2019 (7) TMI 990 - HC - Income Tax

TDS u/s 194A - validity of the orders passed u/s 201(1) and 201(1A) - territorial jurisdiction of AO - Regional Rural Bank having more than 451 branches spread over 9 districts of Karnataka - HELD THAT - Tribunal held that on this issue of restricting the order u/s 201(1) to only 118 branches (out of 451 branches) was in consonance with the directions issued by the co-ordinate bench of Tribunal in the order passed relating to same assessee whereunder the Tribunal had categorically held or opined that AO TDS ward-1 Hubballi would not have jurisdiction other than Head office and branches office if any situated at Hubballi and as such to the extent of orders of AO determining TDS by treating bank as assessee in default in respect of branches other than 118 branches were held to be not in consonance with Section 194A of the Act. This finding of the Tribunal having not been challenged by the Revenue which related to same assessee and as such it cannot be re-agitated. Tribunal has rightly dismissed the appeals insofar as ground No.1 is concerned. Impact of acceptance of decision of Tribunal on similar fact by Revenue - HELD THAT - Reasoning adopted for rejecting ground No.2 is on account of judgment of Delhi High Court of MEGA CORPORATION LTD. 2017 (2) TMI 1253 - DELHI HIGH COURT having not been either cited or urged before the AO or CIT(A). In these circumstances the Tribunal has rightly rejected the second ground also. Though Mr. Y.V. Raviraj learned counsel appearing for the appellant would contend that issue relating to restricting to 118 branches instead of 451 branches was still at large before the Tribunal is erroneous and requires to be considered for purpose of rejection inasmuch as when Revenue was conscious of finding of fact having been recorded had not been challenged and same had reached finality it would not be apt and appropriate for the Revenue to re-agitate same issue. As such we find there is no Substantial Question of Law involved in these appeals to be framed adjudicated and answered by us.

Summary

Issues:
1. Jurisdiction of Assessing Officer over TDS compliance by bank branches.
2. Interpretation of Section 194A of the Income Tax Act regarding TDS responsibilities of bank branches.
3. Compliance with tribunal directions by the Commissioner of Income Tax (Appeals).
4. Consideration of Delhi High Court judgment by the Commissioner of Income Tax (Appeals).
5. Finality of findings by the Tribunal and re-agitation of issues by the Revenue.

Detailed Analysis:
1. The High Court of Karnataka heard appeals regarding the jurisdiction of the Assessing Officer over the compliance of Tax Deducted at Source (TDS) by bank branches. A survey under Section 133A of the Income Tax Act was conducted at a Regional Rural Bank with 451 branches, revealing non-compliance with TDS provisions. The Income Tax Appellate Tribunal (ITAT) held that each bank branch is a separate assessee for TDS purposes and the Assessing Officer exceeded jurisdiction by considering interest paid by branches outside their territory. The ITAT directed the Commissioner of Income Tax (Appeals) to re-examine the matter, focusing on jurisdiction and validity of the orders passed under relevant sections of the Act.

2. The Commissioner of Income Tax (Appeals) partially allowed the appeals filed by the bank, recognizing that only 118 out of 451 branches fell within the jurisdiction of the Assessing Officer. The bank was directed to provide details for consideration, and the demand for interest paid by other branches was to be reduced. The Revenue challenged this decision before the Tribunal, arguing that only considering 118 branches for default was incorrect. However, the Tribunal upheld the Commissioner's decision, citing a previous order related to the same assessee and the jurisdiction limitations of the Assessing Officer.

3. In the second ground raised by the Revenue, regarding the consideration of a Delhi High Court judgment, the Tribunal rejected the argument as the judgment was not presented during the earlier proceedings. The Tribunal emphasized that the Revenue cannot re-agitate issues that have been finalized in previous orders. The Tribunal concluded that no substantial question of law was involved in the appeals, leading to the dismissal of the Revenue's appeals. The judgment affirmed the decisions of the lower authorities and upheld the jurisdictional limitations of the Assessing Officer over TDS compliance by bank branches.