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I.T.O., Ward-31 (1) , Kolkata Versus M/s. Bata India Ltd. Employees Statutory Provident Fund, Kolkata

2016 (9) TMI 997 - ITAT KOLKATA

TDS credit - relevant assessment year - to whom the credit belongs to - whether the TDS certificate filed along with the return of income was not for the relevant A.Y. 2006-07 and also not in the name of the assessee? - Held that:- There is no merit in this appeal by the revenue. The facts with regard to the ownership of the bonds on which the interest accrued as that of the assessee is not in disputed. It is also not in dispute that the assessee was entitled to the interest on the bonds that we .....

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efund of TDS thereon in the event of non taxability of interest income in question. The fact remains that the assessee has offered the interest income to tax in the A.Y.2006-07 and in terms of section 199 of the Act the assessee was entitled to credit for tax deducted at source. The fact that the TDS certificate refers to assessment year 2005-06 is of no consequence. The fact remains that the assessee has not claimed credit for TDS in any other assessment year. The tax deducted at source and pai .....

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2. Grounds of appeal raised by the revenue read as follows :- Whether on the facts & circumstances of the case Ld. CIT(A)-XIX, Kolkata was justified in directing to allow the credit of TDS amounting to ₹ 11,42,889/- when the TDS certificate filed along with the return of income was not for the relevant A.Y. 2006-07 and also not in the name of the assessee. 3. The Assessee was created on 16th March 1939 with the aim of administering the provident fund contributions of both employer and .....

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1957 (Initial Recognition) and vide Order Dated 5th March 1975. Under Section 10(25)(ii) of the Act, total income of recognized employees provident fund was exempt from payment of income tax. As all income generated by a recognized employees provident fund was not chargeable to income tax, the Assessee was not required to file or submit any return of income under the Act. Where the entire income of assessee is exempt under section 10, the assessee will not be liable to tax audit under section 4 .....

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unts etc. Neither The EPF & MP Act 1952 nor Income Tax Rules 1962 has prescribed any format for accounts and audit report, the annual accounts of recognized employees provident fund should be drawn up in accordance with generally accepted accounting principles. The annual accounts should give an adequate and fair disclosure. The balance sheet should disclose assets and liabilities and the income and expenditure account should enumerate various items of income and expenditure. The annual acco .....

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ncial Year basis. Audited Accounts signed on 26th September 2006 for the financial year ended on 31st March 2006 along with schedules were filed before the AO. 4. As already stated the income of the Assessee was exempt u/s 10(25)(ii) of the Act and therefore there was no obligation on its part to file return of income. Nevertheless, the Assessee filed return of income for AY 2006-07 in order to claim refund of TDS erroneously deducted by financial institutions in which funds were invested. The r .....

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in a return. 5. The facts with regard to claim for refund of tax deducted at source for which purpose the Assessee filed return of income are that the Assessee had purchased 83 bonds (Series -Ill) issued by M/s Maharashtra Patbandhare Vittiya Co. Ltd (here in after "M/s MPVCL"), on various dates from outside agency in secondary market which was originally allotted to other parties. Such bonds carries interest @9.5% P.A and Face Value ₹ 10,00,000/- per Bond. M/s MPVCL had issued s .....

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vour of deductee whose name was in bond holders register maintained by the issuer "M/s MPVCL" as at 31st March 2005. During F.Y-2005-06 when actual interest was paid in July 2005 on 9.5% bonds issued by " M/s MPVCL" , "M/s MPVCL" had deducted TDS of ₹ 11,42,889/- on interest income of 60 bonds for the period from 16th April 2004 to 31st March 2005, as on 31st March 2005 bond holder was "M/s The C K P Cooperative Bank Ltd " as per their record. Gross .....

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quot;M/s MPVCL" sent TDS Certificate issued in favour of "M/s The C K P Cooperative Bank Ltd "and confirmed vide letter dated 25th Aug 2005,dated 6th Sept 2005, dated 24th November 2005 that it was the Assessee which was entitled to claim refund of the TDS deducted of ₹ 11,42,889/- in its return for the A.Y-2006-07 even though tds certificate was issued in favour of " The C K P Cooperative Bank Ltd". Thus getting confirmation from issuer of bond and deductor of TDS .....

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o vide letter dated 25th June 2011 confirmed directly to the ITO that no benefit was claimed by the bank against TDS certificate of ₹ 11,42,889/- issued by M/s MPVCL" in their return for the assessment year 2005-06 and 2006-07. 6. The AO however Vide letter Ref No-ITO /W-31(1)/KoI/Demand/ 2011-12/793 dated-17th Feb 2012, ITO rejected refund application for the reasons that the Assessee s name was not found in the TDS certificate and the year mentioned in the TDS certificate was releva .....

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efund application on 17th Feb. 2012 after receiving confirmation from "M/s MPVCL" and from "The C K P Co operative Bank Ltd." without giving an opportunity to the appellant of being heard, hence there is breach of principles of natural justice. The Supreme Court in case of M. Chockalingam and M. Meyyappan v. CIT [1963J 48 ITR 34 (SC) has held that the action u/s 154 may be taken in favour of the taxpayer without any notice to him but if action has the effect of enhancing an a .....

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the amount to be treated as income of the deductee and available for credit. Section 199 states that tax deducted and paid to govt. account shall be treated as payment of tax on behalf of the person from whose income deduction was made and credit shall be given to him for the amount so deducted on production of the certificate furnished u/s 203 in the assessment made under the Act for the AY for which such income is assessable. Sections 198 and 199 do not in any way change the year of assessabi .....

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in which the corresponding income was assessable / taxed. In the instant case, the entire income starting from issue date i.e. from 16th April, 2004 to 31st March, 2006 was considered by "BIL ESPF" as assessable income for AY 2006-07, hence the appellant is entitled to tax credit- even though TDS certificate was issued in the name of "The C K P Cooperative Bank Ltd". 9.3. The Gauhati High Court (supra) held that "All income generated by a recognised employees provident f .....

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egitimately belong to them. The High Court further held that when there is no due from the assessee, revenue should not act like a small time trader interested in enriching itself unjustly at the expense of a citizen by denying refund of tax deducted which legitimately belongs to the assessee. The C K P Co operative Bank Ltd." had given two confirmations that the 110 tax credit was taken by them on the basis of TDS certificate issued by "M/s MPVCL." 9.4. In view of the various cou .....

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