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2016 (2) TMI 30 - ITAT MUMBAI

2016 (2) TMI 30 - ITAT MUMBAI - TMI - Non deduction of tax at source in respect of interest on debenture u/s 193 - Provision made in the books of account versus Actual liability - Held that:- Undisputedly no income has accrued to or has been received by then debenture holders under the provisions of the section 193 of the Act. At the end of tax deducting is requirement of paying any income by way of interest on security but above facts indicate that there was no such requirement at the end of th .....

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round CIT(A) was justified in holding that assessee has not committed any default in this regard. Thus, the assessing officer has rightly been directed not to treat as 'assessee in default' accordingly, he was rightly directed to delete the payment of ₹ 2,92,49,251/- as worked out under provisions u/s 201(1)/201(1A) of the Act. This reasoned factual finding of CIT(A) need not interfere from our side we uphold the same. As a result, appeal filed by revenue is dismissed. - Decided in favour .....

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eing disposed of by assessee common order for sake of convenience. In I.T.A No. 6965/Mum/2012 revenue has filed appeal on following grounds: "1. The Ld. CIT(A) has erred in law and on facts by allowing relief to the assessee relating to non deduction of tax at source in respect of interest on debenture without appreciating that w.e.f 01.06.1989 words 'at the time of credit' has been inserted in section 193 of the I.T. Act along with the explanation to section 193 w.e.f 01/06/1989 wh .....

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ee. 3. The Ld. CIT(A) has erred in law and on facts by deleting the amount of non deduction of tax determined in respect of interest to debenture holders without appreciating that the assessee has disallowed the expenditure of interest on debentures u/s. 43B and not u/s. 40a(i)(a) and in subsequent year, if the same is allowed on payment basis without considering the issue of non deduction of tax on the interest paid to debenture holders, it will result in loss to the exchequer. 4. The Ld. CIT(A .....

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interest to various Insurance Companies, Banks and Financial Institutions. A Survey action u/s133 of the Act was carried out at the premises of the assessee. It was found that assessee had not deducted the tax at source on the interest debited to the Profit & Loss Account in respect of these debentures. The amount of such interest debited to Profit & Loss Account was ₹ 6,77,24,000/- as per the annexure to the Profit & Loss Account for the current year. As a result of Survey, pr .....

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65.99 None Oriental Insurance Co. 13.24 61 None United India Insurance Co. 14.02 64 None The New India Assurance Co. 27.61 129 None National Insurance Co. 12.31 57 None Unit Trust of India 165.92 767.73 None Canbank Financial Services 8.88 46.23 None PNB Principal Trust 35.52 184.92 None State Bank Of India 35.52 184.92 None Sahara India Mutual Benefit Co. 4.80 25 None Stock Holding Co. 11.38 51 None Naval Group Insurance Co. 8.38 36 None ICICI 2.79 12 None Public 1.06 5.53 None Int. on acc int .....

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sessing Officer noticed that assessee had though deducted the tax at source in respect of other expenses incurred but did not deposited the same to the government revenue in time so he worked in tax liability of ₹ 7,28,797/- that delayed payment of tax hence, total demand raised by him against by assessee was ₹ 2,99,78,48/- u/s 201(1)/201(1A) of the Act. 4. The matter was carried before first appellate authority wherein various contentions were raised on behalf of assessee to oppose .....

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record. We find that issue before us is of non - deduction of tax u/s 193 and consequently action u/s 201(1)/201(1A) of the Act. Assessing Officer was of the opinion that once interest liability is provided as per provisions of Section 193 of the Act, assessee under obligation to deduct the tax at source and pay the same to the Government Treasury. In this regard, the stand of assessee is that they have provided the said liability in their accounts only for the purpose of compliance of the appli .....

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requirements. Later on the assessee became a Sick Industries Company and it was also declared under the provisions of Sick Industries Companies (Special Provisions) Act, 1958. The assessee was also granted the status of 'Bombay Relief Undertaking' by the Government of Gujarat under the Bombay Relief Undertaking (Special Provisions) Act, 1958 with a view to protect the industry. Although the assessee has neither paid nor paid interest to these financial institutions in respect of debentur .....

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