M/s Krishna Dist CoOp Central Bank Ltd, Jagayyapet, Vijayawada v. The ITO, TDS, Vijayawada

ITA 300/VIZ/2010 | 2007-2008
Pronouncement Date: 28-07-2010 | Result: Dismissed

Appeal Details

RSA Number 30025314 RSA 2010
Assessee PAN AABTT0343E
Bench Visakhapatnam
Appeal Number ITA 300/VIZ/2010
Duration Of Justice 2 month(s) 9 day(s)
Appellant M/s Krishna Dist CoOp Central Bank Ltd, Jagayyapet, Vijayawada
Respondent The ITO, TDS, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-07-2010
Assessment Year 2007-2008
Appeal Filed On 19-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.298/VIZAG/2010 KRISHNA DIST. CO-OP CENTRAL BANK LTD JAGGAIAHPET ITO TDS VIJAYAWADA (APPELLANT) VS. (RESPONDENT) ITA NO.299/VIZAG/2010 KRISHNA DIST. CO-OP CENTRAL BANK LTD VATSAVAI ITO TDS VIJAYAWADA (APPELLANT) VS. (RESPONDENT) ITA NO.300/VIZAG/2010 KRISHNA DIST. CO-OP CENTRAL BANK LTD CHANDARLAPADU ITO TDS VIJAYAWADA (APPELLANT) VS. (RESPONDENT) ITA NO.301/VIZAG/2010 KRISHNA DIST. CO-OP CENTRAL BANK LTD PENUGANCHIPROLU ITO TDS VIJAYAWADA (APPELLANT) VS. (RESPONDENT) PAN NO. AABTT 0343E AND ASST.YEAR.: 2005-06 FOR ALL APPEALS APPELLANT BY: SHRI A.C. GANGAIAH CA RESPONDENT BY: SHRI D.S. SUNDER SINGH DR ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY THE DIFFERENT ASSES SEES AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE IMPOSITION OF IN TEREST U/S 201(1A) OF THE I.T. ACT FOR DIFFERENT ASSESSMENT YEARS I.E. A.Y. 20 05-06 TO 2009-10 IN ITA NO.298 OF 2010 A.Y. 2005-06 TO 2006-07 IN ITA NO.2 99 OF 2010 A.Y. 2005- 06 TO 2007-08 IN ITA NO.300 OF 2010 & A.Y. 2005-06 TO 2009-10 IN ITA NO.301 OF 2010. ON PERUSAL OF THESE APPEALS IT IS NOTED THAT THE ASSESSEE HAS FILED ONE APPEAL AGAINST THE ORDER OF THE CIT(A ) PASSED FOR DIFFERENT ASSESSMENT YEARS. WHEREAS AS PER LAW ASSESSEE IS REQUIRED TO FILE INDIVIDUAL APPEAL AGAINST A PARTICULAR ASSESSMENT YEAR. THE F ACTS IN ALL APPEALS ARE QUITE IDENTICAL BUT IN ONE APPEAL WE CANNOT DISPOS E OF THE APPEAL FOR DIFFERENT ASSESSMENT YEARS. WE THEREFORE OF THE VI EW THAT THESE APPEALS BE 2 TAKEN AS AN APPEAL FOR THE ASSESSMENT YEAR 2005-06 AND WE ACCORDINGLY PROPOSE TO DISPOSE OF THE APPEAL FOR THE ASSESSMENT YEAR 2005-06 ONLY. SINCE FACTS OF THESE CASES ARE QUITE IDENTICAL WE TAKE UP THE CASE IN ITA NO.298 OF 2010 AS A LEAD CASE AND DISCUSS THE FACTS OF THIS CASE FOR ADJUDICATING THESE APPEALS. 2. ON VERIFICATION IT WAS OBSERVED BY THE A.O. THA T THOUGH THE ASSESSEE BANK HAD PAID OR PROVIDED FOR INTEREST AND DEPOSITS OF THE DEVASTHANAM IT HAD FAILED TO DEDUCT TDS AT SOURCE AND REMIT THE SA ME TO THE GOVERNMENT ACCOUNT AS PER THE PROVISIONS OF SECTION 194A OF TH E I.T. ACT. THE A.O. ACCORDINGLY CHARGED THE INTEREST U/S 201(1A) FOR CO NTRAVENTION OF PROVISIONS OF SECTION 194A OF THE ACT. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) W ITH THE SUBMISSIONS THAT DEVASTHANAM HAS NO TAX LIABILITY UPTO 31.3.200 9 AS SUCH THERE WAS NO JUSTIFICATION FOR CHARGING INTEREST U/S 201(1A). IT WAS FURTHER CONTENDED THAT THERE WAS NO REVENUE LOSS TO THE GOVERNMENT FOR NON -DEDUCTION OF TAX AT SOURCE. HE FURTHER PLACED A RELIANCE UPON THE JUDG EMENT OF THE TRIBUNAL IN THE CASE OF MUNAK INVESTMENTS (P) LTD. VS. ITO (55 I TD 429 CHANDIGARH) WHEREIN IT WAS HELD THAT WHERE THE DATE OF REMISSIO N OF TDS WAS UNKNOWN INTEREST U/S 201(1A) WAS INCAPABLE OF CALCULATION A ND THEREFORE NO INTEREST WAS LEVIABLE. HE FURTHER PLACED A RELIANCE ON THE JUDGEMENT OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF M/S. K.V.S. CATERERS IN ITA NOS. 7514 & 7515/MUMBAI/2004. 4. THE CIT(A) RE-EXAMINED THE ISSUE IN THE LIGHT OF ASSESSEES CONTENTION AND HE HAS OBSERVED THAT DEVASTHANAM WAS GRANTED RE GISTRATION U/S 12A OF THE I.T. ACT ON 30.4.2008 BY THE CIT W.E.F. ASSESSM ENT YEAR 2008-09 ONWARDS. IT WAS ALSO OBSERVED THAT DEVASTHANAM HAS BEEN FILING RETURNS ONLY FROM THE ASSESSMENT YEAR 2007-08 ONWARDS. DEVASTHA NAM HAD NEITHER REGISTRATION U/S 12A OF THE ACT DURING THE PERIOD R ELEVANT TO THE ASSESSMENT YEAR 2005-06 & 2006-07 NOR HAD IT FILED THE RETURNS FOR THE YEAR. THE CIT(A) WAS OF THE VIEW THAT THE MERE FACT THAT THE PAYEE H AD NO LIABILITY TO TAX WOULD NOT BE SUFFICIENT TO ABSOLVE THE ASSESSEE FROM DISC HARGING ITS STATUTORY 3 OBLIGATION RELATING TO TDS PROVISIONS. WHETHER THE PAYEE OR TAX DEDUCTEE HAS TAXABLE INCOME OR OTHERWISE CANNOT BE A DETERMINING FACTOR FOR THE ASSESSEES OBLIGATION UNDER TDS PROVISIONS AT THE T IME OF MAKING PAYMENT OF INTEREST ON THE TERM DEPOSITS. HE ACCORDINGLY CONF IRMED THE ACTION OF THE A.O. IN RAISING DEMAND U/S 201(1A) FOR THE ASSESSME NT YEAR 2005-06 TO 2007-08. THE RELEVANT OBSERVATION OF THE CIT(A) AR E EXTRACTED HEREUNDER: THE MERE FACT THAT THE PAYEE HAD NO LIABILITY TO TA X WOULD NOT BE SUFFICIENT FOR OR ABSOLVE THE APPELLANT FROM DISCHARGING ITS STATUTORY OBLIGATION RELATING TO THE TDS PROVISIONS . WHETHER THE PAYEE OR TAX DEDUCTEE HAS TAXABLE INCOME OR OTHER WISE CA NNOT BE A DETERMINING FACTOR FOR THE APPELLANTS OBLIGATION U NDER TDS PROVISIONS AT THE TIME OF MAKING PAYMENT OF INTEREST ON THE TE RM DEPOSITS. THE TDS PROVISIONS ARE A SELF CONTAINED CODE WITHIN THE INCOME-TAX ACT. THERE IS AN INBUILT MECHANISM WITHIN THE TDS PROVIS IONS FOR NON DEDUCTION OF TAX OR FOR DEDUCTION OF TAX AT A LESSE R RATE. IT IS NOT THE CASE OF THE APPELLANT THAT THE DEVASTHANAM HAD AVAI LED THE BENEFIT OF THE PROVISIONS OF SEC. 197 WHICH AUTHORIZED THE APP ELLANT NOT TO DEDUCT TAX ON THE INTEREST PAYMENTS ON TERM DEPOSIT S. IN THE ABSENCE OF ANY NON DEDUCTION OF TAX CERTIFICATE AS ENVISAGE D IN SEC. 197 OF THE ACT IT IS CLEAR THAT THE APPELLANT WAS LIABLE TO D EDUCT TAX AT SOURCE. IT WOULD BE PERTINENT TO REFER TO THE BOARDS CIRCULAR F.NO.12/113/68- IT(ALL) DATED 28.10.1968 WHICH IS REPRODUCED BELOW: I AM DIRECTED TO REFER TO LETTER DATED 8.8.1968 ON THE SUBJECT QUOTED ABOVE AND TO SAY THAT SO FAR AS AN E DUCATIONAL INSTITUTION WHOSE INCOME IS EXEMPT FROM TAX U/S 10( 22) OF THE ACT IS CONCERNED THE PROVISION OF SEC.194A WILL NOT AP PLY TO IT AND NO DEDUCTION OF TAX AT SOURCE FROM INTEREST IS REQUIRE D TO BE MADE BY THE PAYERS. AS REGARDS A CHARITABLE TRUST WHOSE IN COME IS EXEMPT U/S 11 A STATEMENT IN WRITING MAY BE MADE BY THE IN STITUTION CONCERNED U/S 194A OF THE ACT OR THE INSTITUTION M AY APPLY FOR THE CERTIFICATE FOR DEDUCTION AT A LOWER RATE OR FOR AU THORIZATION OF NON DEDUCTION AT SOURCE U/S 197 OF THE ACT 1961. IN THE LIGHT OF THE FOREGOING DISCUSSION THE LIAB ILITY ON THE APPELLANT TO DEDUCT TAX AT SOURCE CANNOT BE DISPUTE D. ISSUES RELATING TO A.YS 2005-06 TO 2007-08 9. AS IS EVIDENT FROM THE RECORD THE PAYEE OR THE TAX DEDUCTEE HAS NOT FILED ITS RETURNS OF INCOME PRIOR TO A.Y. 2 007-08. AS THE REGISTRATION U/S 12A IS AVAILABLE ONLY FROM A.Y. 20 08-09 ONWARDS THE DEVASTHANAM IS UNDER OBLIGATION TO FILE ITS RETURNS OF INCOME FOR THE EARLIER YEARS. THE LIABILITY TO DEDUCT TAX AT SOUR CE ON THE INTEREST PAYMENTS ON TERM DEPOSITS DURING THE PERIODS RELEVA NT TO THE A.YS 2005-06 TO 2007-08 IS YET TO BE DISCHARGED BY THE A PPELLANT. IN THE CASES OF MUNAK INVESTMENTS (P) LTD. AND KVS CATERERS RELIED ON BY THE APPELLANT IT HAS BEEN HELD THAT THE INTEREST U/S 2 01(1A) CAN NOT BE 4 CALCULATED IN THE ABSENCE OF DATE OF PAYMENT OF TAX BY THE PAYEE OR THE DEDUCTEE AS THE PAYEE OR THE DEDUCTEE HAD NO TA XABLE INCOME. THE FACTS OF THESE TWO CASES ARE DISTINGUISHABLE FR OM THE FACTS ON RECORD IN THE PRESENT APPEALS AND ARE THEREFORE HE LD TO BE NOT APPLICABLE. THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT (293 ITR 226) HAS HELD THAT INTEREST U/S 201(1A) OF THE I.T. ACT WAS LEVIABLE UPTO THE DA TE ON WHICH THE PAYEE HAS PAID THE RELEVANT AMOUNT OF TAX TO THE GO VERNMENT. FROM THIS JUDGEMENT IT IS CLEAR THAT THE PAYER OR TAX D EDUCTOR IS NOT LIABLE TO PAY THE AMOUNT OF SHORT/NON DEDUCTION OF TAX U/S 20 1(1) IN CASES WHERE THE PAYEE OR DEDUCTEE HAS ALREADY INCLUDED TH E RELEVANT INCOME IN HIS TOTAL INCOME AND PAID THE TAX THEREON. THE PRIMARY LIABILITY IS ON THE APPELLANT TO DEDUCT TAX UNDER SEC.194A WHICH H AS NOT BEEN DISCHARGED TILL DATE. THE A.O. (ITO-TDS) IS DIRECT ED TO TAKE COGNIZANCE OF THE PROVISIONS OF SEC. 201(1) OF THE ACT FOR THE SE TWO ASSESSMENT YEARS AND RAISE APPROPRIATE DEMAND ON THE APPELLANT FOR THE ABOVE CONTRAVENTION. IN THE ORDERS PASSED U/S 201(1A) TH E INTEREST HAS BEEN CALCULATED ONLY UPTO THE DATE OF ORDER I.E. 7. 12.2009. THE PRESENT AND CONTINUING LIABILITY U/S 201(1A) WOULD CEASE ONLY ON THE DATE OF PAYMENT OF THE TAX DEDUCTED AT SOURCE. 10. IN VIEW OF THE ABOVE I AM OF THE VIEW THAT NO I NTERFERENCE IS CALLED FOR AND THE ACTION OF THE A.O. IN RAISING DEMAND U/S 201(1A) FOR THE A.YS 2005-06 TO 2007-08 ARE UPHELD. AS DIR ECTED THE A.O. (ITO-TDS) SHALL INITIATE ACTION U/S 201(1) OF THE A CT FOR THESE THREE ASSESSMENT YEARS. THE APPEAL FOR THESE THREE ASSES SMENT YEARS IS DISMISSED. 5. NOW THE ASSESSEES ARE IN APPEAL BEFORE US AND RE ITERATED ITS CONTENTIONS WHAT HAS BEEN RAISED BEFORE THE LOWER A UTHORITIES. HE HAS EMPHATICALLY ARGUED THAT WHERE THE DATE OF PAYMENT OF TDS WAS UNKNOWN THE INTEREST U/S 201(1A) CANNOT BE CHARGED. 6. THE LD. D.R. HAS PLACED THE RELIANCE UPON THE OR DER OF THE LOWER AUTHORITIES. 7. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT U/S 194A AN OBLIGATION IS CAST UPON THE DEDUCTOR TO DEDUCT THE TDS AT THE TI ME OF CREDIT OF INTEREST INCOME TO THE ACCOUNT OF PAYEE OR AT THE TIME OF PA YMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE. SECTION 201(1A) DEALS WITH THE CONSEQUENCES ON NON-DEDUCTION OF TDS BY TH E DEDUCTOR ON PAYMENTS AS PER PROVISIONS OF SECTION 194A OF THE A CT. AS PER PROVISIONS OF SECTION 1A OF SECTION 201 IF ANY PERSON PRINCIPLE OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR IN PART OF THE TAX 5 OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT A PRES CRIBED RATE ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCT IBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. IT HAS NOT RELEVAN CE WHETHER THE DEDUCTEE IS SUBJECT TO PAYMENT OF TAX OR HE HAS PAID THE TAX OR NOT. IN THE LIGHT OF THESE PROVISIONS WE DO NOT FIND FORCE IN THE ARGUMENT OF THE ASSESSEE THAT WHERE THE DATE OF PAYMENT OF THE TDS WAS UNKNOWN INTEREST U/S 201(1A) WAS NOT CHARGEABLE. WE HAVE CAREFULLY EXAMINED THE ORDER O F CIT(A) AND WE FIND THAT HE HAS ADJUDICATED THE ISSUE IN THE LIGHT OF J UDGEMENT OF THE APEX COURT IN THE CASE OF M/S. HINDUSTAN COCA COLA BEVERAGE PR IVATE LIMITED VS. CIT 293 ITR 226. SINCE WE DO NOT FIND ANY INFIRMITY IN HIS ORDER WE CONFIRM THE SAME IN ALL APPEALS. 6. IN THE RESULT THE APPEALS OF THE ASSESSEES ARE D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 28.7.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 28 TH JULY 2010 COPY TO 1 KRISHNA DIST. CO-OP CENTRAL BANK LTD. JAGGAYYAPE T C/O CH PRAMODH CA D.NO.11-62-113 FIRST FLOOR NEAR GANESH TEMPLE CAN AL ROAD VIJAYAWADA 2 KRISHNA DIST. CO-OP CENTRAL BANK LTD. VATSAVAI C/O CH PRAMODH CA D.NO.11-62-113 FIRST FLOOR NEAR GANESH TEMPLE CAN AL ROAD VIJAYAWADA 3 KRISHNA DIST. CO-OP CENTRAL BANK LTD. CHANDARLAP ADU C/O CH PRAMODH CA D.NO.11-62-113 FIRST FLOOR NEAR GANESH TEMPLE CAN AL ROAD VIJAYAWADA 4 KRISHNA DIST. CO-OP CENTRAL BANK LTD. PENUGANCHI PROLU C/O CH PRAMODH CA D.NO.11-62-113 FIRST FLOOR NEAR GANESH TEMPLE CAN AL ROAD VIJAYAWADA 5 THE CIT VIJAYAWADA 6 THE CIT(A) VIJAYAWADA 7 THE DR ITAT VISAKHAPATNAM. 8 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM 6