TMI Blog2020 (7) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor cannot be eliminated. But, there has to be provision of interest of individual account where credited to the account of depositor or to interest payable account is more than ₹ 2500/- for the FY, then only tax is required to be deducted. As per assessee there are no accounts where the individually interest payable to them is in excess of ₹ 2500/- and wherever it is requisite tax is deducted. This is not disputed by the ld DR. Therefore, we hold that there is no infirmity in the order of the ld CIT (A) in holding that assessee was not required to deduct tax at sources where the interest payable to individual account holder does not exceed ₹ 2500/- in FY. Jurisdictions of assessing officer as well as TDS officers - Looking at the orders passed under section 127 of the income tax act by the Commissioner of income tax Lucknow, it is apparent that jurisdiction over TDS has not been transferred to the other specified officers other than ITO (TDS), Lucknow. Further in case of sister concerns also the ITO TDS Ward 2, Lucknow and not the officer of the central circle, has passed the respective orders under section 201 (1A relating to several years which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals two cross objections are field by Sahara India Financial Corporation Ltd [Assessee]. For the same year , one appeal [ ITA No 685] is filed by The Deputy Commissioner of Income Tax, Central Circle -1, Lucknow [ The ld AO] where in the ld CIT (A) has quashed order passed by him U/s 201 (1) 201(1A) of the act holding that there is no default by assessee on merits for not deducting tax at sources u/s 194 A of the act as well as the order passed by ld AO is without jurisdictions. CO of the assessee supports the order of CIT (A). Second appeal [ITA No 686] is filed by The Additional Commissioner of Income-Tax, Central Circle-1, Lucknow against the order of the Ld CIT (A) cancelling penalty u/s 271C of the act for the reason that there is no fault u/s 194A by assessee, and order based on which penalty is initiated is quashed on merits as well as on jurisdiction issue. Co of the assessee supports the order of the LD CIT (A). 2. Facts shows that, For assessment year 96 97, the learned assessing officer, on examination of the profit and loss account of the assessee and the details obtained during the course of hearing under section 143 (3)of that year found that assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready been transferred to ITO TDS ward-2 Lucknow. The learned CIT A after verification of several notifications issued therein found that the learned assessing officer did not have any jurisdiction to pass an order under section 201 (1) as well as under section 201 (1A) of the income tax act. The learned CIT A also relied upon the views of the assessing officer of Central Circle as well as The Income Tax Officer (TDS) Ward 2, Lucknow who also concurred with his view. Thus, according to him, such an order would have been framed only by the AO of, TDS Ward and not by the present assessing officer. Therefore, he cancelled the order passed by the assessing officer. On the merits of the case, he held that if the interest relatable to any individual depositor, whether credited directly to his account or credited to some other account like interest payable account, exceeds ₹ 2500, then only the appellant is liable to deduct tax at the time of credit or payments of interest, whichever is earlier. However if the Consolidated entry in respect of number of depositors are passed and the appellant claims that interest payable to each of the depositor is less than ₹ 2500, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the AO restored. 7. The assessee has raised the following grounds of appeal in CO No. 15/Luc/2004 in ITA No. 685/All/2000 for the Assessment Year 1996-97:- 1. That the order passed by the ld CIT(A) is fully justified on the facts and circumstances of the case. 2. That the ld CIT(A) is fully justified in holding that the jurisdiction in respect of matters under Chapter XVIII-B of the Income Tax Act lies with the Income Tax Officer, TDS Ward-2, Lucknow and with the Assistant Commissioner of Income Tax, Central Circle-1, Lucknow no jurisdiction was vested. 3. That the ld CIT(A) is fully justified in holding that the provisions of section 194A are not attracted on the facts and circumstances of the case. 8. Further pursuant to the above order passed for assessment year 1996 1997 under section 201 (1) and 201 (1A) of the act, since the assessee failed to deduct tax at source, notice under section 271C of the act was issued by The Additional Commissioner Of Income Tax, (Central), Lucknow on 24 June 1999 as to why a penalty of ₹ 7,10,33,156/- being amount of default of tax should not be levied. In response to that, assessee contested that a. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or TDS was not transferred, ignoring the established fact and practice that in all transfer orders only the name of the Assessing Officer having jurisdiction for assessment, who maintains the GIR and PAN, is mentioned and such an erroneous interpretation would modify the provisions of law as explained in the said explanation. 2. The ld CIT(A) has acted contrary to the express words and spirit of law in holding that the provision of section 194A were not applicable in this case. 3. That the order of the ld CIT(A) being erroneous in law as well as on the facts deserves to be vacated and that of the AO restored. 12. Assessee has filed cross objection number 16/ LUk/2004 raising following grounds:- 1. That the order passed by the ld CIT(A) is fully justified on the facts and circumstances of the case. 2. That the ld CIT(A) is fully justified in holding that the jurisdiction in respect of matters under Chapter XVIII-B of the Income Tax Act lies with the Income Tax Officer, TDS Ward-2, Lucknow and with the Assistant Commissioner of Income Tax, Central Circle-1, Lucknow no jurisdiction was vested. 3. That the ld CIT(A) is fully justified in holding that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o support his contentions, he referred to the notification dated 26 March 1990, 12 March 1991, order under section 127 of CIT Lucknow dated 7/6/1991 and order under section 127 of CIT Lucknow dated 11/05/1993 placed in paper book. He submitted that all these are considered by the CIT A to reach at the conclusion that the assessing officer who passed such an order was not having the jurisdiction thereon. 16. On the issue of the merits, he submitted that none of the provision depositors of interest of the GFDA scheme is more than ₹ 2500/- with respect to any of the individual clients, therefore, there is no requirement of tax deduction at source as the individual interest payment/payable to the individual deposit holder in this year did not exceed ₹ 2500/- or more. He otherwise submitted that whenever there is an excess interest paid more than the amount of ₹ 2500, assessee deduct tax at source thereon and also complies with all other provisions of filing the return before The Income Tax Officer (TDS), Lucknow. 17. He explained the manner of provisioning which is mentioned by the ld AO in first paragraph of his order. He submitted that neither the depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision is to apply the average rate of interest on the balances of total deposits by passing monthly credit entries in the interest payable account. Section 194A of the act provides that Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income 36[by way of interest on securities], shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. The explanation below that provides that where any income by way of interest as aforesaid is credited to any account, whether called Interest payable account or Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. 22. By Circular No. 495, dated 22-9-1987, CBDT explained the provision stating that under the existing provisions, deduction of tax at source from interest is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come by way of interest aforesaid in credited to any account, whether called interest payable account or expense account or by any other name, in the books of account of persons liable to pay such income such crediting shall be deemed to be credit of such income to the account of assessee and the this provisions of section shall apply accordingly. 7. Shri Thakkar further quoted the provisions of sub-section (3) of section 194A which states as below:- provisions of sub-section (1) shall not apply as the case may be aggregate of the amount of much income as the case may be the aggregate of the amount of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of or to be payee does not exceed two thousand five hundred rupees. 8. Shri Thakkar submitted that in view of the above it is clear that the legislature has used the word account/ payee in singular. This means that interest credited to the account of one single depositor or the interest credited to any account in relation to that single depositor is to be taken into consideration and if interest relatable to that single deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the interest payable to individual account holder does not exceed ₹ 2500/- in FY. 24. On the issue of jurisdiction, the ld CIT (A) held as under :- 16. The word Assessing Officer has been defined under sub-section (7A) of Section 2 of the IT Act as below:- Assessing Officer means the Asstt. Commissioner or Dy. Commissioner or Assistant Director or Dy. Director or the Income Tax Officer who is vested with the relevant jurisdiction by virtue of directions or order issued under sub-section (1) of sub-section (2) of section 120 or any other provisions of this Act. (underlying by me). ] Therefore, it is clear that an Assessing Officer derives his jurisdiction from the orders passed by the competent authority in this regard and he cannot travel beyond the jurisdiction assigned to him. 17. An important aspect which is not to be forgotten is that prior to the centralization the Sahara Group of cases were assessed by the various Assessing Officer falling under the control of Commissioner of Income-tax, Lucknow. The Commissioner of Income Tax, Lucknow on 12.05.1988 passed an order No. 36, in which the jurisdiction of the income tax officer, TDS Ward-2, Lucknow was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assessing Officer having jurisdiction to make assessments of Income Tax. 20. Finally the Commissioner of Income-tax, Lucknow passed an order on 12.03.1991 which has already been referred to by Shri Thakkar in his submission and for the sake of convenience the jurisdiction granted by the order upon the income tax officer, TDS Ward-2, Lucknow is reproduced as below:- All the functions of Assessing Officer under Chapter XVIIB, BB D, Chapter XXI and Chapter XXII of the Act in respect of such areas, or such persons or classes of persons mentioned below:- All persons responsible for paying any income or sum of the nature mentioned in section 192 to 194, 194A, 194B, 194C, 194D, 194Em 196F, 195 and 196A and for deducting any tax in sum as income tax or for collecting tax in accordance with the provisions of section 206C, whose office (including a branch officer) within the revenue district of Lucknow. 21. This last order also shows that in respect of the assessee belonging to the Sahara Group, the functions under Chapter XVIIB were assigned to Income Tax Officer, TDS Ward-2, Lucknow. 22. At this stage it will be helpful if the provisions of section 127 of the Act m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Do 8. Sahara India Muri Ltd, Kapoorthala, Lucknow Co. Circle, Lko 9. Sahara India, Aliganj, Lucknow DC(Asstt.), Range-II, Lko 10. Sahara India Commercial Ltd, Aliganj, Lucknow Do 11. Sri Subrato Rai, New Hyderabad, Lko Ward-1(6), Lko 25. Vide another jurisdiction order dated 11.05.1993 the learned Commissioner of Income-tax, Lucknow passed u/s 127 of the Act transferred the following cases belonging to Sahara Group to control Circle-III, Lucknow. Sl. No. Name and address of the assessee From Assessing Officer 1. M/s. Sahara India Marketing, Sahahra India Bhawan Kapoorthala, Lko ACIT, Circle 2(3), Lko 2. M/s. Sahara Printers (P) Ltd, 1, Kapoorthala, Lko Do 3. M/s. Sahara India Mass Communications, 1, Kapoorthala, Aliganj, Lucknow Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings which were pending or which were completed or / could be initiated by ITO, TDS Ward-2, Lucknow were never transferred to Central Circle-III, Lucknow. 27. In view of the above discussions, I hold that the Assessing Officer did not have any jurisdiction to pass an order u/s 201(1) as well as u/s 201(1A) of the Act. 28. It is not only who is holding this view but the Assessing Officers of Central Circle as well as Income Tax Officer, TDS Ward-2, Lucknow also held the same view and a few of the examples are given as below:- (1) In case of M/s. Sahara India Ltd, the ITO TDS Ward-2, Lucknow passed an order u/s 201(1a) relating to Assessment Years 1989-90 to 1994-95, appeal of which was decided by the ld CIT(A) on 28.08.1997. The Assessing Officer of Central Circle never raised any objection that ITO, TDS Ward-2, Lucknow did not have jurisdiction in the matter. (2) In the case of Sahara India Housing Ltd, ITO, TDS Ward-2, Lucknow passed an order u/s 201(1A) for Assessment Year 1996-97 for which the appeal was decided on 12.03.1998 by CIT(A)-III, Lucknow and the AO, Central Circle, Lucknow never raised any objection that ITO, TDS Ward-2, Lucknow did not have any juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r all persons responsible for any action mentioned under various sections of TDS. Further looking at the orders passed under section 127 of the income tax act by the Commissioner of income tax Lucknow, it is apparent that jurisdiction over TDS has not been transferred to the other specified officers other than ITO (TDS), Lucknow. Further in case of sister concerns also the ITO TDS Ward 2, Lucknow and not the officer of the central circle, has passed the respective orders under section 201 (1A relating to several years which have been mentioned in paragraph number 28 of the order of the learned CIT A. Further in sub paragraph number five of para 28 of that order , in case of the assessee itself the orders have been passed by the ITO (TDS), Ward 2 Lucknow under section 201 (1A) of the act. Therefore, it is apparent that the jurisdiction of all TDS matters over the assessee was with ITO (TDS) Ward 2, Lucknow and not with The Deputy Commissioner of Income Tax, Central Circle 1, Lucknow. Thus, on reading of all these notifications produced before us and considered by the learned CIT A on jurisdictions of assessing officer as well as TDS officers, it is apparent that the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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