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2017 (3) TMI 579 - AT - Income TaxTDS u/s 192 from salary - short deduction of tds - orders passed u/s. 201(1) and 201(1A) - while computing taxable salary, the assessees were deducting u/s. 80C and interest accrued on employees’ contribution to unrecognized Provident fund is also taxable under the head ‘Income from other sources’ - Held that:- In the instant case, the Assistant Commissioner of Provident Fund very categorically states that the Provident Fund of the assessees is not established as per the scheme framed under the Employees Provident Funds Act, 1952. Assessee also does not have case that its PF is established under a scheme framed under the Employees Provident Fund Act, 1952 (19 of 1952). That being the case, admittedly, the assessees’ contributions to the Provident Fund are not recognized Provident Fund u/s. 2(38) of the Act and the contributions are not entitled to deduction u/s. 80C (2)(vi) of the I.T. Act. If the contributions are not eligible for deduction u/s. 80C of the Act, there are resultant short deductions of tax u/s. 192 of the Act. Consequently, the interest accrued on the Provident Fund is also liable to be taxed as ‘Income from other sources’. Section 192(1) of the Income Tax Act makes abundantly clear that the employees are bound to deduct tax at source at the time of payment of salaries. Since admittedly, the contributions of the assessees to the Provident Fund are not a recognized Fund, the same are not eligible for deduction u/s. 80C (2) (vi) of the I.T. Act. Therefore, the estimations made by the assessees are not correct and since there were short deductions of tax, the Assessing Officer had rightly passed the orders u/s. 201(1) and 201(1A) of the I.T. Act. Also the assessees were not able to show that any of the employees of the assessee-society had filed returns and had paid tax correctly to the Government account. Therefore, the case laws relied on by the assessees cannot come to their aid. Further, the order passed by the Delhi Bench of the Tribunal in the case of DCIT vs. HCL Infosystems Ltd. (2004 (6) TMI 279 - ITAT DELHI-D) relied on by the assessees is of no help since in the instant case it cannot be stated that assessee’s estimation is bonafide or honest estimation of salary income of its employees. Admittedly, the contributions made by the assessees to the Provident Fund were not a recognized Fund and were not eligible for deduction u/s. 80C of the Act which had resulted in short deductions of tax. - Decided against assessee
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