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2014 (6) TMI 604 - AT - Income TaxTDS u/s 194A on Interest - non deduction of TDS due to direct adjustment by the Kotak Mahindra Ltd. – Assessee had obtained margin amount from Kotak Mahindra Ltd for making application in public issue of shares and the amount paid to Kotak Mahindra Ltd. was considered as cost of purchase of shares and not as interest. – Held that:- CIT(A) while granting relief to the Assessee has given a finding that Assessee had not made payment to Kotak Mahindra Ltd. towards interest but the account of the Assessee was directly adjusted by the charges and Assessee had no control and therefore it could not deduct TDS - Kotak Mahindra Ltd. has given a confirmation that it had filed its return and has also paid the taxes –Relying upon Hindustan Coca Cola Beverage Pvt. Ltd. vs. CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA] - there was no justification for levy of demand u/s. 201(1) and 201(1A) of the Act - Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record – thus, the order of the CIT(A) is upheld – Decided against Revenue. Imposition of Penalty u/s 271C of the Act – Held that:- CIT(A) rightly was of the view that the assessee had no chance to apply its mind and deduct tax at source, particularly when it had not made any payment or credited the amount at the relevant time - The amount was directly adjusted by Kotak Mahindra Ltd. from assessee's account with them - CIT(A) while deleting the penalty levied by AO has held that default of non-deduction of tax by the Assessee was not intentional and further Kotak Mahindra Ltd. had already paid tax on returned income - Assessee had reasonable cause for non-deduction of TDS - Revenue could not controvert the findings of CIT(A) – thus, there was no reason to interfere with the order of CIT(A) – Decided against Revenue.
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