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2015 (11) TMI 877 - AT - Income TaxTDS liability u/s 194A - interest to Punjab Agri Export Corporation Limited - Held that - There is no documentary evidence placed on record by the ld. Counsel for the assessee that the loan has been raised from the Government and interest is payable to the Government and therefore, the submission made before the ld. CIT(A) and before us cannot help the assessee to cover the issue u/s 196(i) of the Act. It has also been conceded before the ld. CIT(A) that Punjab Agro Food Grains Corpn. Ltd., has also not declared the said interest income in their books of account. No infirmity in the order of the ld. CIT(A), who has rightly held the assessee in default u/s 201(1) & 201(1A) of the Act. We find no infirmity in the order of the ld. CIT(A) subject to the rate of interest which the assessee in ground No.3 has agitated should have been 10.30% instead of 11.33%. The AO is directed to verify the rate of interest as per law whether it is 10.30% or 11.33%. Accordingly, the matter is set-aside to the file of the AO only to the extent of determination of rate of TDS applicable ie. @ 10.30% or 11.33%.
Issues:
1. Interpretation of provisions of section 250(6) of the Income Tax Act, 1961. 2. Liability to deduct tax at source u/s 194A on provision interest. 3. Correct rate of TDS applicable on provision interest. 4. Consideration of Ist Proviso to S.201(1) by Finance Act, 2012. 5. Applicability of section 196(i) of the Act to the case. Issue 1: Interpretation of Section 250(6) of the Income Tax Act, 1961 The appeal raised concerns regarding the CIT(A)'s order allegedly contravening the provisions of section 250(6) of the Income Tax Act, 1961. The appellant contested the order on legal grounds, emphasizing the incorrect interpretation of the law by the CIT(A). Issue 2: Liability to Deduct Tax at Source u/s 194A on Provision Interest The case involved a dispute over the liability of the appellant to deduct tax at source under section 194A on provision interest of a specific amount to Punjab Agri Export Corporation Limited. The AO held the appellant liable for short deduction of tax at source, leading to a demand for payment. The CIT(A) confirmed the AO's action, resulting in the appellant challenging this decision. Issue 3: Correct Rate of TDS Applicable on Provision Interest Another aspect of the case revolved around the correct rate of Tax Deducted at Source (TDS) applicable to the provision interest. The appellant argued that the AO incorrectly applied a TDS rate of 11.33% instead of the accurate rate of 10.30%. This discrepancy in the TDS rate calculation further fueled the dispute between the appellant and the tax authorities. Issue 4: Consideration of Ist Proviso to S.201(1) by Finance Act, 2012 The appellant contended that the CIT(A) failed to consider the introduction of the Ist Proviso to Section 201(1) by the Finance Act, 2012. The appellant argued that this amendment, being curative in nature and applicable retrospectively, should have been taken into account while passing the order. The failure to acknowledge this amendment was a pivotal point in the appellant's challenge against the CIT(A)'s decision. Issue 5: Applicability of Section 196(i) of the Act A significant issue in the case was the applicability of Section 196(i) of the Act to the appellant's situation. The appellant claimed that as the amount was payable to the Government, no tax at source was required to be deducted. However, the lack of documentary evidence supporting this claim led to a dispute between the appellant and the tax authorities regarding the interpretation and application of Section 196(i) of the Act. In conclusion, the judgment addressed various legal issues concerning the interpretation of tax laws, liability for tax deduction at source, correct TDS rates, consideration of statutory amendments, and the applicability of specific sections of the Income Tax Act. The decision highlighted the importance of accurate legal interpretation, compliance with tax regulations, and the necessity of supporting claims with proper documentation in tax disputes.
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