9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (6) TMI 604 - AT - Income TaxTDS u/s 194A on Interest - non deduction of TDS due to direct adjustment by the Kotak Mahindra Ltd. Assessee had obtained margin amount from Kotak Mahindra Ltd for making application in public issue of shares and the amount paid to Kotak Mahindra Ltd. was considered as cost of purchase of shares and not as interest. Held that - CIT(A) while granting relief to the Assessee has given a finding that Assessee had not made payment to Kotak Mahindra Ltd. towards interest but the account of the Assessee was directly adjusted by the charges and Assessee had no control and therefore it could not deduct TDS - Kotak Mahindra Ltd. has given a confirmation that it had filed its return and has also paid the taxes Relying upon Hindustan Coca Cola Beverage Pvt. Ltd. vs. CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA - there was no justification for levy of demand u/s. 201(1) and 201(1A) of the Act - Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record thus the order of the CIT(A) is upheld Decided against Revenue. Imposition of Penalty u/s 271C of the Act Held that - CIT(A) rightly was of the view that the assessee had no chance to apply its mind and deduct tax at source particularly when it had not made any payment or credited the amount at the relevant time - The amount was directly adjusted by Kotak Mahindra Ltd. from assessee s account with them - CIT(A) while deleting the penalty levied by AO has held that default of non-deduction of tax by the Assessee was not intentional and further Kotak Mahindra Ltd. had already paid tax on returned income - Assessee had reasonable cause for non-deduction of TDS - Revenue could not controvert the findings of CIT(A) thus there was no reason to interfere with the order of CIT(A) Decided against Revenue.
Issues:
- Non-deduction of TDS under section 194A of the Income Tax Act by the Assessee for the financial year ending 31.03.2006. - Dispute regarding levy of demand under section 201(1) and 201(1A) of the Income Tax Act. - Penalty imposed under section 271C for non-deduction of TDS on interest payment made to Kotak Mahindra Ltd. Analysis: 1. Non-deduction of TDS under section 194A: The Assessee, engaged in manufacturing dyes and chemicals, had not deducted TDS on interest payment of Rs. 16,23,458/- to Kotak Mahindra Ltd. for the financial year ending 31.03.2006. The Assessing Officer (A.O) treated the Assessee as an "assessee in default" under section 201(1) and imposed interest under section 201(1A). However, the CIT(A) granted relief to the Assessee, noting that the payment was considered as a cost of purchasing shares, not interest. The CIT(A) also highlighted that Kotak Mahindra Ltd. had paid adequate tax on its income. The Tribunal upheld the CIT(A)'s decision, emphasizing that the Assessee had no control over the payment and dismissing the Revenue's appeal. 2. Dispute over levy of demand under section 201(1) and 201(1A): The Revenue appealed against the CIT(A)'s decision, arguing that the Assessee failed to deduct TDS on the payment to Kotak Mahindra Ltd. The Tribunal noted that the CIT(A) had correctly found that the Assessee did not directly pay interest to Kotak Mahindra Ltd., as the charges were adjusted by the latter. Moreover, Kotak Mahindra Ltd. had paid taxes on its income. The Tribunal, relying on legal precedents, dismissed the Revenue's appeal as it failed to provide contrary evidence. 3. Penalty imposed under section 271C: The A.O imposed a penalty of Rs. 3,64,304 on the Assessee for not deducting TDS on the interest payment to Kotak Mahindra Ltd. The CIT(A) overturned this penalty, stating that the Assessee had no chance to deduct TDS as the amount was directly adjusted by Kotak Mahindra Ltd. The CIT(A) also noted that Kotak Mahindra Ltd. had paid taxes on the income received. The Tribunal upheld the CIT(A)'s decision, emphasizing that the non-deduction of TDS was not intentional and that the Assessee had reasonable cause for the omission, ultimately dismissing the Revenue's appeal. In conclusion, the Tribunal affirmed the CIT(A)'s decisions in favor of the Assessee, highlighting the lack of intentional default in non-deduction of TDS and the reasonable cause for the omission. The judgments were based on the specific circumstances of the case and the legal provisions under the Income Tax Act.
|
