2021 (2) TMI 865 - AT - Income Tax

TDS u/s 194A - deposits of HIMURJA - tds liability - HELD THAT - We find that the said claim of the Revenue cannot be allowed because the alternate prayer of the assessee relying upon the decision rendered by the Apex Court in the case of Hindustan Coca Cola Beverages P. Ltd. 2007 (8) TMI 12 - SUPREME COURT was in the context where the assessee could demonstrate that the deductees had paid tax thereon which evidences were required to be demonstrated and in some cases were available, however in the facts of the present case the foundational fact itself is to be established namely whether in the case of HIMURJA was there any legal mandate on facts in terms of the aforesaid notification in pursuance to Section 194A(3) (iii) (f) of the Act to deduct TDS. Once the foundational fact is established, the consequences as per law and facts shall follow. Accordingly, accepting the prayer of the parties before the Bench, the issues are restored back to the file of the AO with direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is directed to ensure that full facts with supporting evidences are placed before the said authority to take a view. Appeal of assessee allowed for statistical purposes.

Summary

Issues:
1. Correctness of order upholding tax deduction on deposits under section 194A of the Income Tax Act, 1961.
2. Charging of interest under section 201(1 A) of the Income Tax Act, 1961.

Analysis:
1. The appeal challenged the order of the CIT(A) regarding tax deduction on deposits of "HIMURJA" under section 194A. The AR argued that the assessee was penalized for another issue but was granted relief by the Commissioner. The AR highlighted a specific notification exempting TDS for "HIMURJA" under Section 194A(3)(iii)(f). The Commissioner, despite referencing the provision and notification, did not grant relief based on a letter from the CEO of "HIMURJA." The AR requested a remand to provide further evidence. The CIT-DR did not oppose the remand but noted that ground No. 2 was not argued. The AR explained that if no tax withholding was required for "HIMURJA," interest should not be charged, making it a consequential ground.

2. The AR argued that if tax withholding was unnecessary for "HIMURJA," interest should not be levied. The CIT-DR mentioned that the assessee relied on a Supreme Court decision in a different context, suggesting the ground should be decided against the assessee. The ITAT found that the assessee needed to establish the foundational fact of whether there was a legal mandate to deduct TDS for "HIMURJA" under the notification in Section 149A(3)(iii)(f). As the foundational fact was crucial, the issues were sent back to the AO for a detailed order after allowing the assessee to present all relevant evidence. The ITAT directed the assessee to provide full facts and supporting evidence for a proper decision. The appeal was allowed for statistical purposes.

This detailed analysis highlights the arguments, counterarguments, and the ITAT's decision on the correctness of the order regarding tax deduction and interest charges in the given legal judgment.