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2015 (11) TMI 877 - ITAT AMRITSAR

2015 (11) TMI 877 - ITAT AMRITSAR - TMI - TDS liability u/s 194A - interest to Punjab Agri Export Corporation Limited - Held that:- There is no documentary evidence placed on record by the ld. Counsel for the assessee that the loan has been raised from the Government and interest is payable to the Government and therefore, the submission made before the ld. CIT(A) and before us cannot help the assessee to cover the issue u/s 196(i) of the Act. It has also been conceded before the ld. CIT(A) that .....

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% or 11.33%. Accordingly, the matter is set-aside to the file of the AO only to the extent of determination of rate of TDS applicable ie. @ 10.30% or 11.33%. - I.T.A. No.30(Asr)/2014 - Dated:- 17-3-2015 - SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER For the Appellant : Sh.Prikshit Aggarwal, CA For the Respondent : Sh.Tarsem Lal, DR ORDER PER B.P.JAIN,AM: This appeal of the assessee arises from the order of the CIT(A), Jalandhar, dated 08.11.2013 for the assessment year 2008- .....

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, 1961. 2. That on the facts and circumstances of the case, worthy CIT(A) vide para 6.2 of his order, has erred in confirming the action of AO wherein the AO had erroneously held that the appellant was liable to deduct tax at source u/s 194A on provision interest of ₹ 48,00,000/- to Punjab Agri Export Corporation Limited and has thereby erred in passing the order u/s 201(1) to that extent and creating a demand of ₹ 5,43,840/- on account of short deduction of tax at source and consequ .....

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. That on facts, circumstances and legal position of the case before disposing of the appeal, the worthy CI(A) has erred in not considering the introduction of Ist Proviso to S.201(1) by Finance Act, 2012 even when the said amendment is curative in nature and is applicable retrospectively and the insertion of the said proviso was on statute book when the order was passed by worthy CIT(A). 5. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or be .....

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ound by ITO (TDS)-II, Chandigarh that the jurisdiction over TAN of the assessee was with ITO(TDS)-I, Jalandhar. The information in respect of non/short deduction of TDS was, therefore, passed on to the ITO (TDS)-1, Jalandhar by ITO (TDS)-II Chandigarh vide her office letter No. ITO (TDS -II) CHD/2011-12/18673 dated 01.03.2012 for taking necessary action in the case of the assessee. Accordingly, the ITO (TDS)-1, Jalandhar vide her office letter No. ITO/TDS-1/JAL/2011-12/964 dated 21.03.2012 issue .....

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201(1A) of the Act at ₹ 4,42,380/-. 4. The assessee filed the appeal before the ld. CIT(A) against the order of the AO for creation of demand of ₹ 5,43,840/- alongwith other demands raised u/s 201(1) & 201(1A) and u/s 194, 194A, 194C, 194I & 194J of the Act. The Ld. CIT(A) vide page 18 of his order in para 6.2. confirmed the action of the A.O. 5. The Ld. Counsel for the assessee with regard to ground no.2 invited our attention to the provisions of section 196 of the Act and a .....

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is loan by the appellant. 2. In the balance sheet attached alongwith original return of income filed on 28.09.2008, the appellant did not provide for any interest on above loan. 3. However, the above balance sheet was not approved by the Board of Management of the appellant and re-working and reaudit was ordered. 4. In re-working and re-audit the auditor forces the appellant to provide for interest on above loan at minimum 8% p.a. Hence, interest of ₹ 48 lacs was provided in books. This ba .....

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to provide for TDS thereon. 6. It is further submitted that the assessment u/s 143(3) was framed on the basis of original balance sheet and revised balance sheet figures were considered as non-est. The claim of interest of ₹ 48 lacs in the revised balance sheet was itself considered as non-est by AO in proceedings concluded u/s143(3). Therefore, when the claim of interest on accrual basis in the revised balance sheet has been considered by AO to be not part of accounts of the appellant, th .....

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; 1 crore during the year. Hence, even if the appellant is held to be liable to deduct TDS, on accrual of interest of ₹ 48 lacs the non deduction should have been computed at ₹ 4,94,000/- as against computed by AO at ₹ 5,43,840/- . Appropriate relief is prayed. 6. The ld. Counsel for the assessee further invited our attention to PB-29, the submission and in fact, the statement by M/s. Punjab Agri Export Corpn. Ltd., which is reproduced hereinbelow for the sake of convenience: 1 .....

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und was to be kept in a separate account to be called Punjab Agri Promotion and Development Account. It had following further conditions. i) This account will be operated by a nominee each of the Punjab Agro Industries Corporation Limited and PAGREXCO for the implementation of specific schemes for the promotion of Agri export from the State including financial assistance to exporters/growers for infrastructure, transport etc from the interest income and where necessary from the principal amount. .....

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ry, Punjab Rural Development Board. 5. Addl. Managing Director, PAGREXCO An order dated 20.01.1998 passed by the Government of Punjab in regard to above is attached. 3. Thereafter, more funds were ploughed in this corpus fund by State Government, the above referred organizations and other bodies. 4. That in a meeting of corpus fund committee held on 02.01.2007 under the Chairmanship of Financial Commissioner (Development) Punjab. The committee approved the grant of soft loan of ₹ 6 crore @ .....

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y evidence in this regard has been placed on record and therefore, the assessee is not covered u/s 196(i) of the Act, as argued by the ld. Counsel for the assessee. In the rejoinder, the ld. Counsel for the assessee argued that funds are provided by the Government being Nodal agency to the payee and therefore, interest is payable to the Govt. only and therefore, no tax at source is required to be deducted and the assessee is covered u/s 196(i) of the Act. 8. We have heard the rival contentions a .....

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s of account and therefore, judicial pronouncement in the case of Hindustan Coca-Cola will not be available to the assessee as held by the ld. CIT(A). The relevant findings of ld. CIT(A) at page 18 are reproduced for the sake of convenience as under: It has been submitted by the assessee that the Punjab Agro Food Gains Corporation Limited has provided loan/funds of ₹ 6 crores to the assessee on which no interest was ever paid by the assessee. It has also been submitted that the assessee ha .....

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