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2019 (8) TMI 810 - HC - Income TaxLevy of interest on the default u/s 201 - failure to deduct TDS in respect of a company in liquidation - deduction of tax at source on the interest paid by the appellant on the deposits made by the Official Liquidator appointed by the Patna High Court on behalf of the Company in liquidation - absence of any returns filed by the Official Liquidator declaring losses and/or filing of a certificate under section 197A to declare NIL income.- HELD THAT:- There is no dispute that the interest on fixed deposit are chargeable to tax, the appellant was under duty to deduct the same in absence of any returns filed by the Official Liquidator declaring losses and/or filing of a certificate under section 197A to declare NIL income. That the fixed deposits generated an interest which constituted income of the company in liquidation and deductable to tax in absence of the documents/ certificate present to justify the non-deduction, the Bank was legally bound to discharge the obligation. The pleadings on record confirm that the appellant Bank was held the assessee in default in respect of the four depositors, namely, BIADA, IDA, the Bihar State Housing Board and the Official Liquidator of Patna High Court. The order of the Assessing Officer, the Assistant Commissioner of Income Tax at Annexure 1 passed in purported exercise of jurisdiction under sections 201(1) and 201(1A) of ‘the Act’ gives the details of interest generated on deposits in each case as well as the tax deductable against the same. The statutory ladder through which the case has moved confirms that while a demand in its entirety on default of such deduction was raised by the Assistant Commissioner of Income Tax, the same was modified by the order passed under section 154 of ‘the Act’ in view of the certificates of exemption submitted under section 197A by M/s BIADA and by M/s IDA. The matter moved in appeal as against the remaining two depositors i.e. the Bihar State Housing Board and the Official Liquidator and the Commissioner of Income Tax (Appeals) having noted the losses returned by the Bihar State Housing Board has interfered with the default of the appellant in not deducting tax and thus while modifying the demand in so far as tax element was concerned, the Commissioner of Income Tax (Appeals) upheld the interest chargeable thereon. The order passed by the assessing authority as it stood modified by the order passed under section 154 stood further modified but in so far as the issue in hand is concerned, the appellate authority bearing note of the interest generated of ₹ 44,76,182/- and in absence of any document or a certificate under section 197A found no infirmity in the order passed by the assessing authority and which view of the CIT (Appeals) has been affirmed by the Appellate Tribunal as well which in our considered opinion does not require any interference because in our opinion the appellant was definitely an assessee in default in not having deducted tax at source on the interest generated on the fixed deposits made by the Official Liquidator, Patna High Court in respect of the company in liquidation with the appellant Bank. In so far as the case in hand is concerned, there is absolutely nothing on record in form of return filed by the Liquidator or a certificate to such effect under section 197A of ‘the Act’ which would justify the default by the appellant in deduction of tax at source on the interest generated on the deposits made by the Official Liquidator on behalf of the company in liquidation. The substantial question of law is answered accordingly.
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