2019 (1) TMI 1391 - AT - Income Tax

Short-fall OR excess of TDS payment - interest payable under section 201(1A) and 220(2) - adjustment of the excess deposit of TDS made in the earlier year against the TDS payable for the subsequent year - assessee in the present case is a Government of India Undertaking which undertook modernisation work - as per assessee he had paid excess TDS at any stage during the relevant period of eleven financial years but the Assessing Officer selected only five years wherein there was a short-fall in the deposits of TDS on yearly basis and charged interest under section 201(1A) without considering that the excess amount of TDS deposited by the assessee for the earlier year/(s) was available for adjustment Held that - D.R. case is that the position is required to be considered year-wise and the short-fall in deposit of TDS is required to be considered in respect of each year separately without adjusting the excess deposit of TDS made by the assessee in the earlier years. In our opinion this stand taken by the revenue authorities is contrary to the communication issued by the CPC(TDS) on 10.09.2014 which has clarified with an example that in case tax has been deposited more than the required tax deducted at source for a particular assessment year the excess amount of tax can be claimed in the following quarters of the relevant year and the balance amount if any can be carried forward to the next year for claim in the TDS statement. As observed that section 245 of the Act duly authorises the concerned Income Tax Authority to set off the amount of refund or any part of that amount due to any person under any of the provisions of the Act against the sum if any remaining payable by the Act by the person to whom the refund is due. It is thus clear that the refund due to any person under the provisions of the Act for one year can be adjusted against the tax liability for the other year and the concerned authorities are duly authorized to make such adjustment. In the case of Motion vs.- CIT 2013 (3) TMI 316 - DELHI HIGH COURT as taken note of this procedure prescribed under section 245 of the Act and directed the Assessing Officer to adjust the past arrears due to the assessee against the tax liability of the subsequent years. We hold that the assessee is entitled for adjustment of the excess deposit of TDS made in the earlier year against the TDS payable for the subsequent year/(s). We accordingly set aside the impugned order of the ld. CIT(Appeals) on this issue and direct the Assessing Officer to recompute the amount payable/ refundable to the assessee on account of TDS for the years under consideration after making such adjustment. Claiming interest under section 244A on the refund if any due to the assessee for excess deposit of TDS - additional ground - Held that - Since this issue raised by the assessee is purely a legal issue and all the facts relevant to decide the said issue are available on record the additional ground raised by the assessee is admitted by considering case of National Thermal Power Corporation Limited 1996 (12) TMI 7 - SUPREME COURT . Since this issue is raised by the assessee for the first time before the Tribunal and the Assessing Officer is required to be given an opportunity to examine/verify the same from the relevant facts available on record as rightly contended by the ld. D.R. we restore this issue to the file of the Assessing Officer for consideration in accordance with law.

Summary

Issues Involved:

1. Levy of interest under section 201(1A) and 220(2) of the Income Tax Act, 1961.
2. Assessment of TDS deposits and adjustments for the financial years 1988-89 to 1998-99.
3. Validity of demand raised by the Assessing Officer.
4. Applicability of section 245 for adjustment of excess TDS deposits.
5. Claim of interest under section 244A on the refund of excess TDS deposits.

Detailed Analysis:

1. Levy of Interest under Section 201(1A) and 220(2):

The Assessing Officer (AO) initially raised a total demand of Rs. 6,55,20,378 against the assessee for interest payable under sections 201(1A) and 220(2) of the Income Tax Act, 1961. This demand was based on short-falls in TDS deposits for the financial years 1992-93, 1997-98, and 1998-99. The AO calculated interest for the short-falls in these years and charged additional interest under section 220(2).

2. Assessment of TDS Deposits and Adjustments:

The assessee, a Public Sector Undertaking, had deposited TDS on an estimated basis for eleven financial years (1988-89 to 1998-99). Upon finalizing the bills from contractors, it was determined that there was an excess deposit of TDS amounting to Rs. 3.2 crores over the eleven years. The AO originally considered only the years with short-falls and raised a demand without adjusting the excess deposits from other years. The reassessment by the AO showed that there was an overall excess deposit of Rs. 2,96,39,555.

3. Validity of Demand Raised by the Assessing Officer:

The assessee appealed against the AO's order, arguing that the AO did not consider the overall excess TDS deposits and only focused on the years with short-falls. The CIT(A) upheld the AO's order, leading to further appeals by the assessee. The Tribunal found that the AO's approach of considering year-wise short-falls without adjusting the excess deposits from other years was incorrect. The Tribunal noted that the overall position showed no short-fall in TDS deposits.

4. Applicability of Section 245 for Adjustment of Excess TDS Deposits:

The Tribunal emphasized that section 245 of the Act authorizes the Income Tax Authority to set off refunds due against any tax payable. The Tribunal referred to a communication from CPC (TDS) dated 10.09.2014, which allowed for the adjustment of excess TDS deposits from earlier years against liabilities of subsequent years. The Tribunal also cited the Delhi High Court's decision in the case of Motion vs. CIT, which supported this procedure.

5. Claim of Interest under Section 244A:

The assessee raised an additional ground before the Tribunal for claiming interest under section 244A on the refund of excess TDS deposits. The Tribunal admitted this ground as it was a legal issue and restored it to the AO for examination and verification in accordance with the law.

Conclusion:

The Tribunal set aside the order of the CIT(A) and directed the AO to recompute the amount payable/refundable to the assessee after adjusting the excess TDS deposits from earlier years against the liabilities of subsequent years. The Tribunal also restored the issue of interest under section 244A to the AO for consideration.

Order Pronounced:

The appeals of the assessee were allowed, and the order was pronounced in the open Court on January 25, 2019.