2015 (7) TMI 941 - AT - Income Tax

TDS from salary u/s 192 - Disallowance of deduction u/s 80C - short deduction of tax at source from payment of the salary - Interest u/s 201(1 A) - CIT(A) allowed claim for subsequent assessment years - Held that - CIT(Appeals) in subsequent assessment years as noted and following the judgement of the High Court 2015 (4) TMI 272 - PUNJAB AND HARYANA HIGH COURT allowed appeals of the assessee. The ld. CIT(Appeals) noted in these orders that the Provident Fund accounts of the employees of the assessee University are to be maintained by the office of CAG and consequent action to be taken qua transfer of funds from private Trust to the CAG. The contribution made by the employees is to be treated as contribution to Government Provident Fund and deduction under section 80C is allowable to these employees. The ld. CIT(Appeals), in view of the judgement of the Hon ble High Court held that the assessee cannot be treated as assessee in default and accordingly, allowed the appeal of the assessee. - order of the ld. CIT(Appeals) cannot be sustained. The assessee, therefore, cannot be held to be assessee in default and accordingly, the orders of authorities below are set aside - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of deduction u/s 80C for contribution to GPF by employees.
2. Charging interest u/s 201(1A) for short deduction.
3. Recognition of Provident Fund for deduction under section 80C.

Analysis:
1. The appellant challenged the order disallowing deduction u/s 80C for GPF contribution and creating additional demand under section 201(1). The Assessing Officer found the Provident Fund not recognized by the Income Tax Department, leading to demand creation. The appellant argued recognition was granted later, seeking retroactive effect. The CIT(A) upheld the disallowance due to non-recognition during the relevant year, dismissing the appeal.

2. The Assessing Officer also charged interest u/s 201(1A) for short deduction. The appellant contended that the Provident Fund was recognized post-assessment year, pending appeal for retroactive recognition. The CIT(A) confirmed the interest charge, citing non-recognition during the assessment year, leading to dismissal of the appeal.

3. The appellant cited a subsequent judgment allowing similar claims for subsequent assessment years based on recognition by the High Court. The CIT(A) in those years allowed the deduction under section 80C, considering the Provident Fund accounts maintained by the CAG. The High Court judgment influenced the CIT(A) to allow the appeals for those years, recognizing the contribution as Government Provident Fund.

4. Upon reviewing the High Court judgment and considering the CIT(A)'s decisions for subsequent years, the ITAT found in favor of the appellant. The ITAT held that based on the High Court ruling, the appellant could not be treated as an assessee in default. Consequently, the ITAT set aside the lower authorities' orders, allowing the appeal of the assessee.

In conclusion, the ITAT, following the High Court judgment, allowed the appeal, overturning the disallowance of deduction u/s 80C and the interest charge u/s 201(1A), as the Provident Fund was eventually recognized, leading to the appellant not being considered an assessee in default.