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2019 (10) TMI 513 - AT - Income TaxTDS u/s 194A - Assessee bank has not furnished one copy of Form No.15G and Form No.15H to the jurisdictional Commissioner of Income tax as required under the Act - HELD THAT - The provisions of sec. 197A(1A) merely requires a declaration to be filed by the payee of interest and once it is filed, the payer of the interest has not choice except to desist from deducting tax at source from the interest paid. In the case of Punjab National Bank 2016 (9) TMI 392 - ITAT AMRITSAR it has been held that non-mentioning of PAN in Form No.15G and Form No.15H is only a technical breach, when the payees were having PAN. In the instant case, the assessee has furnished a statement showing the details of interest paid on terms deposits. A perusal of the same would show that the assessee has furnished PAN number of most of the depositors. Accordingly we are of the view that this issue requires reexamination in the light of principles discussed above. Accordingly we set aside the order passed by Ld CIT(A) and restore this issue to the file of the AO with the direction to examine this issue afresh TDS u/s 194H - Non-deduction of tax at source from the Commission payment made to NPCI - HELD THAT - As decided in M/S CORPORATION BANK 2015 (3) TMI 1360 - ITAT the payment made to NFS could not be considered as commission or brokerage liable for deduction at source. BANGALORE - The assessee is not liable to deduct tax at source from the payments made NCPI towards NFS charges. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and delete the demand raised on this payment.
Issues Involved:
1. Delay in filing the appeal before CIT(A). 2. Non-deduction of tax at source under Section 194A from interest payments. 3. Non-deduction of tax at source from commission payments to NPCI. 4. Short deduction of tax at source on ATM security payments. Detailed Analysis: 1. Delay in Filing the Appeal: The assessee, a bank, filed an appeal challenging the order passed by CIT(A) which confirmed the demand under Sections 201(1) and 201(1A) of the Income Tax Act. The appeal was filed with a delay of about two months. The assessee attributed the delay to the audit work which was required to be completed immediately after the closure of the financial year. The Tribunal held that the reason furnished by the assessee for the delay constituted a reasonable cause and accordingly condoned the delay. 2. Non-Deduction of Tax at Source under Section 194A: The assessee did not deduct tax at source from interest payments made on term deposits in some cases, and deducted TDS at 10% instead of 20% in cases where depositors did not furnish PAN numbers. The assessee argued that it had obtained Form No. 15G and Form No. 15H from depositors and hence did not deduct tax. However, it was noted that these forms were not furnished to the jurisdictional Commissioner of Income Tax as required, and some forms did not contain PAN numbers. The Tribunal referred to various decisions, including those of ITAT Visakhapatnam, Delhi, and Amritsar, which held that non-furnishing of copies of Form No. 15G and Form No. 15H to the Commissioner would not make the assessee liable to deduct tax at source. The Tribunal set aside the CIT(A)'s order and directed the AO to reexamine the issue in light of these principles. 3. Non-Deduction of Tax at Source from Commission Payments to NPCI: The assessee paid commission to NPCI without deducting tax at source, arguing that NPCI was registered under Section 12AA and its income was exempt. The Tribunal referred to a coordinate bench decision in the case of Corporation Bank, which held that payments made to NFS (National Financial Switch) could not be considered as commission or brokerage liable for deduction at source under Section 194H. The Tribunal held that the assessee was not liable to deduct tax at source from payments made to NPCI and deleted the demand raised on this payment. 4. Short Deduction of Tax at Source on ATM Security Payments: The assessee deducted tax at source on ATM security payments at the end of the year instead of monthly. The assessee did not advance arguments in respect of the demand raised on this issue. Accordingly, the Tribunal confirmed the order passed by CIT(A) on this issue. Conclusion: The appeal was partly allowed. The delay in filing the appeal was condoned, the demand related to non-deduction of tax on interest payments and commission payments to NPCI was set aside, and the issue was remanded for reexamination. However, the demand related to short deduction of tax on ATM security payments was confirmed.
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