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M/s Yes Bank Ltd. Versus Income Tax Officer (TDS)

2015 (12) TMI 184 - ITAT MUMBAI

Short deduction of tax at source on interest paid - demand raised under section 201 and levy of interest under section 201(1A) - Held that:- From the confirmation letter of Tata Motors Ltd., submitted before the first appellate authority, it is very much clear that the deductee has admitted that interest payment of ₹ 1,87,33,461, received from the assessee bank was offered to tax in the return of income filed for the assessment year 2008–09. In the said confirmation, Tata Motors Ltd., also .....

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ion that whether tax paid on such income by the deductee was not mentioned. When the income tax assessment particulars of Tata Motors Ltd. was furnished in the confirmation letter, if the learned Commissioner (Appeals) had any doubt with regard to payment of tax by Tata Motors Ltd., he could have verified from the Departmental Authorities. We have no hesitation in holding that the assessee cannot be treated as assessee in default for the purpose of raising demand under section 201(1) of the Act .....

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rcular no.275/201/95–IT(V) dated 29th January 1997, issued by the CBDT stating that liability to charge interest under section 201(1A) of the Act till the date of payment of tax by the deductee would remain. We, therefore, while deleting the demand under section 201(1) of the Act, direct the Assessing Officer to compute interest under section 201(1A) of the Act till the date of payment of tax by the deductee. - Decided partly in favour of assessee. - ITA No. 2889/Mum/2014 - Dated:- 30-10-2015 - .....

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for short deduction of tax at source. 2. Briefly stated the facts are, the assessee is a banking company. On verifying the TDS return filed by the assessee for the F.Y. 2007-08, the Assessing Officer found that in the second quarter of the relevant F.Y., the assessee has made short deduction of tax to the extent of ₹ 23,69,430. He, therefore, issued show cause notice to the assessee to reconcile the same. However, as observed by the Assessing Officer, as the assessee failed to rectify the .....

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re the first appellate authority. 3. Before the first appellate authority, the assessee reconciling the alleged short deduction of tax at source stated that due to wrong mentioning of deductee code for non-corporate deductee, TDS was calculated at higher rate of 20.60% instead of 10.30% and 11.33% which resulted in tax demand of ₹ 10,59,539. It was submitted this error was rectified by the assessee by filing a revised statement before the Assessing Officer, however, which was not taken int .....

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bmitted, at the time of receiving deposits from the trust the assessee was not aware as to who is the final beneficiary, therefore, the assessee deducted tax @ 10.30% on the interest paid. It was submitted the Assessing Officer noticing that the final beneficiary is a company i.e., Tata Motors Ltd., a corporate deductee and the rate at which tax should have been deducted is 20.60% raised a demand on the assessee. It was submitted by the assessee that as per Explanation to section 191, a deductor .....

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Hon'ble Supreme Court in Hindustan Cocacola Beverages Pvt. Ltd v/s CIT [2007] 293 ITR 226 (SC) and the decision of the Tribunal, Mumbai Bench, in Vodafon Essar Ltd. v/s Dy. Commissioner of Income Tax, 45 SOT 82 (URO). 4. As far as other instances of short deduction of tax are concerned, the learned Commissioner (Appeals) directed the Assessing Officer to verify assessee's claim. However, as far as short deduction of tax in respect of interest payment to Tata Motors Ltd. is concerned, the .....

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on has not been mentioned. He, therefore, sustained the demand raised by the Assessing Officer under section 201(1) on account of short deduction of tax on the interest payment to Tata Motors Ltd. As far as levy of interest is concerned, the learned Commissioner (Appeals) observed that even in case of Cocacola Beverages Pvt. Ltd. (supra), the liability to charge interest under section 201(1A) of the Act is approved. 5. The learned Counsel for the assessee reiterating the stand taken before the f .....

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come filed the assessee cannot be treated as an assessee in default in view of the decision of the Hon'ble Supreme Court in Hindustan Cocacola Beverages Pvt. Ltd. (supra). It was further submitted, to prove such fact, assessee has also furnished the confirmation from Tata Motors Ltd. before the first appellate authority. 6. As far as levy of interest is concerned, the learned Counsel for the assessee relying upon the decision of the Hon'ble Gujarat High Court in CIT v/s Rishikesh Apartme .....

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ay interest under section 201(1A) of the Act. 8. We have considered the submissions of the parties and perused the orders of the authorities below as well as the material available on record. As could be seen, dispute in the present appeal is with regard to short deduction of tax on interest paid to Tata Motors Ltd. Before the first appellate authority, though the assessee accepted that the proper rate at which tax should have been deducted is 20.60% but at the same time it was stated that since .....

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Ltd., also furnished their assessment particulars. Thus, from the confirmation letter of the deductee, it is very much clear that the interest payment on which short deduction was alleged was declared as income by deductee in its return of income filed for the assessment year 2008-09. Thus, it pre-supposes that tax due on such income returned must also have been paid by the deductee. Therefore, the learned Commissioner (Appeals), in our view, was not justified in rejecting assessee's claim o .....

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