ITO, Jaipur V. VAISHALI URBAN CO-OPERATIVE BANK LTD., Jaipur

ITA 599/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4870 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI
• Assessee Lawyers: NITESH GUPTA DHK
• Keywords: Non-deduction of tax
• Section: 201(1); 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 599/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO (TDS)-1 JAIPUR CUKE VS. M/S. VAISHALI URBAN CO-OPERATIVE BANK LTD. D-43, JANPATH, VAISHALI NAGAR JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAATV 3715 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY :SMT. POONAM RAI, DCIT-. DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI NITESH GUPTA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/12/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22 /12/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 18-03-2016 FOR THE ASSESS MENT YEAR 2011-12 RAISING THEREIN FOLLOWING GROUNDS:- (I) WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND CIRCUMSTANCES IN DELETING THE ADDITION OF RS. 08,38 ,724/- RAISED BY THE AO U/S 201(1)(1) AND INTEREST OF RS. 3,10,328/- U/S 201(1A) OF THE I.T. ACT ON ACCOUNT OF INTEREST PAID BY THE ASSESSEE WITHOUT MAKING TDS. ITA NO. 599/JP/2016 THE ITO , (TDS)-1, JAIPUR VS. M/S. VAISHALI URBAN C OOPERATIVE BANK LTD. JAIPUR . 2 (II) WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND CIRCUMSTANCES IN HOLDING THAT INTEREST PAID BY ASSE SSEE IS GOVERNED BY SUB-CLAUSE (V) OF SUB-SECTION (3) OF S ECTION 194A OF THE ACT. IN FACT, THE INTEREST PAID BY THE ASSESSEE IS GOVERNED BY SUB-CLAUSE (B) OF CLAUSE (I) OF SUB-SEC TION (3) OF SECTION 194A. 2.1 THE FACTS AS TO THE ISSUE IN QUESTION EMERGE FR OM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE AO AND SUBMISSION OF THE APPELLANT. THE AO RAISED DEMAND OF RS. 8,87,575/- U/S 201(1) ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE ON VARIO US EXPENSES. EACH EXPENSES IS DEALT AS UNDER:- (1) TDS ON LEGAL EXPENSES OF RS. 6,000/-:- IT IS SE EN THAT THE LD. AR HAS NOT DISPUTED THAT TAX IS NOT DE DUCTIBLE. FURTHER NO DOCUMENT WAS PRODUCED TO PROVE THAT THIS HAS BEEN INCLUDED BY THE RECEIVER. ACCORDINGLY, THE DEM AND RAISED U/S 201(1) ON THIS AMOUNT IS CONFIRMED. (2) TDS ON AUDIT OF RS. 4,00,000/-:-THIS AMUNT CONSISTS OF PAYMENT OF RS. 2,50,000/- TO RAWAT MAHE SH AND ASSOCIATES AND RS. 1,50,000/- AS PROVISION FOR AUDI T FEES. THE LD. AR FILED RETURN OF RAWAT MAHESH AND ASSOCIATES THAT RS. 2,50,000/- HAS BEEN INCLUDED IN THEIR INCOME BUT NO SUCH DETAIL FOR BALANCE AMOUNT OF RS. 1,50,000/- WAS FIL ED ACCORDINGLY, THE DEMAND U/S 201(1) IS CONFIRMED IN RESPECT OF RS. 1,50,000/- AND DELETED FOR RS. 2,00,000/- (3) TDS ON SECURITY EXPENSES OF RS. 1,42,529/-:- THE ASSESSEE HAS PROVIDED CONFIRMATION FROM TWO PAY EES OF THE SAID EXPENSES (LEAD DETECTIVE SERVICES PRIVATE LTD. RS. 78,600/- AND GOLI NATH DETECTIVES (P) LTD. RS. 77,6 00/- WHEREIN THEY HAVE CONFIRMED THE INCLUSION OF THE SA ID ITA NO. 599/JP/2016 THE ITO , (TDS)-1, JAIPUR VS. M/S. VAISHALI URBAN C OOPERATIVE BANK LTD. JAIPUR . 3 INCOME IN THEIR INCOME TAX RETURN AND PAID THEREON. IN VIEW OF PROVISO TO SECTION 201(1), THE TDS LIABILITY DOE S NOT ARISE ON THE SAID EXPENSES ACCORDINGLY, THE DEMAND OF RS. 2,851/- AND INTEREST THEREON RS. 1,055/- STANDS DELETED. (4) TDS ON INTEREST PAID TO MEMBERS OF RS. 83,87237/-:- IT IS SUBMITTED THAT THIS PAYMENT IS MADE TO MEMBERS OF SOCIETY. AS PER SECTION 194A(3)(V), NO T DS IS REQUIRED WHERE COOPERATIVE BANK PAYS INTEREST TO IT S MEMBERS. THE VARIOUS CASES CITED BY A/R SUPPORT HIS CASE. ON THE SAME BASIS A DISALLOWANCE WAS MADE U/S 40(A)(IA) FOR THE YEAR UNDER CONSIDERATION WHICH HA S BEEN DELETED BY THE CIT (A)-1 IN QUANTUM APPEAL VIDE ORD ER DATED 27-03-2015 IN ITA NO. 407/13-14 BY HOLDING THAT NO TDS IS DEDUCTIBLE ON THE SAME. CONSIDERING ALL THESE FACTS SINCE NO TAX IS DEDUCTI BLE ON INTEREST PAID TO MEMBERS, THE LIABILITY RAISED U /S 201(1) AND CONSEQUENTIAL INTEREST U/S 201(1A) IS DELETED. 2.2 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO. 2.3 THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO FILED THE WRITTEN SUBMISSION WHICH HAS BEEN TA KEN INTO CONSIDERATION WHILE ADJUDICATING THE APPEAL OF THE REVENUE. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORDS TH AT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF BANKING AND IT HAD GONE INTO LIQUIDATION W.E.F. 06-08-2013. IT IS ALSO NOTICED THAT THE ASSESSEE FI LED ITS RETURN OF INCOME ITA NO. 599/JP/2016 THE ITO , (TDS)-1, JAIPUR VS. M/S. VAISHALI URBAN C OOPERATIVE BANK LTD. JAIPUR . 4 ON 28-03-2013 FOR THE ASSESSMENT YEAR 2011-12 DECLA RING LOSS INCOME OF RS. 6,55,65,387/-. THE QUANTUM ASSESSMENT WAS COMPL ETED U/S 144 VIDE ORDER DATED 31-01-2014 AT A TOTAL INCOME OF RS. 48, 01,960/- AND CERTAIN EXPENSES WERE DISALLOWED THEREIN ON ACCOUNT OF NON -DEDUCTION OF TDS. BASED ON THE SAID ASSESSMENT, ITO (TDS) ASSESSED TD S LIABILITY U/S 201 AND RAISED TDS DEMAND OF RS. 12,16,523/- (INCLUDING INTEREST U/S 201(1A) OF RS. 3,28,948/-) VIDE ORDER DATED 28-03-2 014. THE DETAILS OF THE DEMAND RAISED BY THE AO ON ACCOUNT OF NON-DEDUC TION OF TDS U/S 201(1) AND INTEREST THEREON U/S 201(1A) ARE AS UNDE R:- HEAD DEMAND U/S 201(1) DEMAND U/S 201(1A) TOTAL LEGAL EXPENSES 6000 2265 8265 AUDIT FEES 40000 15300 55300 SECURITIES 2851 1055 3906 INTEREST EXPENSES 838724 310328 1149052 TOTAL 887575 328948 1216523 IT IS ALSO NOTED THAT ON SAME BASIS A DISALLOWANCE AS MADE U/S 40(A)(IA) FOR THE YEAR UNDER CONSIDERATION WHICH HAD BEEN DELETE D BY THE LD. CIT(A)-1, JAIPUR IN QUANTUM APPEAL VIDE ORDER DATED 27-03-20 15 IN ITA NO. 407/13-14 BY HOLDING THAT NO TDS IS DEDUCTIBLE ON T HE SAME. LOOKING INTO THE OBSERVATION OF THE LD. CIT(A)-1, JAIPUR (S UPRA) IN QUANTUM APPEAL OF THE ASSESSEE, THE LD. CIT(A)-III, JAIPUR IN APPE LLATE PROCEEDINGS IN THE CASE OF THE ASSESSEE RELATING TO NON-DEDUCTION OF T DS IN THE ABOVE HEADS HELD THAT NO TAX IS DEDUCTIBLE ON INTEREST PAID TO MEMBERS AND THUS THE ITA NO. 599/JP/2016 THE ITO , (TDS)-1, JAIPUR VS. M/S. VAISHALI URBAN C OOPERATIVE BANK LTD. JAIPUR . 5 LIABILITY RAISED U/S 201(1) AND CONSEQUENTIAL INTER EST U/S 201(1A) WAS DELETED. HENCE, IN VIEW OF THE ABOVE FACTS AND CIRC UMSTANCES OF THE CASE, I CONCUR WITH THE FINDINGS OF THE LD. CIT(A) ON THE ISSUE. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 /12 /2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22 /12/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, (TDS)-1, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. VAISHALI URBAN COOPERATIVE BA NK LTD. JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 599/JP/2016 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR