2017 (9) TMI 1908 - AT - Income Tax

TDS u/s 194A - interest payments made by the bank - no deduction of TDS - As argued no opportunity given for the bank to furnish the acknowledgements in respect of the remaining branches for having furnished before the jurisdictional CIT copies of Form No.15G/ 15H - HELD THAT - In the case of hand it is not clear from the record as to how many cases of payment of interest the assessee was having Form No.15G/15H and whether these Forms were at all submitted with the jurisdictional CIT. In this factual matrix of the case, as discussed above, we are of the opinion that the impugned orders of the CIT(A) for both asst. years 2011-12 and 201213 rejecting the assessee's claims which are presently before us for consideration, cannot be sustained in view of the observations by the ld CIT(A) of the lacuna and shortcomings of the AO in carrying out proper verification in the TDS made on interest payments. We, therefore, in the interest of equity and justice, set aside the impugned orders of the ld CIT(A) for asst. years 2011-12 and 2012-13 and restore the matter to the file of the AO for denovo adjudication of this matter, with the directions to verify the assessee's TDS liability branch wise and deductee wise details of interest payments on the point of availability of Form No.15G/15H only in respect of cases when such Forms were before the respective CIT even though belatedly. The assessee will get the benefit of availability of Form No.15G/15H only in respect of cases where such Forms are available with the assessee and submitted with the jurisdictional CIT concerned. - Appeal of the assessee stands allowed for statistical purposes.

Summary

Issues:
1. TDS liability determination under sections 201/201(1A) for the assessment year 2014-15.
2. Opportunity for furnishing interest payment particulars and Form No. 15G/15H.
3. Liability to deduct TDS ceasing once Form-15G/H is obtained.
4. Applicability of Sec.194A and Sec.40(a)(ia) for TDS deduction.
5. Disallowance upheld due to belated submission of Form 15G and 15H.
6. Compliance with formalities and genuineness of the claim.
7. Payments of interest outside Sec.194A and Sec.40(a)(ia) provisions.
8. Excessive, arbitrary, and unreasonable disallowances.

Analysis:

1. The appeal was filed against the CIT(Appeals) order regarding TDS liability determination for the assessment year 2014-15. The appellant contended that the determination was against the law, weight of evidence, and probabilities of the case.

2. The appellant argued that the CIT(A) should have provided sufficient opportunity for furnishing interest payment particulars and allowed the bank to submit acknowledgments of Form No. 15G/15H from remaining branches.

3. The appellant claimed that once branch managers obtain Form-15G/H from depositors, the liability to deduct TDS ceases. Reference was made to a Mumbai Tribunal decision supporting this contention.

4. It was argued that there was no obligation to deduct tax at the source under Sec.194A, and therefore, Sec.40(a)(ia) provisions were not applicable to justify the disallowance made by the CIT(A).

5. The CIT(A) upheld the disallowance due to belated submission of Form 15G and 15H, even though the expenditure claimed was supported by these forms. The appellant contended that the delay was due to procedural formalities being complied with and the genuineness of the claim not being doubtful.

6. The CIT(A) was urged to consider that several interest payments were outside the purview of Sec.194A, and therefore, Sec.40(a)(ia) provisions should not be applied to justify the disallowance.

7. The appellant argued that the disallowances were excessive, arbitrary, and unreasonable, requesting a substantial reduction.

8. The Tribunal noted that identical issues were examined in the appellant's case for previous assessment years, where the matter was restored to the AO for fresh adjudication. Considering the previous Tribunal's order, the current appeal was allowed for statistical purposes, and the matter was restored to the Assessing Officer for readjudication after affording the appellant adequate opportunity of being heard.