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TMI Blog2021 (9) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- u/sec. 201(1A) of the Act, while observing that section 201(1) & 201(1A) provides consequences of failure to deduct tax at source to the effect that any person who fails to deduct tax at source shall be deemed to be an Assessee in default in respect of such tax, hence, the Assessee is deemed to be an Assessee in default in respect of tax of Rs. 29,72,42,976/-. Further that as per sub-section (1A) of section 201, where a person fails to remit the tax deducted into government account within the due dates, the person responsible for deducting tax shall be liable to pay simple interest at the prescribed rate on the amount of such tax from the date on such tax is deductible to the date on which such tax is actually paid. Since the Assessee has failed to deduct the tax of Rs. 29,72,42,976/- it is also liable to pay interest u/sec. 201(1A) amounting to Rs. 17,83,45,620/- for the period from 01/04/2006 to 31/03/2011. 3. The Assessee in first round of litigation, challenged the said addition before the Ld. Commissioner and in response to the remand proceedings submitted specifically by way of written submissions dated 31/08/2012 that it is also brought to your notice that any interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e back to the file of the AO to determine the status. In case it is found that it is a financial corporation, the exemption may be granted." 5. The Ld. AR and Ld. DR submitted that the Assessee also filed appeal against the order dated 24/08/2016 passed in ITA No. 1707/Hyd/2013 by the ITAT, before the Hon'ble high Court of Andhra Pradesh, which is pending for adjudication, however no stay is granted by the Hon'ble Court qua further proceedings in pursuance to the ITAT order. 6. As no stay was granted by the Hon'ble High Court qua further proceedings in pursuance to the ITAT Order, the AO while following the directions of the Hon'ble Tribunal, vide its order dated 14/12/2017 u/sec. 254 of the Act concluded that on verification it is found that the said APIIC does not cover u/sec. 194A(3)(iii)(b) of the Act, since it is a company incorporated for the purpose of the development of the infrastructure for industries in the state of Andhra Pradesh. Consequently, the AO made the addition of Rs. 25,93,12,825/- and Rs. 35,06,31,083/-. 7. The Assessee in 2nd round of litigation challenged the said order dated 14/12/2017 passed by the AO before the ld. Commissioner. The ld. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, being aggrieved against the impugned order under challenge, preferred the instant appeal on the following grounds of appeal:- "1. The order of the ld. CIT(A) is erroneous both on facts and in law. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has failed to note that the ITAT vide it order dated 24/08/2016 adjudicated the matter and remitted the limited issue to the file of the Assessing Officer to find out whether M/s.APIIC (Andhra Pradesh Industrial Infrastructure Corporation Limited) is a 'financial corporation' or not within the meaning of section 194(3)(iii)(b) of the Act. 3. The ld. CIT(A) has erred in granting relief holding that M/s. APIIC is an exempted entity u/sec. 194A(3)(iii)(f) of the Act ignoring the fact that as per the said provisions, in order to avail the exemption from TDS, such institution should be notified by the Central Government in the Official Gazette after recording reasons whereas the Assessee company itself has admitted that there is no such notification for APIIC. 4. On the facts and circumstances of the case and in law, the ld. CIT(A) was erred in quashing the original order dated 31/03/2011 of the DCIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) The provisions of sub-section (1) shall not apply- (i).................................................................................................. ..................................................................................................... ................................................................... (ii) [***] (iii) to such income credited or paid to- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence with the conclusion of the ld. Commissioner for covering the APIIC u/sec. 194A(3)(iii)(f) of the Act and to the effect as well that APIIC is an organization exempted u/sec. 11 of the Act having filed 'NIL' taxable income, is not liable to tax and, therefore, deduction of tax at source qua APIIC is not attracted. Consequently, the conclusion drawn by the ld. Commissioner, whereby deleted the addition made by the AO u/sec. 201(1) & 201(1A) of the Act is liable to be affirmed. In the result, ground No.3 filed by the Revenue Department stand dismissed. 10. Now coming to the ground No.2 wherein the Revenue Department has raised the issue that the ld. Commissioner has failed to note that the ITAT vide its order dated 24/08/2016 adjudicated the matter and remitted the limited issue to the file of the AO to find out whether APIIC is a 'financial corporation' or not within the meaning of section 194A(3)(iii)(b) of the Act. No doubt the coordinate Bench remitted the issue to the file of the AO for determination as to whether the APIIC is a financial corporation or not within the meaning of section 194A(3)(iii)(b) of the Act and the AO while following the directions of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the Assessee has shown the receipt as income in his return, it does not make him liable to tax thereon. If the Income-tax Officer assess an Assessee upon a receipt, which is not taxable in law, it is always open to the Assessee to take the case in appeal or in revision thereafter. Further the Assessee is within his rights in requiring the appellate or the revisional authority to examine the validity of the assessment to tax a receipt which, though admitted by him, is not taxable in law. 10.8 From the verdicts of the Apex Court and High Court, it is clear that the very purpose of income tax proceedings is to correctly assess the tax liability of an Assessee in accordance with law, may be the Assessee has claimed mistakenly and/or inadvertently and/or not claimed under proper provisions of law as happened in this case. Further the legal as well as factual additional/new ground(s) and fresh claim can be raised at any time before the appellate authorities and the appellate authorities are empowered to decide the additional/new ground(s) and fresh claim, raised by the parties during the course of appellate proceedings for the just and proper decision of a case. 10.9 While coming to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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