9911796707
TMI Blog2013 (1) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the ICD only on 31st March, 2010; thus the claim of the assessee company that it was liable to deduct tax at source at the rate of 10%, which was the rate in force on the date of credit to the account of the payee. The liability of the assessee to deduct tax at source with reference to the interest payment is only at the rate of 10%. In favour of assessee Delay in payment of TDS – Interest u/s 201(1) – Held that:- Following the decision in case of Hindustan Coca Cola Beverage Pvt. Ltd (2007 (8) TMI 12 - SUPREME COURT OF INDIA) that assessee cannot be made liable u/s 201(1), since the payee had disclosed the interest income in its return of income - In favour of assessee - ITA No.1198/Bang/2011 - - - Dated:- 19-10-2012 - N. Barathvaja Sankar And George George K, JJ. Appellant Rep by: Shri Srinivasan, C.A. Respondent Rep by: Shri S.K. Ambastha, CIT (DR-I), ORDER Per: George George K: This appeal instituted by the assessee is directed against the order of the CIT(A)-II, Bangalore dated 10/10/2011. The relevant assessment year is 2010-11. 2. The grounds of appeal raised read as follows:- i) The learned CIT(A) is not justified in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194A of the Act. The assessee company had filed an application dated 9/5/2010 before the Assessing Officer seeking rectification of order passed under section 201(1) and 201(1A) for assessment year 2010-11 on the ground that the rate of TDS mentioned in the order should be 10% instead of 20% by virtue of amendment made by Finance Act, 2009 w.e.f. 1/10/2009. 3.2 The assessee company had obtained Inter Corporate Deposit (ICD) from M/s Urban Infrastructure Trustees Limited amounting to Rs.116.80 crores and according to the assessee company, the interest due on ICD were payable on 31/3/2010. It was stated in the rectification application that Part II of the Finance Act prescribes the deduction for interest payable under section 194A at the rate of 10% w.e.f. 1/10/2009 as against 20% before the said date. It was for this reason the assessee company had moved application under section 154 seeking rectification as the Assessing Officer had computed the tax deductible in terms of the rates that were in force before 1/10/2010 and had not considered the rates in force as per the amendment made by Finance Act, 2009. 3.3 The Assessing Officer rejected the rectification application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents is stated to be made. Therefore, any such documents which is not ratified by the Board would be ultravires and will not have any impact on the existing liability of the deductor . a) It is clear, therefore, that the agreement said to be dated 25/6/2009 is apparently not ratified by the Board as is evident from the fact that, as per the documents filed on 14/10/2010 before the AO, the resolution for accepting inter-corporate deposits and the terms and conditions therefore was passed by the Board on 25/8/2008. Apparently, there has been no such resolution after the date of the so-called new agreement said to be dated 25/6/2009. b) Moreover, the said new agreement is merely a letter dated 25/6/2009 from M/s Sterling Urban Infrastructure (P) Ltd. signed by a Director indicating the charges, inter alia, which has been accepted by M/s Sterling Urban Infra Projects Pvt. Ltd. on their behalf by Authorised Signatory. The entire process was apparently executed on the same day through signatures on a single sheet of paper. Even during the course of appellate proceedings, the appellant has not shown that this agreement is ratified through a meeting or tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted by M/s Urban Infrastructure Trustees Limited and the same is evident by the letter dated 25.6.2009 of the assessee company written to the M/s Urban Infrastructure Trustees Limited (source - page 20 of the paper book). It was contended that since the interest is payable only on 31st March, the rate for TDS subsequent to the period 1/9/2009 was only at 10%. It was further contended by referring to section 194A of the Act that the interest income was credited to the account of the payee only on 31st March, 2010 and the payments were made by issuance of cheque only thereafter. So the correct rate for deduction for TDS purpose in respect of payments made on interest to M/s Urban Infrastructure Trustees Limited was at the rate of 10% and not 20%. Lastly it was contended that the interest income was disclosed by payee in its return of income and hence, the assessee company could not make liable under section 201(1) of the Act. For the above proposition, the learned AR relied on the Hon ble Apex Court s judgment in the case of Hindustan Coco Cola Beverages Ltd. v CIT reported in 293 ITR 226 (SC). 8. The learned DR strongly supported the orders of the Income Tax authorities. 9. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended clause was accepted by M/s Urban Infrastructure Trustees Limited. When the parties to the agreement modified interest clause in the deposit agreement, the interest payment arises only on 31/3/2010. It is pertinent to mention here that the assessee company had given a copy of the ledger account of interest paid, which was enclosed to the letter dated 13/7/2010 addressed to the Assessing Officer. It can be seen from the ledger account that the assessee company had credited the interest payable on the ICD only on 31st March, 2010; thus the claim of the assessee company that it was liable to deduct tax at source at the rate of 10%, which was the rate in force on the date of credit to the account of the payee, was substantiated with reference to the terms of the amended agreement and the entries passed in the books of accounts of the assessee relating to the credit of interest which is not in dispute. 9.1 The reasoning of the revenue authorities that even as per the terms of amended clause, the interest was accruing quarterly and therefore, the tax has to be deducted as the rate in force in quarterly basis, is not correct. The interest on ICD was payable on 31st March, although ..... 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