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2018 (3) TMI 1566 - AT - Income TaxLiability for tax deduction u/s. 192 - assessee in default u/s. 201 and 201(1) - contribution to the PF Fund - Held that - An identical issue was considered by the Tribunal in the case of Kodakkad Service Co-operative Bank Ltd. vs. Income Tax Officer(TDS) (2017 (3) TMI 579 - ITAT COCHIN) wherein it was held that the contribution to the PF Fund that was not recognized by the Chief Commissioner or Commissioner in accordance with the rules contained in the Part A of the Fourth Schedule or under a scheme framed under the Employees Provident Fund Act, 1952, is not entitled to deduction u/s. 80C of the Act. It was further held by the Tribunal that the interest accrued to the assessee on the contributions to such unrecognized PF was also liable for tax deduction u/s. 192. Thus we hold that the CIT(A) is justified in confirming the orders passed u/s. 201 and 201(1) of the I.T. Act. - Decided against assessee.
Issues:
Short deductions of tax on salaries for assessment years 2007-08 and 2008-09 due to contributions to unrecognized Provident Fund and interest on employees' PF deposits. Analysis: The appeals were filed against the CIT(A)'s order confirming short deductions of tax on salaries due to contributions to unrecognized Provident Fund and interest on PF deposits. The AO found that the assessee, a cooperative society, made short deductions of tax on salaries under section 192 of the Income Tax Act due to contributions to an unrecognized Provident Fund. The AO held that these contributions were not eligible for deduction under section 80C. Additionally, the interest accrued on employees' PF deposits was deemed taxable under 'Income from other sources'. The CIT(A) upheld the AO's decision, leading to the present appeals. The main contention was whether the contributions to the Provident Fund were eligible for deduction under section 80C and if the interest on PF deposits was subject to tax deduction under section 192. The Tribunal referred to a similar case where it was held that contributions to an unrecognized PF were not entitled to deduction under section 80C and that interest accrued on such contributions was liable for tax deduction under section 192. The Tribunal analyzed the relevant sections of the Income Tax Act and concluded that since the assessee's PF was not recognized under the Act, the contributions were not eligible for deduction under section 80C, leading to short deductions of tax under section 192. The Tribunal emphasized that the employees are responsible for deducting tax at source at the time of salary payment. Since the contributions were not recognized, the estimations made by the assessee were incorrect, resulting in short deductions of tax. The Tribunal rejected the assessee's contentions, citing lack of employee tax filings and reliance on irrelevant case laws. The Tribunal dismissed the appeals, upholding the CIT(A)'s decision based on the precedent set in a similar case. Therefore, the Tribunal affirmed the CIT(A)'s order, stating that the contributions to the unrecognized Provident Fund were not eligible for deduction under section 80C and that the interest on PF deposits was subject to tax deduction under section 192. The appeals filed by the assessee were dismissed in line with the previous judgment, and the orders passed under sections 201 and 201(1) of the Income Tax Act were upheld.
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