENCY AUTHORIZED BY THE MINISTRY IN THIS BEHALF. H E, THEREFORE, SUBMITTED THAT THE WITHDRAWAL COULD NOT BE MADE WITHOUT DUE AUTHORIZATION. HE POINTED OUT THAT TILL DATE NO WITHDRAWAL HAS BEEN M ADE BY ONGC. HE, THEREFORE, SUBMITTED THAT THERE IS NO QUESTION OF A NY FIXED PERIOD BEING THERE AND, THEREFORE, IT DOES NOT COME WITHIN THE AMBIT O F TIME DEPOSIT AS CONTEMPLATED IN EXPLANATION 1 TO SECTION 194A. 11. THE THIRD PLEA OF LD. SR. COUNSEL WAS THAT SEC TION 194A IS APPLICABLE TO INCOME BY WAY OF INTEREST AND UNLESS THERE IS TA XABLE INCOME, SEC. 194A CANNOT BE ATTRACTED. HE POINTED OUT THAT AS PER THI RD PROVISO TO SECTION 33 ABA(1), THE AMOUNT CREDITED IN THE SPECIAL A/C OR T HE SITE RESTORATION ACCOUNT BY WAY OF INTEREST IS TO BE TREATED AS DEPO SIT. THUS, THE LD. SR. COUNSEL CONTENDED THAT THE INTEREST LOOSES ITS CHAR ACTER AB INITIO AND DEEMED TO BE DEPOSIT. HE SUBMITTED THAT THE IDENTITY OF IN TEREST GETS LOST WITH ITS ACCRUAL AS PER THIRD PROVISO TO SECTION 33ABA(1) 11.1. LD. SR. COUNSEL SUBMITTED THAT SECTION 33ABA IS A SELF CONTAINED CODE AND, THEREFORE, CHARGEABILITY OF INTEREST ACCR UED FOR PURPOSES OF TDS U/S 194A HAS TO BE CONSIDERED AS PER THE PROVIS IONS OF SECTION 33ABA. HE SUBMITTED THAT UNLESS INTEREST INCOME WAS CHARGEABLE TO 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 13 TAX, NO TDS PROVISIONS COULD BE TRIGGERED. HE SUBMI TTED THAT SECTION 194A CANNOT OPERATE INDEPENDENTLY BEING MACHINERY PROVISION AND IT IS TO BE READ WITH SECTION 33ABA. IN THIS REGARD LD . COUNSEL RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F GE INDIA TECHNOLOGY CENTRE P. LTD. VS. CIT (2010) 327 ITR 45 6 (SC), WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE EXPRESS ION CHARGEABLE UNDER THE PROVISIONS OF THE ACT IN SECTION 195(1) SHOWS THAT THE REMITTANCE HAS GOT TO BE A TRADING RECEIPT, THE WHO LE OR PART OF WHICH IS LIABLE TO TAX IN INDIA. IF TAX IS NOT SO ASSESSABLE , THERE IS NO QUESTION OF TAX AT SOURCE BEING DEDUCTED. THUS, HE SUBMITTED TH AT INTEREST IS TO BE CHARGEABLE TO TAX BEFORE SECTION 194A CAN BE MADE A PPLICABLE. HE SUBMITTED THAT IF TDS IS MADE IN THE YEAR OF ACCRUA L THEN IT WILL RESULT INTO DOUBLE TAXATION IN THE YEAR OF WITHDRAWAL. 11.2. LD. SR. COUNSEL RELIED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY & CO. (INDIA ) PVT. L TD. (2009) 15 SCC 1, OBSERVING AS UNDER: THUS, TWO CONCLUSIONS FLOW. FIRSTLY, IT CANNOT BE STATED AS A BROAD PROPOSITION THAT THE TDS PROVISIONS WHICH ARE IN THE NATURE OF MACHINERY PROVISIONS TO ENABLE COLLECTION AND RECOVERY OF TAX ARE INDEPENDENT OF THE CHARGING PRO VISIONS WHICH DETERMINE THE ASSESSABILITY IN THE HANDS OF T HE ASSESSEE EMPLOYEE. SECONDLY, WHETHER THE HOME SALARY PAYMENT MADE BY 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 14 THE FOREIGN COMPANY IN FOREIGN CURRENCY ABROAD CAN BE HELD TO BE DEEMED TO ACCRUE OR ARISE IN INDIA WOULD DEPEN D UPON THE IN DEPTH EXAMINATION OF THE FACTS IN EACH CASE. IF THE HOME SALARY/ SPECIAL ALLOWANCE PAYMENT MADE BY THE FOREI GN COMPANY ABROAD IS FOR RENDITION OF SERVICES IN INDI A AND IF, AS IN THE PRESENT CASE, NO WORK STOOD PERFORMED FOR TH E FOREIGN COMPANY BY THE EXPATRIATE TO THE JOINT VENTURE COMP ANY IN INDIA AND THE TOTAL REMUNERATION PAID WAS ONLY FOR SERVIC ES RENDERED IN INDIA, THEN SUCH PAYMENT WOULD CERTAINLY COME UN DER SECTION 192(1) READ WITH SECTION 9(1)(II). IN SUCH A CASE T HE TAX DEDUCTOR ASSESSEE WAS STATUTORILY OBLIGED TO DEDUCT TAX UNDER SECTION 192(1) OF THE 1961 ACT., 12. THE FOURTH PLEA ADVANCED BY THE LD. SR. COUNSEL WAS THAT, IN ANY VIEW OF THE MATTER, THE ENTIRE EXERCISE IS REVENUE NEUTRAL BECAUSE THE ASSESSEE HAS INCLUDED THE INTEREST IN ITS P&L A/C A ND HAS CLAIMED HUNDRED PER CENT DEDUCTION OF SAME AMOUNT AS PER THE PROVIS IONS OF SECTION 33ABA. THEREFORE, IN ANY VIEW OF THE MATTER, NO TAX WAS CH ARGEABLE FROM THE INTEREST. 12.1. LD. SR. COUNSEL POINTED OUT THAT THE TOTAL AM OUNT ALONG WITH INTEREST EARNED ON SRF A/C IN EACH OF THE ASSESSMENT YEARS F OR THE PAST 12 YEARS HAVE BEEN WELL BELOW 20% OF PROFITS OF BUSINESS OF ONGC (THE FIGURE OF WELL BELOW 20% HAS BEEN FACTUALLY ACCEPTED BY ONGC IN T HE COUNTER AFFIDAVIT FILED IN HONBLE UTTRAKHAND HIGH COURT). THUS, IN A NY EVENT, INTEREST EARNED ON SRF A/C IS HUNDRED PER CENT DEDUCTIBLE U/S 33ABA WHICH MEANS THAT THIS IS REVENUE NEUTRAL. 13. LD. SR. COUNSEL IN THIS REGARD SUBMITTED THAT A SSESSEE HAS SUBMITTED CERTIFICATES FROM CAS TO PROVE THAT ONGC HAS, IN AN Y EVENT, ACCOUNTED FOR INTEREST TREATING IT TO BE INCOME, THEREFORE, AS PE R THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA B EVERAGE PVT. LTD. AND THAT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. RISHIKESH 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 15 APARTMENTS CO-OPERATIVE HOUSING SOCIETY LTD. 253 IT R 310 (GUJ.), THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAUL T. LD. COUNSEL POINTED OUT THAT THIS PLEA OF ASSESSEE HAS BEEN ACCEPTED BY LD. CIT(A) AND DEPARTMENT IS IN APPEAL ON THIS ISSUE. 14. LD. CIT(DR) REFERRED TO PAGE 116 OF THE PAPER B OOK, WHICH IS LETTER DATED 19-12-2003 FROM AO TO AGM, SBI, WHEREIN THE A SSESSING OFFICER HAD, INTER ALIA, REQUIRED THE SBI TO FURNISH THE DETAILS REGARDING INTEREST AND TDS. HE FURTHER REFERRED TO PAGE 117 WHICH IS THE REPLY FILED BY ASSESSEE AND POINTED OUT THAT ASSESSEE KEPT SILENT OVER THE PLEA OF TIME DEPOSIT. 14.1. LD. CIT(DR) SUBMITTED THAT EXPLANATION 1 TO S UB-SECTION (3) OF SECTION 194A AIMS TO ADDRESS THE DEPOSITS WHICH A RE NOT PAYABLE ON DEMAND.. HE SUBMITTED THAT TIME DEPOSIT IS A DEPOSI T THAT CAN BE WITHDRAWN ONLY AFTER GIVING NOTICE. HE POINTED OUT THAT TIME DEPOSIT IS QUITE SIMILAR TO THE TERM TERM LOAN WHICH MEANS A LOAN WHICH IS DU E ONLY AFTER EXPIRY OF SPECIFIED PERIOD/EVENTUALITY. HE, IN HIS WRITTE N SUBMISSIONS, POINTED OUT THAT AS PER BLACKS LAW DICTIONARY (5 TH EDITION), A DEPOSIT IS CALLED AS TIME DEPOSIT BECAUSE A PERSON MUST WAIT A CERTAIN AMOUNT OF TIME AFTER NOTICE OF WITHDRAWAL IS GIVEN TO THE BANK. 14.2. LD. CIT(DR) SUBMITTED THAT PERIOD AS INDICA TED IN THE EXPLANATION DOES NOT MEAN A PREFIXED SPECIFIC NUMBER OF MONTHS, DAYS OR YEARS. IN THE CASE OF FIXED PERIOD BOTH THE PARTIES HAVE TO HAV E NOTICES WHEREAS IN THE CASE OF OTHER TYPES OF DEPOSITS NOTICE TIME MAY NOT NECESSARILY BE AVAILABLE TO BOTH THE PARTIES AS A MATTER OF RIGHTS. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 16 14.3. THE PERIOD STARTING FROM THE DEPOSIT OF MONEY TILL THE EVENTUALITY WHEN WITHDRAWAL IS MADE IS COVERED BY THE PHRASE FIXED PERIOD AND HENCE IT WILL CLEARLY BRING THE SRF WITHIN THE AMBI T OF TIME DEPOSIT. 14.4. LD. CIT(DR) SUBMITTED THAT SRF DEPOSITS ARE S UPPOSED TO BE TREATED AS TIME DEPOSITS ONLY GETS FURTHER STRENG TH FROM THE PROVISIONS OF PARA 6(3) OF THE SRF SCHEME, WHICH, LIKE FOR FDR/ T IME DEPOSITS, BAR FOR UTILIZATION OF INTEREST CREDITED EXCEPT ON WITHDRAW AL FOR UTILIZATION IN TERMS OF THE SCHEME ITSELF. THIS GETS FURTHER DEMONSTRATE D FROM PARA 8 OF THE SCHEME WHICH PROVIDE FOR WITHDRAWAL OF THE DEPOSIT ONLY ON EXPIRY OR TERMINATION OF THE AGREEMENT ETC., WHICH ALSO GOES TO SHOW THAT DEPOSIT WAS OF THE NATURE OF TIME DEPOSIT AND NOT OF THE NATURE OF DEMAND DEPOSIT ESPECIALLY WHEN IT IS AN ESTABLISHED FACT OF PRESENT DAY COMMERCIAL LIFE THAT A DEPOSIT WHICH IS NOT PAYABLE ON DEMAND PARTAKES THE CHARACTER OF TIME/TERM DEPOSIT ONLY. 15. AS REGARDS THE FIRST PLEA OF ASSESSEE THAT EXEM PTION HAD BEEN GRANTED IN A. Y. 2002-03, LD. CIT(DR) SUBMITTED THAT STATEM ENT OF BRANCH MANAGER SHOULD NOT BE CONSIDERED. LD. CIT(DR) FURTHER REFE RRED TO LETTER ADDRESSED TO ITO, (TDS) BY THE AUTHORIZED REPRESENTATIVE OF T HE BANK WHICH WAS FILED BEFORE US ON 13 TH MAY 2014 AND POINTED OUT THAT IN THE SAID LETTER I N PARA 4 IT WAS POINTED BY THE AUTHORIZED REPRESENTATIVE THAT I N THE ABSENCE OF ANY COMMUNICATION FROM THE ONGC ON THE POINT OF TDS, IT HAS BEEN PRESUMED BY THE BANK THAT THE EXEMPTION ALREADY GIVEN TO THE ONGC HAS BEEN WITHDRAWN BY THE I.T. DEPARTMENT AND THE BANK HAS N O ALTERNATIVE BUT TO DEDUCT THE TAX AND, ACCORDINGLY, TAX WAS ALSO DEDUC TED ON 31-3-2003 FOR BOTH THE FINANCIAL YEARS VIZ. 2001-02 AND 2002-03 AMOUNTING TO RS. 9,.15,02,410/- HE, THEREFORE, SUBMITTED THAT ASSESS EE HAD ACCEPTED THAT THE 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 17 TDS WAS TO BE MADE AND, THEREFORE, RELIANCE OF LD. SR. COUNSEL ON THE CERTIFICATE FOR A.Y. 2002-03 IS MISPLACED. 15.1. AS REGARDS THE PLEA OF ASSESSEE WITH REGARD T O NON-APPLICABILITY OF SECTION 194A ON ACCOUNT OF THERE BEING NO INCOME BY WAY OF INTEREST, LD. CIT(DR) SUBMITTED THAT SECTION 33ABA IS NOT RELEVAN T FOR SBI. HE SUBMITTED THAT SECTION 190 STARTS WITH NON OBSTANTE CLAUSE AND, THEREFORE, INTENTION OF LEGISLATURE IS TO REQUIRE THE DEDUCTO R TO DEDUCT THE TAX AT SOURCE NOTWITHSTANDING THE REGULAR ASSESSMENT TO BE MADE A T A LATER DATE. HE REFERRED TO SECTION 194A AND POINTED OUT THAT THE P HRASE USED IS SHALL WHICH MEANS THAT IT IS MANDATORY IN NATURE. LD. CI T(DR) SUBMITTED THAT PROVISIONS OF SECTION 194A ARE TO BE INTERPRETED IN DEPENDENT OF SECTION 33ABA. UNLESS CERTIFICATE OF EXEMPTION FROM TDS WAS PRODUCED BY ONGC, THE DEDUCTOR HAD NO OPTION BUT TO DEDUCT TDS. 15.2. LD. CIT(DR) SUBMITTED THAT AS FAR AS THE ASSE SSEES PLEA REGARDING DOUBLE TAXATION IS CONCERNED, THAT CAN BE TAKEN ONL Y BY ONGC. 15.3. LD. CIT(DR) SUBMITTED THAT THE DECISION IN TH E CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F ELI LILLY & CO. (INDIA) PVT. LTD. (SUPRA) IS QUA SALARY INCOME AND, THEREFORE, APPLICABLE ONLY TO SECTION 192A. HE POINTED OUT THAT IN THIS CASE T HE HONBLE SUPREME COURT IN PARA 57 HAS, INTER ALIA, POINTED OUT AS UNDER: , WE WISH TO CLARIFY THAT OUR JUDGMENT IS CONFINE D STRICTLY TO THE QUESTION OF DEDUCTIBILITY OF TAX FROM THE INCO ME CHARGEABLE UNDER THE HEAD SALARIES UNDER SECTION 192(1). 15.4. AS REGARDS THE DECISION OF HONBLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. RISHIKESH APARTMENTS CO-OPERATIVE HOUSI NG SOCIETY LTD. (SUPRA), RELIED BY LD. COUNSEL FOR THE ASSESSEE, L D. CIT(DR) SUBMITTED THAT 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 18 THE MAIN SECTIONS INVOLVED IN THIS CASE WERE SECTIO NS 190, 194C AND 199 WHICH ARE NOT UNDER CONSIDERATION HERE. FURTHER, TH IS JUDGMENT IS LIMITED TO THE ISSUE OF LEVY OF INTEREST U/S 201(1A) AND NOT W ITH REFERENCE TO TREATING A DEDUCTOR AS ASSESSEE IN DEFAULT U/S 201 FOR NON -DEDUCTION OF TAX WHEREAS MAIN ISSUE INVOLVED IN THE PRESENT ASSESSEES CASE IS WHETHER SBI CAN BE TREATED TO BE AN ASSESSEE IN DEFAULT U/S 201. 15.5. AS REGARDS THE SUBMISSIONS OF LD. COUNSEL THA T BY VIRTUE OF CLAUSE (B) OF EXPLANATION TO SECTION 33ABA WHAT-EVER INTEREST GETS ACCRUED BECOMES DEPOSIT IN TURN TAKING IT OUT OF TAXABILITY AT THE VERY THRESHOLD, LD. CIT(DR) SUBMITTED THAT THE BANKS STAND RUNS CONTRARY TO TH E STAND OF THE ONGC. THE MAIN ACTOR ONGC HAS UNDISPUTEDLY FIRST TREATED THE INTEREST IN THEIR RETURN AS TAXABLE AND ONLY THEREAFTER THEY HAVE BEE N CONTINUOUSLY CLAIMING DEDUCTION AS PROVIDED U/S 33ABA. 15.6. HE POINTED OUT THAT AS PER THE THIRD PROVISO TO SECTION 33ABA(1) DEEMED DEPOSIT OF INTEREST IS ONLY FOR THE PURPOSES OF THAT SECTION BUT IT IS NOT RELEVANT FOR TAXABILITY OF INTEREST. DEEMING FICTIO N IS ONLY FOR TREATING THE ACCRUED INTEREST AS DEPOSIT AND IT CANNOT BE EXTE NDED BEYOND THAT. 15.7. LD. CIT(DR) FURTHER SUBMITTED THAT THE CONTEN TION OF ASSESSEE THAT SECTION 33ABA IS A SELF CONTAINED CODE, IS NOT CORR ECT BECAUSE THIS SECTION IS DEPENDENT UPON THE OTHER PROVISIONS OF THE INCOM E TAX ACT AND THE RULES OF THE SRF SCHEME. HE SUBMITTED THAT WHAT IS GOING TO BE THE QUANTUM OF THE DEDUCTION IS DEPENDENT UPON OTHER P ROVISIONS OF THE INCOME-TAX ACT BECAUSE THERE UNDER ONLY ELIGIBLE PROFITS AND GAINS OF BUSINESS AS ADDRESSED IN CLAUSE (II) OF SECTION 33A BA(1) CAN BE COMPUTED. 15.8. LD. CIT(DR) FURTHER SUBMITTED THAT ASSESSEE HAS SOUGHT TO PLACE RELIANCE ON AUDITORS CERTIFICATE ISSUED UNDER RULE 3AD READ WITH SECTION 33ABA OF THE ACT TO MAKE OUT A CASE THAT INTEREST A CCRUED ON SRF WAS NOT 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 19 AMENABLE TO TAX. IN THIS CONTEXT HE SUBMITTED THAT UNDER THE SCHEME OF THE ACT, THE COMPETENT AUTHORITY TO ALLOW NON-DEDUCTION OF TDS ON A SUM IS THE INCOME TAX AUTHORITY AS CONTEMPLATED U/S 197 OF THE ACT AND NONE ELSE. 15.9. LD. CIT(DR) SUBMITTED THAT INTERPRETATION OF THE BANK THAT INTEREST ACCRUED HAS TO BE NECESSARILY TREATED AS DEPOSIT, MAKE THE WORDS WHICHEVER IS LESS, OTIOSE/ REDUNDANT. HE POINTED OUT THAT CLAUSES (I) & (II) HAVE TO BE READ TOGETHER IN A WAY TO ARRIVE AT THE QUANTUM OF THE DEDUCTION AVAILABLE WHICH IS LESSER OF DEPOSIT OR THE 20% PROFITS OF THE BUSINESS. 15.10. AS REGARDS THE ASSESSEES PLEA THAT WHOLE EX ERCISE IS REVENUE NEUTRAL, LD. CIT(DR) SUBMITTED THAT FIRSTLY THE BANK CANNOT EVEN INDIRECTLY RELY ON THIS SECTION BECAUSE BANK IS GOVERNED BY SECTIONS 1 94A, 197 & 197A AND NOT 33ABA. HE FURTHER SUBMITTED THAT THE AMOUNT ADD RESSED U/S 33ABA(5) IS THE SUM WHICH IS TAXABLE UNDER THE HEAD PROFITS OF THE BUSINESS. SINCE INTEREST IS AS SUCH TAXABLE AS INCOME FROM OTHER S OURCES, BANK CANNOT ARGUE THAT IT TOO WILL BE TAXABLE U/S 28 ONLY. 16. IN THE REJOINDER, LD. SR. COUNSEL REFERRED TO P AGE 23 OF THE SUPPLEMENTARY PAPER BOOK, WHEREIN THE COUNTER AFFID AVIT FILED BY THE INCOME-TAX DEPARTMENT IN THE WRIT PETITION FILED BY ASSESSEE IS CONTAINED AND POINTED OUT THAT IN PARAS 10 & 11 THE DEPARTMEN T HAS NOT CONTRADICTED THE ASSESSEES STAND THAT PERCENTAGE OF AMOUNT DEPO SITED IN SRA/SRF ACCOUNT BY ONGC IS WELL BELOW 20%. THE DEPARTMENT I N PARA 11 SUBMITTED THAT IT IS CORRECT THAT THE ENTIRE AMOUNT DEPOSITED IN THE SRF/SRA ACCOUNT IS ALLOWABLE AS DEDUCTION. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. ADMITTEDLY THE ASSESSEE DID NOT DEDUCT THE TAX ON T HE INTEREST ACCRUED ON THE CORPUS OF SRF FUND OF ONGC AND THAT TRIGGERED THE C ONTROVERSY OF NON- 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 20 DEDUCTION OF TAX AT SOURCE. CONSEQUENTLY, STATE BAN K OF INDIA WAS TREATED AS AN ASSESSEE IN DEFAULT AND INTEREST U/S 201(1A) WAS ALSO LEVIED. 17.1. THE PLEA OF CONSISTENCY WITH REFERENCE TO CER TIFICATE GRANTED FOR A.Y. 2002-03 IS NOT ACCEPTABLE FOR THE SIMPLE REASON THA T CERTIFICATE IS GRANTED FOR INCOME ACCRUING DURING A SPECIFIED PERIOD AND, THER EFORE, IT CANNOT HAVE ANY EFFECT FOR SUBSEQUENT YEARS. MOREOVER, PRINCIPLES O F RES-JUDICATA ARE NOT APPLICABLE TO INCOME-TAX PROCEEDINGS. 17.2. SECTION 194A MANDATES THE PAYER OF INTEREST T O DEDUCT TDS AT THE TIME OF CREDIT OF SUCH INTEREST TO THE ACCOUNT OF THE PA YEE. HOWEVER, BY VIRTUE OF SUB-SECTION (3), PROVISIONS OF SUB-SECTION (1) ARE NOT APPLICABLE, INTER ALIA, AS PER CLAUSE (VII) IN THE CASE OF INTEREST CREDITED OR PAID IN RESPECT OF DEPOSITS (OTHER THAN TIME DEPOSITS MADE ON OR BEFORE 1 ST DAY OF JULY 1995). THEREFORE, IF A DEPOSIT IS NOT IN THE NATURE OF TIM E DEPOSIT, THEN IT IS NOT AMENABLE TO THE PROVISIONS OF SECTION 194A. 17.3. IN THE PRESENT CASE INTEREST HAS BEEN CREDITE D BY SBI ON SRF A/C WHICH HAS BEEN OPENED BY ONGC WITH IT AS PER THE PROVISIO NS OF SECTION 33ABA. THEREFORE, IT IS NECESSARY TO FIRST EXAMINE THE REL EVANT PROVISIONS IN THIS REGARD TO FIND OUT WHETHER SRF A/C IS TIME DEPOSIT OR NOT. 17.4. SECTION 33ABA DEALS WITH SITE RESTORATION FU ND IN RESPECT OF THOSE ASSESSEES, WHO ARE CARRYING ON BUSINESS OF PROSPEC TING FOR, OR EXTRACTION OR PRODUCTION OF, PETROLEUM OR NATURAL GAS OR BOTH IN INDIA. RELEVANT PORTION READS AS UNDER: [ SITE RESTORATION FUND. 33ABA. (1) WHERE AN ASSESSEE IS CARRYING ON BUSINESS CONSI STING OF THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, PE TROLEUM OR NATURAL GAS OR BOTH IN INDIA AND IN RELATION TO WHICH THE CENTRAL GOVERNMENT HAS ENTERED INTO AN AGREEMENT WITH SUCH ASSESSEE FOR SUCH BUSIN ESS, HAS BEFORE THE END OF THE PREVIOUS YEAR 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 21 ( A ) DEPOSITED WITH THE STATE BANK OF INDIA ANY AMOUNT OR AMOUNTS IN AN ACCOUNT (HEREAFTER IN THIS SECTION REFERRED TO A S THE SPECIAL ACCOUNT) MAINTAINED BY THE ASSESSEE WITH THAT BANK IN ACCORD ANCE WITH, AND FOR THE PURPOSES SPECIFIED IN, A SCHEME (HEREAFTER IN THIS SECTION REFERRED TO AS THE SCHEME) APPROVED IN THIS BEHALF BY THE GOVERNMENT O F INDIA IN THE MINISTRY OF PETROLEUM AND NATURAL GAS; OR ( B ) DEPOSITED ANY AMOUNT IN AN ACCOUNT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SITE RESTORATION ACCOUNT) OPENED BY THE ASSESSEE IN ACCORDANCE WITH, AND FOR THE PURPOSES SPECIFIED IN, A SCHEME FRAMED BY THE MINISTRY REFERRED TO IN CLAUSE ( A ) (HEREAFTER IN THIS SECTION REFERRED TO AS THE DEPOSIT SCHEME), THE ASSESSEE SHALL, SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED A DEDUCTION (SUCH DEDUCTION BEING ALLOWED BEFORE THE LOSS, IF ANY, BROUGHT FORWARD FROM EARLIER YEARS IS SET OFF UNDER SECTION 72 ) OF ( I ) A SUM EQUAL TO THE AMOUNT OR THE AGGREGATE OF THE AMOUNTS SO DEPOSITED; OR ( II ) A SUM EQUAL TO TWENTY PER CENT OF THE PROFITS OF SUCH BUSINESS (COMPUTED UNDER THE HEAD PROFITS AND GAIN S OF BUSINESS OR PROFESSION BEFORE MAKING ANY DEDUCTION UNDER THIS SECTION), WHICHEVER IS LESS : .. . PROVIDED FURTHER THAT WHERE ANY DEDUCTION, IN RESPECT OF ANY AMOUNT DEPOSITED IN THE SPECIAL ACCOUNT, OR IN THE SITE RE STORATION ACCOUNT, HAS BEEN ALLOWED UNDER THIS SUB-SECTION IN ANY PREVIOUS YEAR, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH AMOUNT IN ANY O THER PREVIOUS YEAR : PROVIDED ALSO THAT ANY AMOUNT CREDITED IN THE SPECIAL ACCOUNT OR THE SITE RESTORATION ACCOUNT BY WAY OF INTEREST SHALL BE DEE MED TO BE A DEPOSIT. (3) ANY AMOUNT STANDING TO THE CREDIT OF THE ASSESS EE IN THE SPECIAL ACCOUNT OR THE SITE RESTORATION ACCOUNT SHALL NOT B E ALLOWED TO BE WITHDRAWN EXCEPT FOR THE PURPOSES SPECIFIED IN THE SCHEME OR, AS THE CASE MAY BE, IN THE DEPOSIT SCHEME. .. (5) WHERE ANY AMOUNT STANDING TO THE CREDIT OF THE ASSESSEE IN THE SPECIAL ACCOUNT OR IN THE SITE RESTORATION ACCOUNT IS WITHD RAWN ON CLOSURE OF THE ACCOUNT DURING ANY PREVIOUS YEAR BY THE ASSESSEE, T HE AMOUNT SO WITHDRAWN FROM THE ACCOUNT, AS REDUCED BY THE AMOUN T, IF ANY, PAYABLE TO THE CENTRAL GOVERNMENT BY WAY OF PROFIT OR PRODUCTI ON SHARE AS PROVIDED IN THE AGREEMENT REFERRED TO IN SECTION 42 , SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION OF THAT PREVIOU S YEAR AND SHALL ACCORDINGLY BE CHARGEABLE TO INCOME-TAX AS THE INCO ME OF THAT PREVIOUS YEAR. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 22 EXPLANATION. WHERE ANY AMOUNT IS WITHDRAWN ON CLOSURE OF THE ACC OUNT IN A PREVIOUS YEAR IN WHICH THE BUSINESS CARRIED ON BY THE ASSESSEE IS NO LONGER IN EXISTENCE, THE PROVISIONS OF THIS SUB-SEC TION SHALL APPLY AS IF THE BUSINESS IS IN EXISTENCE IN THAT PREVIOUS YEAR. 17.5. EXPLANATION 1 TO CLAUSE (VII) OF SUB-SECTION (3) TO SECTION 194A CLEARLY CONTEMPLATES TIME DEPOSIT TO MEAN DEPOSITS WHICH ARE REPAYABLE ON THE EXPIRY OF FIXED PERIODS. 17.6. LD. SR. COUNSEL HAS REFERRED TO THE VARIOUS F ORMS, FORMING PART OF THE SCHEMES, WHICH HAVE BEEN NOTED IN HIS ARGUMENT FRO M WHICH IT IS EVIDENT THAT THERE IS NO FIXED PERIOD PRESCRIBED IN REGARD TO THESE DEPOSITS AND ASSESSEE HAS TO GIVE NOTICE TO THE BANK FOR MAKING WITHDRAWAL FROM THIS DEPOSIT ACCOUNT. THE WITHDRAWAL IS TO BE MADE AS PE R REQUIREMENT OF SUB- SECTION (3) TO SECTION 33ABA. THEREFORE, IT CANNOT BE SAID TO BE FOR A FIXED PERIOD. THE FIXED PERIOD IMPLIES THAT PERIOD IS D ETERMINABLE AT THE TIME OF ENTERING INTO CONTRACT. THE TERM PERIOD IS QUALIF IED WITH THE TERM FIXED AND, THEREFORE, WHEN PERIOD OF DEPOSIT IS LEFT TO T HE EVENTUALITY OF ARISING OF PURPOSE FOR WITHDRAWAL AS CONTEMPLATED U/S 33ABA(3) THEN, WE FAIL TO APPRECIATE AS TO HOW IT CAN COME WITHIN THE AMBIT O F FIXED PERIOD. THE DEFINITION/ MEANING OF TIME DEPOSIT IS GIVEN IN S ECTION 194A AND, THEREFORE, IT CANNOT BE ASSIGNED A GENERAL MEANING AS SUBMITTE D BY LD. CIT(DR). THERE IS NO ROOM FOR ANY INTERPRETATION/ CONSTRUCTION IN TAX LAWS, WHEN THERE IS NO AMBIGUITY IN THE LANGUAGE OF SECTION. WHEN THE PLAI N WORDS OF STATUTE CLEARLY AND DIRECTLY CONVEY NO OTHER MEANING, THEN THERE IS NO NEED FOR ANY INTERPRETATION. THEREFORE, LD. CIT(DR)S CONTENTION THAT THIS WITHDRAWAL NOTICE ITSELF IMPLIES THAT THE DEPOSIT IS FOR FIX ED PERIOD CANNOT BE ACCEPTED IN THE BACKDROP OF SPECIFIC DEFINITION GIVEN UNDER THE ACT. 17.7. FURTHER, IT IS NOT NECESSARY THAT ENTIRE AMOU NT IS TO BE WITHDRAWN IN ONE GO AND WITH THE WITHDRAWAL THE SCHEME WILL CLOS E. ON THE CONTRARY THERE 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 23 ARE STIPULATIONS U/S 33ABA READ WITH THE SCHEME TO ENSURE THAT ONGC WITHDRAWS THE REQUIRED AMOUNT ONLY FOR UTILIZING TH E AMOUNT AS PER THE SCHEME. IN ORDER TO CLARIFY THIS ASPECT, WE REPRODU CE HEREUNDER CERTAIN CLAUSES FROM THE SCHEME. 17.8. CLAUSES 8 & 9 OF THE SCHEME READ AS UNDER: 8. WITHDRAWAL AND UTILISATION OF THE AMOUNT DEPOSI TED: A DEPOSITOR SHALL BE ENTITLED TO WITHDRAW FROM THE AMOUNT STANDING TO THE CREDIT OF THE ACCOUNT ONLY S UCH AMOUNT AS IS NECESSARY TO MEET ANY EXPENDITURE TO B E INCURRED BY HIM ON THE EXPIRY OR TERMINATION OF THE AGREEMENT OR RELINQUISHMENT OF PART OF THE CONTRACT AREA, TOWARDS REMOVAL OF ALL EQUIPMENTS AND INSTALLATION S, IN A MANNER AGREED WITH THE CENTRAL GOVERNMENT PURSUANT TO AN ABANDONMENT PLAN OR TOWARDS ALL NECESSARY SITE RESTORATION IN ACCORDANCE WITH MODERN OILFIELD AND PETROLEUM INDUSTRY PRACTICES AND TOWARDS MEETING AL L OTHER EXPENSES NECESSARY TO PREVENT HAZARDS TO LIFE OR PROPERTY OR ENVIRONMENT CONSEQUENT ON SUCH EXPIRY, TERMINATION OR RELINQUISHMENT. 9. PROCEDURE FOR WITHDRAWAL (1) THE DEPOSITOR SHALL BE ENTITLED TO WITHDRAW THE WHOLE OR ANY PART OF THE AMOUNT STANDING TO THE CREDIT OF THE ACCOUNT BY MAKING AN APPLICATION IN FORM E, DULY AUTHORIZED BY THE MINISTRY OF PETROLEUM & NATURAL GAS OR ANY AGENCY AUTHORIZED BY THE MINISTRY OF PETROLEUM & NATURAL GAS IN THIS BEHALF. (2) ON RECEIPT OF THE REQUEST FOR WITHDRAWAL, THE DEPOSIT OFFICE SHALL, A SOON AS MAY BE, PAY THE AMOUNT TO THE DEPOSITOR THROUGH A CREDIT O THE DESIGNATED ACCOUNT. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 24 17.9. SRF DEPOSIT CONTINUE TO RUN AS LONG AS THE AG REEMENT OF ONGC WITH THE GOVERNMENT RUNS AND WITHDRAWALS CAN BE MADE DEP ENDING UPON REQUIREMENTS. CLAUSE 3 OF THE SRF SCHEME READS AS U NDER: 3. DEPOSIT: HOW TO BE MADE (1) A DEPOSIT IN TERMS OF SECTION 33ABA OF THE INCOME-TAX ACT , 1961 MAY BE MADE BY ANY DEPOSITOR IN ACCORDANCE WITH THE PROVISIONS OF THIS SCHEME. (2) THE DEPOSIT MAY BE MADE IN ONE LUMP SUM OR IN INSTALMENTS (NOT EXCEEDING FOUR INSTALMENTS IN EACH FINANCIAL YEAR) (3) SUCH DEPOSIT HAS TO BE MADE IN INDIAN RUPEE, AN D OUT OF PROFITS DERIVED FROM THE BUSINESS REFERRED I N SUB PARAGRAPH (3) OF PARAGRAPH 1 ABOVE. (4) SHALL ACCOUNT SHALL BE MAINTAINED IN INDIAN RUPEES. 17.10. THIS CLEARLY SHOWS THAT SRF DEPOSIT MAY BE MADE IN ONE LUMP SUM OR INSTALMENTS NOT EXCEEDING FOUR INSTALMENTS IN EA CH FINANCIAL YEAR. THIS PLEA IS FURTHER FORTIFIED BY CLAUSE 6 OF THE SCHEME WHICH CONTEMPLATES FOR COMPUTING INTEREST AND READS AS UNDER: 6. INTEREST: (1) SUBJECT TO SUB-PARAGRAPH (2) THE DEPOSIT SHALL CARRY INTEREST AT THE HIGHEST RATE FOR THE APPLICABLE PER IOD AS PAID BY THE STATE BANK OF INDIA ON THE DATE THE DEP OSIT IS MADE FOR RUPEE TERM DEPOSITS PREVAILING AT THE END OF THE FINANCIAL YEAR. (2) WHERE DURING ANY FINANCIAL YEAR ANY PART OF THE DEPOSIT IS WITHDRAWN, THE INTEREST PAYABLE ON THE DEPOSITS SHALL BE CALCULATED ON THE BASIS OF THE MINIMUM MONTHLY BALANCE IN THE ACCOUNT DURING EACH OF THE MONTHS IN THE FINANCIAL YEAR. (3) THE INTEREST PAYABLE FOR ANY FINANCIAL YEAR, OR PART THEREOF, SHALL ONLY BE CREDITED TO THE ACCOUNT AND SHALL NOT BE PAYABLE TO THE DEPOSITOR EXCEPT AS PART OF 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 25 WITHDRAWAL FOR UTILIZATION IN TERMS OF PARAGRAPH 9 OR PART OF PAYMENT OF BALANCE ON CLOSURE OF ACCOUNT IN TERM S OF PARAGRAPH 12. (4) THE GROSS INTEREST CREDITED TO THE ACCOUNT IN A FINANCIAL YEAR SHALL BE EVIDENCED BY A CERTIFICATE ISSUED IN FORM C, BY THE DEPOSIT OFFICE AND THE AMOUNT OF SUCH GROSS INTEREST SHALL BE DEEMED TO BE A DEPOSIT MADE BY TH E DEPOSITOR UNDER THIS SCHEME IN THAT FINANCIAL YEAR. 17.11. SUB-CLAUSE (2) OF CLAUSE 6 OF THE SCHEME MAK ES IT CLEAR THAT WITHDRAWAL CAN BE MADE IN ANY FINANCIAL YEAR AND, THEREFORE, IT CANNOT BE A CASE OF FIXED PERIOD. LD. SR. COUNSEL IN THE COURSE OF HEARING POINTED OUT THAT NOT EVEN SINGLE PAISE HAS BEEN WITHDRAWN FOR THE LA ST 12 YEARS FROM THE CORPUS OF THE FUND THAT HAS NOW SWELLED APPROXIMAT ELY TO RS. ELEVEN THOUSAND CRORES. WE ARE IN AGREEMENT WITH THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SRF IS CLEARLY NOT F OR FIXED PERIOD AT ALL. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE SUB MISSIONS OF LD. COUNSEL FOR THE ASSESSEE THAT IN VIEW OF CLAUSE (VII) TO SE CTION 194A(3), THE PROVISIONS OF SECTION 194A(1) ARE NOT ATTRACTED TO THE PRESENT CASE. 17.12. AS WE HAVE ACCEPTED THE FIRST PLEA OF ASSESS EE, THEREFORE, THE ARGUMENTS ON OTHER PLEAS HAVE BECOME ACADEMIC. HOWE VER, SINCE DETAILED ARGUMENTS HAVE BEEN ADVANCED BY BOTH THE SIDES, FOR THE COMPLETENESS OF THE ORDER, WE WILL DEAL WITH THE SAME. 17.13. THE NEXT PLEA OF LD. COUNSEL FOR THE ASSESSE E WAS THAT INTEREST WAS NOT CHARGEABLE IN THE HANDS OF ONGC BECAUSE THE INTERES T WAS TREATED AS DEPOSIT BY VIRTUE OF THIRD PROVISO TO SECTION 33ABA(1). WE WILL CONSIDER THIS PLEA ALONG WITH THE PLEA THAT THE WHOLE EXERCISE, IN ANY VIEW OF THE MATTER, IS REVENUE NEUTRAL. BEFORE WE CONSIDER THIS ASPECT, WE MAY POINT OUT THAT COLLECTION AND RECOVERY PROVISIONS ARE PRIMARILY MA CHINERY PROVISIONS AND, THEREFORE, THEY HAVE TO BE CONSIDERED IN THE CONTEX T OF SUBSTANTIVE SECTION. 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 26 THEREFORE, PLEA OF LD. CIT(DR) THAT PROVISIONS OF S ECTION 33ABA SHOULD NOT BE CONSIDERED AT ALL IS DEVOID OF ANY MERIT. WHOLE SCHEME U/S 33ABA READ WITH SECTION 194A IS AN INTEGRATED SCHEME OF TAXATI ON AND BOTH HAVE TO BE CONSIDERED TOGETHER. 17.14. IT IS WELL SETTLED PRINCIPLE OF INCOME-TAX L AW THAT THE NATURE OF RECEIPT IS TO BE DECIDED AT THE FIRST INSTANCE. THE INTERES T ACCRUING TO SRF A/C IS INCOME OF ONGC AND THE DEEMING PROVISION AS PER THI RD PROVISO TO SECTION 33ABA(1) OF TREATING IT AS DEPOSIT IS ESSENTIALLY A PPLICATION OF INCOME. THIS IS ALSO CLEAR FROM THE FACT THAT ONGC IS ACCOUNTING FOR THE INTEREST IN ITS P&L A/C AND THEN CLAIMING DEDUCTION OF DEPOSIT WHIC H INCLUDES THE INTEREST ACCRUED ON SRF A/C. THE DEEMING FICTION CONTEMPLATE D IN THIRD PROVISO IS FOR THE PURPOSES OF SECTION 33ABA ONLY AND CANNOT BE EX TENDED BEYOND THE PURPOSE FOR WHICH IT HAS BEEN INSERTED IN SECTION 3 3ABA. 17.15. THE PLEA ADVANCED BY LD. SR. COUNSEL IS BAS ED ON THE PREMISE THAT THE DEPOSITS IN THE SRF A/C INCLUDING THE INTE REST ACCRUED ON THE SRF A/C IS LESS THAN 20% OF THE PROFITS AND GAINS OF THE BU SINESS AND, THEREFORE, THE ENTIRE DEPOSIT IS ALLOWABLE AS A DEDUCTION. HOWEVER , THIS CANNOT BE THE BASIS FOR DECIDING WHETHER TDS WAS REQUIRED TO BE MADE U/ S 194A OR NOT. IT IS THE NATURE OF RECEIPT BEING INTEREST, WHICH TRIGGERS TH E APPLICABILITY OF PROVISIONS OF SECTION 194A AND IF THE ASSESSEE WAS CLAIMING FO R NO TDS THEN IT SHOULD HAVE OBTAINED CERTIFICATE U/S 197 FOR NON-DEDUCTION / AT LOWER RATE. THE INTEREST INCOME DOES NOT LOOSE ITS CHARACTER MERELY BECAUSE OF THE DEEMING PROVISIONS U/S 33ABA TREATING THE ACCRUED INTEREST BEING TREATED AS DEPOSIT. 17.16. LET US TAKE A HYPOTHETICAL REVERSE CASE THAT THE DEPOSIT INCLUDING ACCRUED INTEREST IS MORE THAN 20% OF THE PROFITS OF BUSINESS. UNDER SUCH CIRCUMSTANCE THE DEPOSIT OVER AND ABOVE 20% OF THE PROFITS OF BUSINESS IS NOT ADMISSIBLE AS DEDUCTION. SECTION 33ABA DOES NOT MAKE THE ACCRUED 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 27 INTEREST ON SRF A/C AS NOT CHARGEABLE TO TAX BUT ON LY ENTITLES THE ASSESSEE TO GET DEDUCTION TO THE EXTENT CONTEMPLATED U/S 33ABA( 1) ONLY. THUS, THERE IS SUBSTANCE IN PLEA OF LD. CIT(DR) THAT IF PLEA OF AS SESSEE IS ACCEPTED THEN IT WOULD RENDER 33ABA(1)(B)(I) & (II) OTIOSE. THEREFOR E, WE ARE NOT INCLINED TO ACCEPT THIS PLEA OF ASSESSEE. THE SECOND LIMB OF AS SESSEES ARGUMENT IS THAT BY VIRTUE OF SECTION 33ABA(5), REPRODUCED EARLIER, THE AMOUNT WITHDRAWN ON CLOSURE OF THE ACCOUNT BECOMES CHARGEABLE TO INCOME TAX AS THE INCOME OF THAT PREVIOUS YEAR. THEREFORE, THE CONTENTION IS TH AT ACCRUED INTEREST COULD NOT BE CHARGED TO TAX EARLIER. IN OUR OPINION, THIS PLEA CANNOT BE ACCEPTED FOR TWO REASONS FIRSTLY, AS ALREADY OBSERVED EARLIER, THE NATURE OF A RECEIPT IS TO BE DECIDED AT FIRST INSTANCE; AND SECONDLY, THIS SUB-SECTION DOES NOT MAKE THE WITHDRAWALS CHARGEABLE TO TAX TILL THE ACCOUNT IS NOT CLOSED. WE ARE HERE DEALING WITH THE PROVISIONS RELATING TO TDS ON ACCR UED INTEREST OF SRF A/C AND NOT CONSIDERING THE SAID PROVISIONS WITH REFERE NCE TO WITHDRAWALS MADE U/S 33ABA(5) ON CLOSURE OF ACCOUNT AS SUCH. IT IS N OT THE CASE OF ASSESSEE THAT WHEN WITHDRAWAL IS MADE ON CLOSURE OF ACCOUNT, THEN ALSO THE AMOUNT WITHDRAWN IS TO BE SUBJECTED TO TDS. MOREOVER, THIS SUB-SECTION REFERS TO ENTIRE CREDIT BALANCE LYING IN THIS ACCOUNT AND NOT ONLY THE ACCRUED INTEREST. AT BEST IT CAN BE SAID THAT SECTION 33ABA(5) BRINGS TO TAX THE AMOUNT WHICH WAS EARLIER ALLOWED AS DEDUCTION. WE, THEREFORE, DO NOT FIND ANY SUBSTANCE IN THIS PLEA OF ASSESSEE. 17.17. THIS ISSUE CAN BE EXAMINED FROM ONE MORE POI NT OF VIEW. THE DEPOSITS CONTEMPLATED U/S 33ABA NEED NOT NECESSARIL Y COME FROM BUSINESS OF EXTRACTION OR PRODUCTION OF PETROLEUM OR NATURAL GAS BECAUSE OF THE WORD USED CONSISTING IN SUB-SECTION (1) OF SECTION 33A BA. THE DEPOSITS CAN BE MADE FROM ANY OTHER SOURCE OF INCOME ALSO. FROM THI S IT FOLLOWS, AS SUBMITTED BY LD. CIT(DR), THAT INTEREST INCOME EAR NED FROM SRF A/C IS 3924, 3914 & 3915/D/13 3936, 3937 & 3938/D/13 STATE BANK OF INDIA 28 ASSESSABLE AS INCOME FROM OTHER SOURCES AND NOT AS BUSINESS INCOME. CONSEQUENTLY, NO PARITY CAN BE DRAWN BETWEEN INTERE ST ACCRUING TO SRF A/C AND THE WITHDRAWALS MADE U/S 33ABA(5) WHICH ARE ASS ESSABLE AS BUSINESS INCOME. THEREFORE, IT CANNOT BE HELD THAT INTEREST ACCRUED ON SRF A/C WAS NOT CHARGEABLE TO TAX IN THE YEAR OF ACCRUAL. 17.18. AS WE HAVE ALLOWED THE ASSESSEES APPEALS HO LDING THAT THE PROVISIONS OF SECTION 194A ARE NOT APPLICABLE, ACCEPTING THE F IRST PLEA OF ASSESSEE, THEREFORE, THE APPEALS FILED BY THE DEPARTMENT, CON TESTING THE DIRECTIONS OF LD. CIT(A) IN RESTORING THE MATTER TO ASSESSING OFFICER FOR CERTAIN VERIFICATION, HAVE BECOME INFRUCTUOUS. 19. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED AND THE DEPARTMENTS APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18/07/2014. SD/- SD/- ( C.M. GARG ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18-07-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR