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2020 (7) TMI 190 - AT - Income TaxTDS u/s 194A - interest provision credited to the interest payable account - non deduction of TDS - assessee company has provided interest on deposits collected under GFDA scheme floated by assessee and debited the same to the profit and loss account by applying the average rate of interest on the balance amount of deposits bypassing monthly credit entries in the interest payable account without crediting the corresponding interest accrued on each individual deposit to the individual depositors account - default u/section 201(1) and 201(1A) - HELD THAT:- Any sum credited to "suspense account" or "interest payable account" shall be deemed to be credited for the purpose of tax deduction at source. Therefore, if the individual account interest payments exceed ₹ 2500/- merely because they are credited to the different account than the account of depositors, TDS liability of the deductor cannot be eliminated. But, there has to be provision of interest of individual account where credited to the account of depositor or to interest payable account is more than ₹ 2500/- for the FY, then only tax is required to be deducted. As per assessee there are no accounts where the individually interest payable to them is in excess of ₹ 2500/- and wherever it is requisite tax is deducted. This is not disputed by the ld DR. Therefore, we hold that there is no infirmity in the order of the ld CIT (A) in holding that assessee was not required to deduct tax at sources where the interest payable to individual account holder does not exceed ₹ 2500/- in FY. Jurisdictions of assessing officer as well as TDS officers - Looking at the orders passed under section 127 of the income tax act by the Commissioner of income tax Lucknow, it is apparent that jurisdiction over TDS has not been transferred to the other specified officers other than ITO (TDS), Lucknow. Further in case of sister concerns also the ITO TDS Ward – 2, Lucknow and not the officer of the central circle, has passed the respective orders under section 201 (1A relating to several years which have been mentioned in paragraph number 28 of the order of the learned CIT – A. Further in sub paragraph number five of para 28 of that order , in case of the assessee itself the orders have been passed by the ITO (TDS), Ward – 2 Lucknow under section 201 (1A) of the act. Therefore, it is apparent that the jurisdiction of all TDS matters over the assessee was with ITO (TDS) Ward – 2, Lucknow and not with The Deputy Commissioner of Income Tax, Central Circle – 1, Lucknow. On reading of all these notifications produced before us and considered by the learned CIT – A on jurisdictions of assessing officer as well as TDS officers, it is apparent that the order passed by the learned Assistant Commissioner of Income Tax, central circle – 1, Lucknow under section 201 (1) and 201 (1A) of the act on 1/6/1999 has correctly been held by the learned CIT – A as without jurisdiction. No infirmity in the order of the learned CIT – A in quashing the order passed by the learned assessing officer under section 201 (1) and 201 (1A) of the act on 16 1999 on the issue of jurisdiction as well as on the merits. - Decided against revenue. Penalty u/s 271C - HELD THAT:- Penalty u/s 271C is also dismissed for the reason that, there is no default by the assessee under section 194A of the income tax act relating to deduction of tax at source on interest paid for the year. Further the action of penalty was initiated based on the order under section 201 (one) and 201 (1A of the act passed by the learned assistant Commissioner of income tax, central circle – one, Lucknow was also found to be without jurisdiction. Therefore, when the penalty itself was initiated on an order, which was not passed by a proper jurisdictional officer, penalty initiated based on that order, even otherwise, could not survive.
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