TMI Blog2017 (2) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in Form No.13. AO has annexed the details in Schedule-II of Form No.13 to the certificate issued u/s.197 of the Act. By doing so, the AO cannot treat the assessee as a person who has not deducted tax at source to the extent of the payments made by the assessee over and above the sum specified in the certificate u/s 197 of the Act. We therefore agree with the arguments of assessee that certificate u/s 197 of the Act is with reference to the person to whom the income is paid and is not with reference to any sum as may be specified in the certificate. Assessee cannot be treated as a person who has not deducted tax at source on the difference between the amounts specified in the certificate issued u/s 197 of the Act and the amounts actually paid by the assessee. Consequently the levy of interest u/s 201(1A) of the Act cannot be sustained and the same is directed to be deleted. - Decided in favour of assessee - I.T.A Nos 464 & 465/Kol/2014 - - - Dated:- 3-2-2017 - Sri N. V. Vasudevan, JM And Shri Waseem Ahmed, AM For the Appellant : Shri Ravi Tulsiyan, FCA For the Respondent : Shri Sallong Yaden, Addl. CIT(DR) ORDER Per N. V. Vasudevan, JM These are appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MKJ Ent.Ltd. 54792126 44441448 10350678 2228500 @ 21.53% 31/03/2008 7 155995 4. On the excess amount as specified in the 197(1) certificate, Tax was deducted @ 1.03% instead of 20.6% in the case of Amrit Sales Promotion P.Ltd and @ 1.13% instead of 22.66% in the case of MKJ Enterprises Limited. The deductees submitted their return of income on 14.10.2008 and 12.09.2008 respectively. Therefore interest on tax short deducted was alone levied by the AO u/s.201(1A) of the Act. 5. In AY 2009-10, the facts are similar. In that year interest was paid by the Assessee to M/S.MKJ Enterprises Ltd. The short deduction of tax at source in this year was on a sum of ₹ 46,484 on which the AO imposed interest u/s.201(1A) of the Act of ₹ 11,247/-. 6. On appeal by the Assessee against the orders of the AO u/s.201(1A) of the Act for both the Assessment years, the CIT(A) confirmed the order of the AO. Hence these appeals by the Assessee before the Tribunal. 7. The plea of the Assessee before the AO was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co Cola Beverages Pvt. Ltd. [293 ITR 226 (SC)] to hold that the amount to be deducted was specifically mentioned in the Annexure and hence the assessee-deduction was liable to pay interest u/s.201(lA). He further held relying on CBDT Circular No. 275 dated 29.01.1997 that the interest would be chargeable even if the deductee had nil income or was claiming a loss as the charging of interest under this section is mandatory and is compensatory in nature. The interest charged upon the assessee u/s.201(IA) was thus upheld. 10. Before us the submission of the learned counsel for the Assessee was that the certificate issued by the AO u/s 197(1) of the Act clearly specifies that the assessee was authorised to pay any sum by way of interest other than interest on securities as referred to in section 194A of the Act after deducting the tax at source @ 1% plus surcharge and education cess thereon. Similar certificate has been issued in the case of M/s. MKJ Enterprises Ltd.. It was contended by him that the aforesaid certificate is only with reference to the person by whom income is payable and mention of the quantum of income in the annexure to the certificate will not in any way enhance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO himself had inferred a lower rate, there is no justification whatsoever for the AO to infer short deduction in respect of similar payments not covered by the certificate. 11. The ld. DR reiterated the stand of the revenue as reflected in the orders of the revenue authorities. 12. We have given a careful consideration to the rival submissions. Sec.197 of the Income Tax Act, 1961 (Act) and Rule 28AA of the Income Tax Rules, 1962 (Rules), in so far as it relevant to the present appeal, reads thus: Certificate for deduction at lower rate. 197. (1) [Subject to rules made under sub-section (2A), [where, in the case of any income of any person [or sum payable to any person], income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, [194,] 194A, [194C,] 194D, [194G] [, 194H] [, 194-I] [, 194J] [, 194K], 194LA] and 195, the Assessing Officer is satisfied] that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax , as the case may be, the [Assessing] Officer shall, on an application made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed71: Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of tax at source at lower rate is person specific and cannot be extended to the amounts specified by the recipient of the payment while making an application for grant of certificate u/s 197 of the Act in Form No.13. The AO has annexed the details in Schedule-II of Form No.13 to the certificate issued u/s.197 of the Act. By doing so, the AO cannot treat the assessee as a person who has not deducted tax at source to the extent of the payments made by the assessee over and above the sum specified in the certificate u/s 197 of the Act. We therefore agree with the arguments of the ld. Counsel for the assessee that certificate u/s 197 of the Act is with reference to the person to whom the income is paid and is not with reference to any sum as may be specified in the certificate. We are therefore of the view that the assessee cannot be treated as a person who has not deducted tax at source on the difference between the amounts specified in the certificate issued u/s 197 of the Act and the amounts actually paid by the assessee. Consequently the levy of interest u/s 201(1A) of the Act cannot be sustained and the same is directed to be deleted. 15. In the result both the appeals a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
