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2015 (5) TMI 356 - AT - Income TaxDemands raised by the A.O. u/s 201 (1) & 201 (1A) - CIT(A) deleted the addition as inter - alia of relevant F.Y. 2005-06 is barred by limitation as per the provisions of section 201(3) of the I.T. Act - Held that:- CIT (A) has followed the judgment of Hon’ble Kerala High Court rendered in the case of Traco Cable Co. Ltd. vs. CIT, [1987 (2) TMI 36 - KERALA High Court ] and held that no order u/s 201 (1) could be made after 31.03.2013 in respect of Financial Years 2005 - 06 to 2009 - 10. In respect of Financial Year 2010 - 11, he held that an order u/s 201 (1) could be made in respect of last quarter for which statement has been filed in Financial Year 2011 - 12. Hence, as per the Proviso to section 201 (3) inserted by Finance Act 2009, for F.Y. 2007 - 08 and earlier years, the order u/s 201 (1) got time barred on 31.03.2011. For F.Y. 2008 - 09 to 3rd Quarter of F.Y. 2010 - 11 also, the order is time barred because of expiry of two years from end of the financial year in which the statement is filed because it is not in dispute that these statements were filed by the assessee. - Decided in favour of assessee. Recovery of interest u/s 201 (1A) - Held that:- When recovery of tax u/s 201 (1) is time barred, recovery of interest u/s 201 (1A) is also time barred. We find no infirmity in the order of learned CIT (A) on this aspect also because in our considered opinion, interest u/s 201 (1A) is consequential to default u/s 201 (1) and therefore, when action u/s 201 (1) is time barred, action u/s 201 (1A) is also time barred as a consequence and for that , specific mention of section 201 (1A) in section 201 (3) is not essential. - Decided in favour of assessee. Taxability of interest on NCDs - as per CIT(A) no tax was deductible in respect of any NCD in the case of the assessee in these years i.e. financial years 2009-10 to 2012-13 - Held that:- Decision of CIT(A) is on the basis that the exemption from TDS from listed and dematerialized securities came into force from 01/06/2008. He has given a clear finding that the assessee had earlier deducted TDS from interest in respect of NCDs prior to this date and in fact up to 30/09/2009. He has also noted that the details of interest in respect of TDS deducted during financial year 2007-08 to 2009-10 and challan for deposit of tax are available on pages 129 to 140 of the paper book. This finding of CIT(A) could not be controverted by Learned D.R. of the Revenue and hence, this has to be accepted that till 30.09.2009, TDS deduction was made by the assessee from interest on NCDs. The CIT(A) has given further finding that all the NCD of the assessee were listed and dematerialized. He has also given a finding that NCDs held by LIC were exempt from TDS under clause (vi) of the proviso to section 193 and therefore, no tax was deductible in respect of any NCD in the case of the assessee in these years i.e. financial years 2009-10 to 2012-13. These findings of CIT(A) also could not be controverted by Learned D.R. of the Revenue and since the interest on NCDs paid by the assessee were exempt from the requirement of TDS either on account of NCDs being listed and dematerialized or on account of held by LIC, TDS was not deductible and therefore, there is no reason to interfere in the order of CIT(A) on this issue also. - Decided in favour of the assessee. Taxability of interest on FCCBs - CIT(A) holding that the demand raised by the AO in respect of the notional gain arising from conversion of the FCCBs is contrary to the provisions of the Act as well as the ratified scheme of FCCBs - Held that:- CIT(A) has noted down the contents of CBDT Circular No. 621 dated 19/12/1991 as per which, capital gain is not chargeable on conversion of debenture or bonds in shares in view of clause (x) of section 47 of the Act. Hence, it is seen that no capital gain arise on conversion of debenture into shares. Moreover, even if such capital gain on conversion of debenture into share is considered as income at the time of conversion, this cannot be considered as interest and the liability of TDS cannot be fastened on the assessee. The CIT(A) has also referred to the provisions of section 115AC read with section 196C and observed that as per the scheme of taxation in respect of FCCBs, it has been provided that TDS is required to be deducted from interest payments on bonds until the conversion option is exercised. This scheme exempts the taxation of capital gain arising from the transfer of bonds outside India among non residents. He has further noted that the scheme expressly forbids the taxation of any capital gain arising from the conversion of bonds into shares. Considering all these facts and in view of the above discussion, we are of the considered opinion that the Assessing Officer was not justified in fastening the liability of TDS on the assessee in respect of notional gain worked out by the Assessing Officer on conversion of FCCBs and therefore, on this issue also, no reason to interfere in the order of CIT(A) - Decided in favour of the assessee. Taxability of interest on FDRs - AO treated the entire non tax deducted interest as tax deductible interest on the ground that the assessee only gave the names of deposit holders and the amount of interest earned but their address, PAN, amount of deposit, rate of interest and period were not give - Held that:- CIT(A) noted that the assessee vide his letter dated 13/03/2004 explained that the difference between the total interest and tax deductible interest was due to below ₹ 5,000/- interest cases as well as Form 15G/15H cases and in both of these cases, tax was not deductible. He has reproduced the details of total interest, tax deductible interest and non deductible tax interest in respect of financial years 2007-08, 2008-09 and 2012-13. Thereafter, a clear finding is given by CIT(A) that in spite of all these details and evidence furnished by the assessee, the Assessing Officer in her impugned order has treated the entire non tax deducted interest as tax deductible interest on the ground that the assessee only gave the names of deposit holders and the amount of interest earned but their address, PAN, amount of deposit, rate of interest and period were not given. He has further noted that the Assessing Officer has rejected Forms 15G/15H cases on the ground that names and amounts of interest involved in 15G/15H forms could not be ascertained from the copies of receipts for the delivery of these forms in the office of the CIT(A). Thereafter, a clear finding is given that sufficient opportunity has been given to the assessee as well as to the Assessing Officer during appellate proceedings and thereafter, he has given a finding that it is seen from the facts that there was no liability of the assessee for TDS on FDR interest. These specific findings of CIT(A) on this issue could not be controverted by Learned D.R. of the Revenue. When the FDR interest paid by the assessee is partly below ₹ 5,000/- per payee or partly the payee has given Form 15G/15H and as a consequence, no TDS was required to be deducted by the assessee, it was not proper for the Assessing Officer to raise this liability of TDS on such FDR interest. No infirmity in the order of CIT(A) on this issue - Decided in favour of assessee.
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