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Commissioner of Income-Tax (TDS) Versus Canara Bank

2016 (9) TMI 56 - PUNJAB AND HARYANA HIGH COURT

TDS u/s 194A - demand created under section 201(1) and (1A) in respect of Punjab Infrastructure Development Board, treating the assessee in default for non deduction of tds - whether no automatic exemption is available, even if the assessee is exempted under section 10(23C)(iv) of the Act ? - ITAT deleted the demand - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal on appreciation of material on record have concurrently recorded that if an organisation is exempted from paym .....

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e P. Ltd. v. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA ], where it has been held as under : - "Be that as it may, the Circular No. 275/201/95-IT(B), dated January 29, 1997, issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares 'no demand visualized under section 201(1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by th .....

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n 260A of the Income-tax Act, 1961 (in short "the Act") against the order dated April 15, 2015 (annexure A-3) passed by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (hereinafter referred to as "the Tribunal"), in I. T. A. No. 1128/CHD/2014, for the assessment year 2012-13, claiming the following substantial questions of law : "Whether the Income-tax Appellate Tribunal was right in law in deleting the demand created under section 201(1) an .....

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as carried out at the business premises of the assessee on May 14, 2013. During the course of said survey, it was noticed that the assessee had made payment of interest without deduction of tax at source to the following persons: (i) Director, PEC University of Technology, Chandigarh (Salary Account) ; (ii) Director, PEC University of Technology (Provident Fund Trust ) ; (iii) PEC University of Technology (Pension Fund Trust) ; and (iv) Punjab Infrastructure Development Board. 3. The Assessing O .....

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1A) of the Act for non-deduction of tax at source on total interest payment of ₹ 6,01,92,037. Further, the assessee had also not deducted tax at source on payments made to three individuals (NNND agents) hired by the bank for daily collection purposes in respect of pigmy deposits. The Assessing Officer treated the payment made to the three individuals as commission under section 194H of the Act and by holding the person responsible as "assessee in default" for non-deduction of ta .....

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peal of the assessee and deleted the demand. Against the order, annexure A-2, the assessee as well as the Revenue filed appeals before the Tribunal who vide order dated April 15, 2015 (annexure A-3) upheld the order of the Commissioner of Income-tax (Appeals) and dismissed both the appeals. Hence, the present appeal. 4. Learned counsel for the appellant-Revenue submitted that the assessee was required to deduct tax at source under section 194A of the Act and having failed to do so, was liable fo .....

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chnology (Pension Fund Trust). (iv) Punjab Infrastructure Development Board. 7. In the case of entity at Sr. No. (i), the assessee was not liable to deduct tax at source as the income of the recipient was exempt under section 10(23)(iiiab) of the Act. As regards serial No. (ii), the fund being recognized by the Commissioner of Income-tax, Chandigarh whereas the income of the organisation at serial No. (iv), was exempt under section 10(23C)(iv) of the Act, thus, no tax at source was required to b .....

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e deducted on interest paid to it. Accordingly, the Commissioner of Income-tax (Appeals) treating the assessee in default in respect of payment made to the person at serial No. (iii) confirmed the demand of ₹ 12,56,023 created under section 201(1)/(1A) of the Act and deleted the rest of the demand of ₹ 62,46,541. The relevant findings recorded by the Commissioner of Income-tax (Appeals) read thus : "5. I have considered the facts of the case. As per the documents filed by the ap .....

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treating the payment as 'salary' in respect of three individuals NNND Agents, hired by banks for daily collection purpose in respect of pigmy deposits, in view of the letter dated December 12, 2007, issued by Under Secretary (ITB) from F. No. 275/75/2007-ITB. The Assessing Officer has wrongly treated the payment made of these individuals as commission under section 194H of the Act." On appeal the said findings were affirmed by the Tribunal. 8. The Commissioner of Income-tax (Appeal .....

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